Prior to the election I set out items I thought were missing from the government’s balance sheet that ought to be there. I estimated the bank liabilities from banks with government shareholdings, PFIand PPP liabilities which are another kind of borrowing, and unfunded public sector pensions. I said that an incoming Conservative government should and probably would set out these items for us all to see.
So it proved with the Coalition government. They have published figures showing much larger state liabilities. On this site I have been criticised for failing to include the figures for the basic state retirement pension. I do not see this as a liability in the way government borrowing or PFI is a liability. The scheme has always been pay as you go. In that sense it is just like the NHS or the education service. We pay taxes in collectively, and those in need of these services receive the benefits.
However, I have no wish to disappoint people who do wish to have in mind an even larger figure for state liabilities. If we take the 10 million Old Age Pensioners today, and multiply that by the £140 a week pension promised for the time after the forthcoming reforms, we get an annual bill of £73 billion. If you multiply this by 20 you get the rough capital cost of such provision, or £1.5 trillion. You could make it more if you allowed for further increases in pensioner numbers given growing longevity. I hope that makes my critics feel better!