Regular readers will recall that in August I raised concern when the UK Office for National Statistics claimed that simultaneously UK national debt had exceeded £2 trillion for the first time and had exceeded 100% of GDP for the first time since the 1960s.
I also raised concern at that time about what actually constituted the national debt, noting just how hard it was to find this information within the data published by the ONS, before coming up with this presentation:
There are a number of things to note. The first is that, slightly amusingly, the latest ONS data, released for September, downgrades the July debt estimate to £1,997bn. So, it wasn't £2 trillion after all.
More importantly, I have pursued, as I said I would, the issues arising. I should record my thanks to the ONS, HM Treasury and the Office for Budget Responsibility, all of whom have actively engaged in discussion on this issue now, and to the Bank of England, which has corresponded, at length.
I would like to say I have an answer to the issues I have raised, but as yet I admit that I have not. This discussion is ongoing, including on matters as basic as what is, and is not, included in the calculation, which discussion covers some quite surprising issues.
Issues around how I think the national debt should also be presented have been subject to a lot of research, and report drafting, followed by much redrafting as evidence has accumulated. The issues arising, and the economic, accounting and political economy issues involved are remarkably complex. Colleagues at Sheffield University and elsewhere have already provided invaluable support in these discussions.
What began as a simple blog post has turned into a major project, in which all the UK's major public sector economic reporting agencies have now played a part. There will, I promise, be results in due course: I am now working on a paper, although don't expect brevity or a light read, as those who have commented to date have complained. I do, however, think that the work, and the wait, will be worthwhile. The one thing I think I can safely predict is that the national debt is definitely not what it claims to be.
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If my household budget was £2 trillion in debt; I’d be worried 😉
Or rather, my bank would be worried !
But the government is not a household….
Some logic to refute the household myth.
I hope we can all agree that the government can print sterling coins and notes.
If the government is like a household then logically a household is like the government so I demand that my household has the right to print sterling coins and notes. But of cause the government has made it illegal for any one else to print sterling so a household is not like the government.
Excellent! I doff my hat. I will not spoil this genuine praise that you have managed to open a genuine dialogue on the actual content of government financial information in its own accounts, by wondering mischeviously what the economic discipline thinks these figures contain, and what exacting research it has ever done to check the accuracy of its own assumptions. Oh, I just did. Oops!
This is an issue being looked at…
The fact you got cooperation is encouraging….. I await your paper!
So do I
Completely out of my depth, but it must have implications for international accounting standatds!
National debt is not prepared using accounting standards
Or even double entry, come to that
That is one of the problems
Richard, we are all in your debt for your ability to see the broad picture, develop an intellectual framework to analyse and mobilise support to bring about change, a change which is moral as well as practical, as it will benefit the ordinary people, not just the few. And the immense hard work it entails.
I expect you will, rightly, point to all the support you have received, but much of that might not have happened without you. It is important that you pace yourself so you can complete the course. (I used to run half marathons )
I just hope that a wider political and academic audience will take up your project and join in a real movement for change.
Thanks
This really good news. Reporting information to the public that is accurate is very important. I am also glad that the discussion is including political economy as well as the narrower focus on accounting. I also find it heartening that these institutions are engaging in the discussion. Thank you for your continued work.
We have agreed to continue the engagement
And they know I am going to be critical, to a degree
They have seen some workings.
Well done. Richard !
I don’t want brevity or a light read
I just want to understand what the hell is going on !
Why has it taken the authorities so long to engage on what the same experts say is so important ?
I suspect we’ll get the same misdirection that we get from the trolls on this blog
Good luck & keep looking after yourself.
Thanks, Richard. I am not an economist, how but can someone say the national debt is £2 trillion (or £1.997 trillion, or indeed any other number) without first being able to fully list and explain the elements that are aggregated to give that overall number? Is there any objective measurement, or are you saying it is in fact subjective or political in nature, depending on the definitions and framing that one uses? Even if it is, I would expect someone publishing a figure to be able to explain how they got there. Reading between the lines, are you saying that you, OBR, HMT, OBR, BoE, and perhaps other acronymic public bodies, each has its own idiosyncratic definition, not entirely consistent with the others? Can you indicate some of the surprising things that are added in or left out, or will we have to wait to read your paper in due course?
