Coffee House

Osborne increases debt more than Labour did over 13 years

21 November 2013

The national debt figures are out – £1.2 trillion and rising – and although I hate to say it, the Labour Party has a valid point to make. If you don’t adjust for inflation, Osborne has borrowed more in under four years than the Labour Party borrowed over 13 years. It’s unusual for Ed Balls to talk about debt accumulation as a bad thing, perhaps because his policy remains the accumulation of even more debt. But here’s the story so far:-Screen Shot 2013-11-21 at 14.41.36

Labour is, as ever, spinning too much. As they know, you need to adjust for inflation to make any meaningful comparison in public spending. But the overall point holds.


Now, things are going pretty well for Osborne. Today , a CBI survey shows the strongest orders for manufacturing since 1995 (note from Citi here, graph below).Screen Shot 2013-11-21 at 14.44.41

But the debt pile – growing at more than £3,000 per second – will cast a long shadow over George Osborne’s Autumn Statement next month. Is this recovery real, or another debt-fuelled illusion? The annoying truth is that we just don’t know.

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  • Jackie Cairns

    It’s only to be expected when you have a drug addict in charge of the money.

  • Not a quark

    And hey Clarkson was sacked under Osborne too!

  • Tickety Boo

    Only by bribing the electorate can the Tories remain in power, so they will continue to do it, until our debt is so unmanageable that we cannot even pay the interest.

  • peterb

    What Frazer never admits is that if Osborne had wanted to reduce the Nations debt he would have had to eliminate the annual deficit quicker.

    You can only do that by
    a) Raising Taxes & much deeper cuts
    b) Risking economy goes into deep recession

    The reasons for going slowly slowly catchy monkey was two fold.

    1) The EU crisis reared its ugly head putting pay to any growth led lowering of the deficit
    2) Leaving enough of the pain for the next parliament. We cannot afford to have taken all the negative economic pain without some political gain.

    The 2010 election was an election best lost politically, that is why the cover of the LibDems was required. To have cleaned up Labours mess and then left them a strong economy with no negatives would be political suicide.

  • Jordan Eves

    Because borrowing to pay the bills is typical when there is a deficit, the spending obviously needs to be cut, but especially if taxes are not going to be raised. Spending is not the only thing the deficit comprises of. The interest on the debt is also a component of the deficit.
    Osborne’s borrowing may be substantial but the planned spending cuts must so far be enough if taxes aren’t going to be raised, when raised taxes are an aspect of austerity.

  • si
  • Malc

    And so the finger pointing goes on, it’s their fault! No it’s the other lot! We need to build a fairer society, but there is no money? But big business is sitting on billions! They need to make a profit or they will pack up and go elsewhere? Well if we wait until there is nothing left they will do that anyway. Time to chip in I think.

  • namidehya

    “The annoying truth is that we just don’t know”…..

    The annoying thing is that YOU DO KNOW….

  • Jane Young

    The problem is that austerity policies have contributed to the unemployment caused by the global financial crisis. If people had been kept in employment, they would have been paying tax and national insurance and spending in their local economies. Unemployment is a huge drain on the economy, because unemployed people need income-replacement benefits and don’t pay tax or NI. This approach to the economy has cost the country dear.

    • LB


      There has been no austerity.Taxes have increased, Spending has increased.

      And its got worse, and you want to blame austerity (there isn’t any).

      Unemployment is a drain, but the primary reasons are that

      1) People won’t work for a few extra quid.
      2) They chose not to
      3) They won’t move to the work
      4) There are too many low paid low skilled migrants.

      • Jane Young

        Most people want to work, but it should be sufficiently well-paid to make it affordable to go to work. Would you work for nothing, or if it costs you to do so? Of course not.

        Anyway, try telling those whose benefits have been cut for no good reason and who can’t afford to feed their kids that there’s no austerity – if there isn’t, there’s got to be a damn good reason to put people in that position!!

        And if there’s no austerity, it’s because the Coalition is paying the price of policies that weaken the economy. And spending lots on bungled re-organisations and “reforms”, of course.

        Yes, taxes have increased – but regressively. VAT increases affect everyone equally; if income tax had increased at least that wouldn’t hammer those who don’t pay any because they’re too poor!!

        But the fact is that those who earn well over £100,000 aren’t all philanthropists – so there has to be a better way to create a more equal society, than expecting high earners to give their money away voluntarily. I’m all ears!

