After the fiddled figures comes the changed rules. For years we have been served up a diet of changed statistics, altered bases for setting out public spending, a riot of off balance sheet disguises for extra borrowing, and changes in the dates of the famous cycle that is meant to anchor the governmentâ€™s spending controls. Despite all that we learn today that even the government think their so called fiscal rules lack credibility, so we are to have new ones that allow the government to carry on borrowing as if there were no day of repayment.
â€œFiscal rules lacking credibilityâ€ is a smart way of saying no-one believes them any more. No wonder. I have set out how I think the true balance sheet indebtedness of the UK government including unfunded pension liabilities is around Â£1500 billion, or more than 100% of our National Income. To be told we are still just below 40% of National Income on the governmentâ€™s measure, staying within this control, is absurd. If the government wants to have a control over total debt it should include the borrowings of Northern Rock, Network rail, all the PFIs and PPPs, even if still refuses to include the pensions deficits that any private sector company now has to put on its balance sheet. That alone would mean they would need a debt ceiling above 50% of National Income unless they are going to start cutting their debt burden..
Then there is the sustainable investment rule, which says they should not borrow more than they need to pay for capital items across the cycle. This allows them to borrow for current spending â€“ to live on overdraft â€“ for years on end, as the cycle may last 12 years and is their flexible friend. They only tell you when the cycle ends when they feel like it and after it has happened! A better rule would be to limit borrowing to capital and a specified percentage for current spending if economic growth falls below a stated level, and to require proportionately less borrowing than capital spend when economic growth exceeds the same level, which should be set at the trend or average rate of growth.
What matters today is not efforts to change the rules, but efforts to control spending and borrowing more effectively. This week I was sent a note telling me that work is advancing on having more honest, understandable and consistent figures for public spending after all these years of fiddled figures. I emailed back with the ironic enquiry that I assumed this work would not be ready until the 2010-11 financial year, just in time for a new government if one is elected. Quick as a flash I was emailed back to tell me that was exactly the expected date of introduction! I just trust the sender shared my sense of irony. Clearly some are preparing for a new government, and think it should not have access to the flexible presentation of the current regime.