I’d like to resolve the issues first
But is it subjective? Yes. I can answer that.
It is quite extraordinary to me that you seem to be the first person in recent history ( or is it EVER?) to have questioned the authorities about how they present “our” accounts. You are doing sterling (sorry!) work for the public good. I look forward to the “simple version” of your findings.
Remember the history of this accounting is only 75 years old, really
And everything that has happened since 2008 is unknown territory
But I am bemused as to why the questions have not been asked
I thought that one of the features of fiat money was that no-one could ever accurately calculate what you owned or owed? And by the time you’ve made a reasonable estimate the answer is out of date.
What an earth are you talking about?
You are aware we had inflation (and also, as worryingly, deflation) in the pre 1971 gold standard era, aren’t you?
And what about retiring some of the dubious terminology, such as “debt” which is used as a weapon by the usual suspects to frighten us all into accepting austerity? Any movement there or even understanding that such a framing is, let us say, unhelpful ?
I assure you, I am aware of that issue
I’m looking forward to readin it Richard.
Really well done.
I’m very impressed! I admit to doubting all these institutions would engage with you fully, so I’m really pleased to hear that everyone sounds like they are actively involved and, perhaps, want to resolve things. That’s quite an achievement Richard!
I have the feeling that if you think the issues are complex, I’m unlikely to understand your paper, but if you throw together a decent abstract I’ll give that a go 😉
On doubting they’d engage you on this – I think we have become totally jaded about authority now, disbelief and distrust, because of our governments (at all levels) being so awful. It’s heartening to hear of some apparent desire for good engagement with the public (maybe honesty?) in some of the institutions.
I am pleased with the assistance and cooperation that has been offered – and the willingness to learn from the process
‘National Debt’ & ‘Tax Payers Money’
Two giant pantomime dragons that we cower infront of as the tiny puppet masters pull the strings from behind their ancient velvet curtains.
Starmer even used the phrase at pmq’s , as does the media constantly reinforcing the Big Lies.
Hope we can have some jolly xmas reading! Can’t wait for such an exciting prospect of clarity of public finances.
We used to study the psbr reports and the carious ‘motorways of money’ M1,2,3 as part of our A level Economics.
Maybe you are writing a school textbook for future generations.
Perhaps the beginning of a new school of thought.
Murphianism?
MurphysLore?
(Couldn’t resist)
It’s just a bit of insight
Let’s not get carried away….
I hope it goes well, perhaps the beginning of a Kuhnian paradigm shift, as the Proclaimers sung, “there’s only taxpayers’ money – no more” and a proper accounting on a balance sheet of all issuance by the Government/BoE.
I watched Starmer talking about wasting tax payer’s money whilst attacking Johnson the other day.
It is hard to get over any of these issues (tax, national debt) when they become so weaponised by politicians of all creeds.
I agree…
I submitted an article to the Guardian on this issue
It got nowhere
did the Guardian say why it wouldn’t publish your article ?
Comment is Free simply ignore 99% of submissions, I gather
POnce they welcomed outsiders: they do not anymore
Re the guardian why not get your good friend Larry Elliot to exert some influence?
He is aware of this research
Where are the values of the assets that much of the debt funded? Assets like the road and rail network, public buildings, public land, publicly owned works of art, defence equipment, and countless other assets.
Counting the nation’s liabilities without including its assets doesn’t seem to make much sense. Part of the problem is that the UK Government has no idea what its assets are worth. They haven’t been collated and re-valued for a very long time AFAIK.
Your question is appropriate
Assets also include natural assets such as the productivity of land, sea, people, minerals, wind, waves etc. The UK’s extensive network of overseas territories should also be included. These generate huge revenues for the City of London.
Also, if I was valuing a business, I would include the value of its intellectual property and goodwill as well as its future ability to generate revenues. These are ignored in the national debt figures.
For these, and many other reasons, I expect that the remaining UK will owe Scotland a monetary settlement upon independence. Talk of Scotland having to take a share of the UK’s national debt makes no logical sense to me.
Much of your argument is as dubious as the average set of IFRS accounts