        • LB

          So they go on benefits, and take money from other people, making the situation worse.

          It’s screwed. Pure and simple. The result of your borrow and spend is that the poor are going to be destitute.

          People like you got us into this mess. Lets look at the size of the mess.

          1.2 trillion borrowing. 6.5 trillion for pensions (off the books). PFI 0.4 trillion off the books .Nuclear decommissioning likewise off the books. Total well over 8 trillion.

          The annual increase? 850 bn a year. Compare that with taxes which only come to 600 bn.

          So its screwed. You can’t double increase taxes and cut spending to zero just to pay the debts. Face up to the reality, they are just fiddling. Nothing will change. Not even labour can cure it. Neither the Tories. Not you, not me.

          So anyone who is dependent on the state is f***ed.

          Now for the blame. It is people like you who think the state is the solution and allowed them to take pension contributions and spend them. You are to blame. You have set up people who are dependent to be destitute.

  • IanH

    Fraser, you are pathetic. Not only did Gordon destroy our economy, he set in train a massive increase in debt e.g. doubling “investment” in public service leads to doubling of the pension payouts as they retire with their index linked 2/3 final salary. We won’t even talk about his PFI.

  • DWWolds

    Fraser haven’t you heard of the accounting concept of accruals? Under that any deficit in current year’s spending is added to the overall debt at the end of the relevant financial year.

    Labour left behind an annual deficit of £160bn, which would have added that amount to the debt at the end of that financial year. Since then, despite the efforts of Osbourne to bring down our annual overspend, the annual deficit has added well over £100bn in each year to the debt.

    If you work out the total figure for that, plus the interest we are paying on it, you will soon see where the £417bn has come from.

  • BenM_Kent

    Nelson may have a point on the bald figures but the increase in the stock of debt was always going to be rapid under this government because the damage done to the economy in 2007-8 was so profound.

    I speak as a Labour voter looking forward to booting this inept administration out in 2015. But I can’t criticise Osborne for debt accumulation. You can’t just stop spending overnight, the economy would go into arrest.

    • 2trueblue

      And paying down debt of the size left by the previous administration takes quite a number of years.

      • LB

        It never will be paid down. It will be defaulted on. Notice how they proponents of more debt won’t tell you what they owe for pensions, and the rate of increase of that debt.

        • 2trueblue

          And Liebore did of course?!

          • LB

            734 bn a year, plus the deficit on top.

            So I don’t quite get your point.

            Perhaps its the Yorkshire ripper defence. You can’t prosecute me because you haven’t done Jack the ripper

    • LB


      You either tax people and spend, or don’t tax people and they spend.

      Nothing is destroyed in pound terms.

      In value terms, vast amounts of value are destroyed by the state.

      However you’re going to get your wish. The economy will go into arrest. The reason is the debt. Not the small borrowing bit, but the true debt.

      ONS has the numbers.

      That shows how incompetent Labour are. 734 bn a year increase in debts hidden off the books. When that falls due, you will get your arrest.

  • London Calling

    Housing Bubbles and now Osborne increases debt more than Labour did over 13 years………………cheer up Fraser, we could be in a recession………..:O

  • potager

    As before the last General Election,Fraser ,you seem to be getting into gear to trash the Tories.George Osborne has done a heroic job in horrific circumstances.The economic signs are very encouraging , which is no doubt why you are unable to give credit where credit is due.You did your best to get Gordon Brown re-elected last time and again your bias is in full flight. Is it an inherent left – wing agenda or an aversion to the English establishment?

    • HookesLaw

      Nelson seems to think he is talking to infants.

      • the viceroy’s gin

        …he’s not far off, in your case.

  • Rockin Ron

    We do know – it’s a debt-fuelled illusion that will fade after 2015. Look at your second chart and see the sharp decline in export orders for proof. Instead of just shoving charts together, why don’t you take a few minutes to think through what they may be showing?

  • anyfool

    The slip under your skirt covering your visceral dislike of the posh boys is showing,
    context is all and this is not quite in order.
    A staggeringly bad balance sheet to start with has tied Osborne`s hands for years to come, their problem was that they had to spin that the task in hand was easier than appeared to prevent a flight of capital from the country, if they had been truthful from the beginning they would have made life a lot easier.
    That the media gives the Labour party a free ride over the effluent they project as spending policy is something you should be addressing.
    Surely even the most Labour loyalist mouthpiece from the MSM cannot even think that the bankers bonus tax can cover the dozen or so policies it is going to pay for.

    • HookesLaw

      You make a very good comment.

  • Tom Tom

    Larry Summers thinks we have sunk into a Liquidity Trap and are headed for a 30-Year Slump so it will be a case of pile on the debt and then default…….China has $3 Trillion in bad debt in the banking system with large blocks of loans to solar panel producers going bad. It will be interesting to see what kind of regime introduces the New Currency, it is certain that the system is on the skids so Osborne might as well go for broke

    • HookesLaw

      Like Summers knows how to tie his own shoelaces?

      ‘As Joseph Stiglitz has pointed out, few economists deserve more blame
      for the financial trainwreck of the last five years than Summers. In a blog for the New York Times a few days ago, Stiglitz, who won the Nobel prize for economics in 2001, commented: “As a Treasury Department official during the Clinton administration, Mr. Summers supported banking deregulation, including the repeal of the Glass-Steagall Act, which was pivotal in America’s
      financial crisis.
      His great ‘achievement’ as secretary of the Treasury,
      from 1999 to 2001, was passage of the law that ensured that derivatives
      would not be regulated — a decision that helped blow up the financial
      Stiglitz has also pointed out that Summers’s record of egregious error
      goes back at least to the mid 1990s, when he encouraged East Asian
      nations quickly to liberalize their capital markets, a development that
      led straight to the Asian financial crisis’

      • dalai guevara

        So Larry Summers has woken up and you’re still in dream land?

        • HookesLaw

          You are the one in need of an alarm clock

      • Tom Tom

        I am very familiar with Larry Summers and how he made $39 milliion and was Managing partner at D E Shaw hedge fund, and that like Bernanke, Yellen, Greenspan, Lew, Geithner, and his sponsor Rubin, he is part of the Jewish cabal. Geithner’s father was sponsor of Obama’s mother in her microfinance project in Indonesia.

        Nevertheless, Larry Summers may have a valid point about Secular Stagnation

        • the viceroy’s gin

          The sad part of this is, Summers as bad and dishonest as he is, is probably the best and most trustworthy of the band of thieves you’ve listed above. And I’m including Yellen in this, although she’s yet to wreak any havoc yet.

          Rubin needs to be sent to Gitmo permanently, for daily waterboarding.

        • HookesLaw

          ‘a jewish cabal…’
          ‘Thank you Mr TomTom… Next!!!’

        • HookesLaw

          ‘a jewish cabal…’
          ‘Thank you Mr TomTom… Next!!!’

      • LB


        Oh I see. That bet I put on the Everton Liverpool match must have been responsible for the result.

        Nothing to do with people not paying the debts eh?

  • HJ777


    This makes little sense.

    Suppose you had two governments which alternated every election and that elections were equidistantly timed. Let’s say one always steadily reduced the deficit to zero from whatever level they inherited, and the other always steadily increased it from zero to 10% of GDP.

    Over the same amount of time in office both governments would borrow (i.e. run a deficit of) exactly the same amount per year (5% of GDP, on average) and accumulate the same amount of new debt. However, there would be no doubt that the one that always reduces the deficit would be the more fiscally prudent.

    The amount of debt that is accumulated under a government depends not only on the behaviour of that government but on the deficit and the trend in the deficit that they inherit from their predecessors.

  • wycombewanderer

    Labour were and are committed to spending more and borrowing more

    That never seems to figure in their equations!

    • Tom Tom

      So…they aren’t doing it…Osborne is !

      • the viceroy’s gin

        Thank goodness for Boy George. The bloated public sector was in danger there, for a moment. But the crisis has passed now. Carry on.

  • Neotelemachus

    This is absolute nonsense. If Brown, Balls, Darling and co had not left a recurring deficit north of £160bn we would not have had the massive increase in debt and any comparison with the situation during the 13 years of terror is bogus. What about the PFI debt and the increase in public sector pension liabilities during Brown’s stewardship? I expect better from you Mr Nelson.

    • dalai guevara

      What about PF2? Do you actually know anything, piper?

      • Neotelemachus

        In some areas I probably know less than you, Idiot #3, and in other areas I undoubtedly know more. However, I have yet to see any evidence from your postings that you know f*ck all about anything. Craphat.

        • dalai guevara

          Oh no, dude. Just look below/above – the plebs willfully ignoring the data. Not that they did not know, they don’t want to know.
          This is so typical, the nation’s distinguishing characteristic in fact. What that too philosophical for you?

    • ohforheavensake

      If you look at the graph, debt starts to spike in 2008- because Labour nationalised failing banks. If they hadn’t done so, the economy would have collapsed.

      Second point- if the Coalition had invested wisely in the economy, it would have grown (as it did under Labour in 2009-10). Instead, they imposed austerity measures and the economy stagnated. Renewed growth has been partly fuelled by government spending- albeit on the wrong things.

      Here’s a good, simple explanation of the effect the Coalition have had on the economy-

      • kyalami

        They didn’t have to finance failing banks. They could have let them fail and honoured the commitment to insure deposits up to £85,000 (or whatever the figure was then). Instead we propped up failing banks with public money and then the bankers took in many cases good sized bonuses.

        Now the way you “invest in the economy” is to shrink government so that there are fewer taxes for companies to pay.

        • dalai guevara

          RBS is that government, Lloyds banking group is that government, Quangos are that government, the Co-op will soon be that government too (watch this space), JSA in Britain is still lower than the Greek equvalent (!)

          When you stop comparing apples with pears, someone will perhaps listen.

          • the viceroy’s gin

            Yes, you socialist nutters did rush to bail out the banksters, didn’t you?

            • dalai guevara

              Did I? Prove it.

              • the viceroy’s gin

                Of course you did. You’re a socialist nutter. There’s the proof.

                • dalai guevara

                  Am I? Prove it.

                • the viceroy’s gin

                  You are. You’re a socialist nutter. That’s the proof.

                • dalai guevara

                  Ah yes, I see perfectly clear. Now prove it.

                • the viceroy’s gin

                  Good, you’re making progress. You’re a socialist nutter. That’s proof.

        • Gareth

          Then who builds the roads these companies use to ship their goods?

      • HJ777

        Present your evidence that the increase in the debt was mainly due to nationalising banks.

        It was not.

        And the value of the GDP ‘growth’ in 2009/10 was less than the value of all the extra government borrowing and spending required to generate it. Do you think that rate of increase in spending and borrowing was sustainable?

        • dalai guevara

          Here it is
          Page 55 of 56, hidden away, PSF11B, line 2

          • HookesLaw

            The seem to figures show that the debt lss banking interventions is the same as show on the graph

            • dalai guevara

              the PS banking debt is a trillion quid.
              quod erat demonstrandum

              • Nicholas chuzzlewit

                Again, that is a ludicrous misunderstanding of the figures.

                • dalai guevara

                  Ah yes – they don’t exist, it’s not a ‘debt’, it’s ‘exposure’.

                  ONE TRILLION QUID of what? Marbles? Go kid Flowers, he won’t know either what you are on about.

                • HookesLaw

                  To put it simply – you are thick.
                  The like for like debt figures shown in the graph do not include banking bail outs.

                • dalai guevara

                  I know!

                • HookesLaw

                  You can read what ylou want. The graph above does not include bank bail outs.

                • dalai guevara

                  Let me guess.
                  YOU DON’T WANT TO KNOW?

                  You nearly wound me up there. I need a ‘harmonise’ tea now.
                  Well done, Hooky, I like you. Viceroy never gets me this excited…

                • HookesLaw

                  The issue is different to that which you suggest. As others are trying to tell you.

                  ‘The report tries to make an assessment of how much they still owe us now, after repayments, fees and interest. The headline figure is £456.33bn, down from £612.58bn in March 2010. The peak was a mighty £1.162 trillion.’

                  Do your figures show this decline?

                  ‘guaranteed liabilities in the wholly-owned banks have reduced by £9.10bn mainly due to maturing liabilities
                  • £2.46bn of loan repayments have been received from banks and the Financial Services Compensation Scheme’

                  ‘Actual money is the smallest part: £123.93bn’

                • dalai guevara

                  “Do your figures show this decline?” Yes, line 2 page 55 Goddammmmmit. And it’s not the sums you quote.

                  Tell me one thing: do you not have a pdf reader installed on your laptop? Can you not read the ONS data? I am really just curious…that’s all.

                  nb. why are you giving me Guardian stuff? Are they accountants now? This is hopelessly old data, from 2009? Mine is from yesterday!

                  I have linked to the ONS. Are they the devil? I am really just curious …that’s all.

          • HJ777

            Try again. That is not debt due to the banking bailout/nationisation and in any case it is a total figure and does not indicate a change in that figure, only a level.

            To demonstrate that that figure increased due to the banking bailout you would have to show how it changed at the time of the banking bailout.

            • HJ777

              If you read the monthly borrowing figures which show how the debt is increasing you will see that it explicitly states “excluding financial interventions”.

              • Joshua Calvert

                Excluding the money we gave them doesn’t exclude the other costs that came as a direct result of their failure such as the vast increase in benefits for unemployment and housing as a million people lost their jobs due to their companies not being able to get short term credit from the bank any more and going bust. The cost of the banking crisis isn’t limited to just the amount we had to spend on the banks to stop their collapse.

            • dalai guevara

              that precise line indicates “PSND’s part in public sector banking group debt”. That’s what we’re talking about. I do not care what that figure was in 2008. That figure is now 925bn, up from 917bn.

              It’s the “evidence that the increase in the debt was mainly due to nationalising banks” you asked for.

              • HJ777

                No it doesn’t.

                It clearly states: “Less public sector banking groups”.

                You forget that the government already owned the Bank of England, for example. You also conveniently forget that when banks were nationalised, their debt became public sector debt (but so did their assets) – it does not mean that we spent the amount of their debt bailing them out.

                You should care what it was in 2008 because we are discussing the INCREASE in debt and the reason for the increase.

                • dalai guevara

                  Oh look, you’re asking me to “produce evidence for an increase”, but will not allow me to add the figures that indicate the increase, as you want me to exclude all banking group liabilities that would indicate the increase in banking group liabilities.
                  That makes no sense whatsoever!

                  The liabilities for banking group debt have RISEN by £7.5bn from Q2 to Q3 2013 (=now). It is listed in line 2 of PSF11B. That is what we are talking about.

                • HJ777

                  If you want to produce evidence of an increase, you have to produce the ‘before’ and ‘after’ figures.

                  The claim is that the debt spiked due to the banking bailout, therefore you have to show what this figure was before the bailout.

                  In any case, as I have pointed out, the debt figures we are discussing – the ones that have increased rapidly – “exclude financial interventions” as is always clearly stated in government publications (such as this one).

                  It has long been clear that you are innumerate.

                • dalai guevara

                  The figures before the banking bailout were zilch, n’est-ce pas? The figures for the banking bailout in Q2/2012 were £917bn, non? The latest figures (Q3/2013) indicate they are now £925bn. That’s all the figures I have. That’s all the figures I need.

                  But of course we could spin this – we could say:

                  A year ago, our exposure to public sector banking group debt was £1,012bn, now it’s only £925bn.

                  We’ve just found £87bn we never had. Let’s spend it!

                • HJ777

                  Demonstrate that that figure was zero before the bailout.

                  Demonstrate that the published debt figures include the cost of bailouts rather than excluding them, as is clearly stated

                  In your case you will believe what you want to believe and the facts mean what you want them to mean.

                  You are financially innumerate.

                • dalai guevara

                  It is CLEARLY states that PSND including bank exposure is £2.1tn quid. Are you blind?

                • dalai guevara

                  Call the figures a lie. Go on, we know you want to.
                  That would be an entirely different matter.

                • Nicholas chuzzlewit

                  No he is right. You are wilfully misinterpreting this data. HJ777 has provided you with a well argued explanation which you seem incapable of understanding. Oh and the phrase is mark-to-market.

                • dalai guevara

                  Yes, and now ‘past tense’ it. Jeez Louise – another OAP thickoid.

                • jaydeepee

                  You’re wrong. Now shut up.

                • Nicholas chuzzlewit

                  Thank you for an excellent explanation and for saving me the trouble. From experience however, you would be better off trying to explain Pythagorus’s Theorem to a yoghurt.

                • HJ777

                  My eyesight is perfect.

                  The problem is that you are stupid.

                • dalai guevara

                  Now you are asking for a spanking, matey. I will administer that.
                  Manners, FAQwit. I can accommodate an argument from you, if you made one, but you are not. You are just waffling – show me your figures or STFU.

                • HJ777

                  My god, you’re stupid.

                  Nothing interests you if it contradicts your view by intruding with facts.

                • dalai guevara

                  What contradiction?
                  The ONS, oh who are they again? The Onaniste Society? The Organisation of National Sculduggery? No! They are the nation’s accountants.

                  They say that YOU, yes YOU, sport a
                  – PSNDex of 1.2tn and a
                  – PSND incl public banking groups of 2.183tn quid, up from 2.167tn.

                  There, right there. They have put it on paper, they did that for you.

                  Now YOU go and ‘demonstrate’ that they are lying.
                  Contradict that.

                • HJ777

                  You will never believe what you don’t want to believe however much it is pointed out to you, by people who understand what the data means, that you are clearly wrong.

                  You will never change so I don’t propose to try any more.

                  Believe what you like. Just don’t expect anyone to take you seriously.

                • dalai guevara

                  Oh, I am happy to change my mind in an instant. I will change my mind once you demonstrate that the ONS records are misleading.
                  How are they misleading? I have asked you that three times now. When will you respond to that?

                • HJ777

                  They’re not misleading.

                  You’re deliberately misinterpreting them, as has been pointed out by me and several others.

                  The issue is that for you to believe what you want to believe, you have to misinterpret them. And, as believing what you want to believe is clearly all-important to you, you will determinedly continue to misinterpret them regardless of what anyone says.

                • dalai guevara

                  I misrepresent?
                  The ONS lists PSND incl at £2.183tn.
                  They misrepresent?
                  Come on HJ777, go for it. Debunk it. Give it your best shot. I have all day.

                  nb. it’s far worse than what the ONS are reporting? No sh_t Sherlock.

                • LB

                  The Banking exposure has largely gone.

                  When they took the assets on as repo, (repurchase agreements), they took the assets in exchange for loans. There was a haircut. That means they took on more assets than the debts. In other words, for the banking bailout the assets of the state went up by more than the debts.

                  So as far as the bailout, it was net positive for the government’s accounts.

                  There is more evidence of this. Look at the profit booked on the loans. 35 bn. You would only generate a profit if there was a net asset increase.

                • dalai guevara

                  Excellent, now that is the kind of discussion I value.
                  A “net asset increase”, valued in which currency?
                  “Profits of 35bn” on the back of what? A 1,000bn exposure? It this really all good?
                  My gran (if she were still around) would say: boy, you’re mad.

                • LB

                  Look at the exposure. Exposure is a net measure. It’s the difference between assets and liabilities. So what was the exposure?

                  They lent 1 trillion, but they received 105% in assets back. The net exposure was positive.


                  Shows one part of the profit being booked.

                  What you need to consider is net liabilities. That’s the critical factor.

                  So the question is what are net liabilities? It’s the difference between assets and liabilites.

                  Borrowing is obvious as a liability. You’ve taken money up front and agree to pay later.

                  Pensions are liabilities. An example of taking money up front and agreeing to pay latter. In the case of civil servants, its the service up front for payment later.

                  Just like invoices yet to be paid.

                  Insurance also creates liabilities. This is like the banking example. Think about house insurance. If the insurance company insures 100,000 properties over the UK, are all of them going to burn down? Nope. Lets say there is a 1% chance of them burning down, it only needs to have money to pay out for 1,000 houses. [Simple – reality a bit more complex but not by much]

                  Same with the banks. The state is on the hook for the expected loses. That’s completely different from the total value insured. It’s got 105% of the assets, and its insured 100%. It won’t take any loses until more than 5% has been lost. However, looking at the pay down of the loans, you can see that its nowhere near 1 trillion.

                  So the banking bailout is largely an irrelevance. The big problem is pensions.

                  ONS put the debts at 5 trillion 3 years ago. That was rising at 734 bn a year. So we are now talking 7 trillion in pension debts at that rate of increase. Borrowing on top. What about assets? We know that with a high degree of accuracy. Actually with no uncertainty at all. Zero. They have no assets to back them up.

                  Net liabilities = liabilities. That’s the nightmare.

                  If you want another example, think about a mortgage. Liabilities = size of mortgage. Assets = value of the house. Net liabilities is the difference. Below zero and you are in negative equity and you have a problem. The size of the problem is the difference.

                  At the end of the day, its net assets and liabilities that is the key indicator.

                • dalai guevara

                  Thanks for that, appreciated.
                  Yes, I believe it’s not difficult to understand the term ‘asset backed’.
                  Yes, you bought a house or two for 200k each, and like magic, with no input of your own and a flick of a switch, they are now worth £1m each. Your entire life is magically ‘backed’, is it not – everything, food, education, holidays, pension, everything. Without doing anything! Pension crisis solved, (again).

                  So what are these ‘assets’ that back the liabilites?
                  The ONS reports a £925bn exposure to public sector banking group debt, ie. exposure to public sector banking group ‘net liability’.

                  That’s a trillion out of 2 trillion, liabilities that are not accredited to school teachers, bin collection, public sector service delivery, people who ‘work’ to deliver a service to you and me, that’s a trillion quid of ‘liabilities’ to someone who has, excuse my French, FAQall to do with anything around me.

                  They made that up, one trillion out of two trillion pounds of PSNDincl, not PSNDex – it not mine! Never mind the pensions.

                  Take it away. I don’t want it. Stick it where the sun don’t shine. What has this got to do with me?
                  What, you want a bonus? Now, you have got to be kidding me.

                  Do you see what my problem is? I don’t believe you that ‘your’ debt is not ‘my’ problem.
                  It quite clearly is.

                  (disclaimer: ‘You’ is not meant as ‘you personally’)

                • LB

                  Yes, you bought a house or two for 200k each, and like magic, with no input of your own and a flick of a switch, they are now worth £1m each. Your entire life is magically ‘backed’, is it not – everything, food, education, holidays, pension, everything. Without doing anything! Pension crisis solved, (again).


                  Really. So what you’re saying is the state is going to confiscate your property. Hmm, Whose going to buy it from the state?


                  So what are these ‘assets’ that back the liabilites?
                  The ONS reports a £925bn exposure to public sector banking group debt, ie. exposure to public sector banking group ‘net liability’.


                  Give us the reference to a recent statement. I presume you mean the asset purchase facility. Where’s the number for the assets bought at the same time? Ah yes, you can’t admit to that, because it shows net assets as positive for the banking bailout.


                  They made that up, one trillion out of two trillion pounds of PSNDincl, not PSNDex – it not mine! Never mind the pensions.


                  Correct. But for the banking bit, even at the height, there were real assets against the banking bit. REAL ASSETS. For the banking bit, they had assets > liabilities.

                  Fr the pensions, that is not the case. 7 trillion plus of liabilities, assets zero.

                  Do you see what my problem is? I don’t believe you that ‘your’ debt is not ‘my’ problem.
                  It quite clearly is.


                  I’m debt free, but then I’m sensible. So what’s the current set up for the Asset purchase scheme? If you think that all the liabilities aren’t backed with assets, then the liabilities will still be at a trillion. Oh dear, they aren’t, you’re wrong.

                  Now, where I do agree. The state’s debt is my problem. It’s your problem too. You and I are one of the creditors. They are going to default. Then on top, to pay off some of their creditors, they are making you liable for even more.

                  See, large debts, no assets, and they are going to come after you.

                  It’s all down to pensions, not to the banks. It’s all the state, not the banks.

                • dalai guevara

                  For clarity, again:
                  When I say ‘my’, I am talking about the taxpayer.
                  When I say ‘you’, I do not mean you personally.

                  The pension problem is solved, the assets have just gone up in value, to pay for everything. ‘My’ two houses pay for ‘my’ retirement (and life in fact), ‘yours’ pay for ‘yours’. Have I been clear? The pension problem is resolved!
                  The pension problem would NOT be resolved if asset prices collapsed, they have NOT collapesd, the pension crisis is r e s o l v e d.

                  “Give us the reference to a recent statement.”
                  How often do I need to link to the ONS October statement? I have referred to it in every post.
                  PSF11B page 55 of 56, line 2.
                  This is getting very tiresome indeed.

                • LB

                  The state has no assets to back up its 7,000 bn pension liabilities.

                  Do you not understand what unfunded means? It means no assets.

                  ie. The state pension debt has no assets. What happens to assets has no effect on the liabilities. What happens to assets has no effect on the state’s pension assets because its zero.

                • dalai guevara

                  You have outlined your view on pensions many times, I am aware of that.
                  Pensions, like teachers salaries are paid for, by FUTURE budgets.

                  The pensions conundrum is resolved as other UK assets have.not.collapsed. Next up – land values – let’s just add a nought. That should pay for a generation of two.

                  Now, when will ANYONE LOOK AT THE ONS FIGURES?
                  I AM SO BORED!!!!!!!!

                • LB

                  It doesn’t work.

                  Pensions are inflation linked debt. So you add a nought to the currency, and wooops you’ve added a nought to the debts.

                  So back to the assets and liabilities. When it comes with the banks and the asset purchase facility, why have you ignored the assets purchased with the debts?

                • dalai guevara

                  That pot is about to get smaller and smaller, as the pension entitlements you refer to are getting smaller and smaller. Who still has these entitlements? A smaller and smaller number of people.

                • LB

                  There is no pot. The state pension and civil service pension is unfunded. The pot is empty. The pot was always empty.

                  It can’t get any smaller.

                  That’s the asset side.

                  The pension entitlements are the liability side. They are getting bigger and bigger.

                  1. Inflation

                  2. Longevity increases

                  3. More people have them.

                  Those increases are bigger than the decreases which is the rate that people are dropping dead.

                  Now for the evidence for the above. Just one short paper from the ONS will be enough.


                  The increase in debts is rising at 734 bn a year. The relevant bits are

                  Levy (2012) explains that the last official figure for the state pension schemes’ obligations was


                  produced by the Government Actuary’s Department (GAD), as at 31 March 2005, at £1.347 trillion, for Great Britain, based on the legislation in force at that date.


                  In summary, the estimates in the new supplementary table indicate a total Government pension

                  obligation, at the end of December 2010, of £5.01 trillion, or 342 per cent of GDP, of which around £4.7 trillion relates to unfunded obligations.


                  A previous, unaudited, summary had been published in July 2011. The WGA include a range of figures relating to Government pensions liabilities but these do not include an estimate of any obligations arising from the state pension schemes

                  [Off the books contrary to GAAP and FRS17 and FRS19]


                  Unfunded state pension obligations and other such comments litter the document.

                  Unfunded means no pot.

                • LB

                  PS. I have looked at them. I’m asking you whether you’ve looked at the assets that the money was used to buy with the bank bailout cash?

                • dalai guevara

                  Can I touch those assets?
                  I get all touchy-feely when someone tells me they have got ‘asset backing’.

                • LB



                  Start at the above for your research.

                • dalai guevara

                  Can I touch those assets?
                  I get all touchy-feely when someone tells me they have got ‘asset backing’.

                • HJ777

                  I’d be bored too if I spent all day spouting the nonsense you spout.

                • LB


                  Shows they booked a profit on the Asset purchase scheme.

                  So you need to explain how a liability makes income?

                  I can give you a hint. It’s because they bought assets against the liability, and the assets are bigger than the liabilities. Hence the profit.

                  I’m not disputing the ONS figure, I’m pointing out that you cannot consider the liabilities arrising from the asset purchase scheme without also including the assets.

                  You want to exclude the bought assets to make a point, but that points invalid. You must include both assets and liabilities.

                  e.g The housing analogy. You buy a house with debt, you have both an asset and a debt. You’re in a mess if assets are worth less than the debt, and if its the other way round, you are probably safe [Ignoring cash flow issues]

            • LB

              So come on, what about the 734 bn a year that Brown was putting on the debts? Namely pensions

            • Daniel Maris

              So the government never spent any money on bailing out failing banks? You could have fooled me…

              Is that your claim.

              If not, how much do you think it cost us? £3.57 taken from the tea kitty?

              • HookesLaw

                This graph,
                the same as Mr Nelsons points out that the bebt figures do not include the temporary bail outs.
                So the point is the upward tick in 2008 doeas not include the bail outs.

                As for the bailouts here are some facts

                • dalai guevara

                  are you thick? the ONS figures do.

                  PSF11B, page 55 of 56 hidden away, line 2

                • Daniel Maris

                  “Temporary”? We are still owed £400 plus billion. That’s about

                  £16000 for every household.

                  How has the figure been wrestled down to £400 billion from over a trillion? By us having to pay exorbitant interest rates on loans and credit cards – that’s how.

                  In relative terms, it’s been a debt laid on our shoulders – unless you are one of those average Rolex-wearing Speccie readers with enough personal wealth not to be troubled by such matters.

              • HJ777

                No that’s not my claim.

                Clear enough for you?

                What I say (and it’s a fact, not a claim) is that the huge increase in public debt is not due to the bank bailouts.

                • Daniel Maris

                  I think I understand your point now but as I explain above in reply to HookesLaw, effectively it is a debt that has been placed on us – the average Joes and Janes who have loans, mortgages and credit card bills. We are the ones helping the banks buy themselves out of government control

                • peterb

                  you mean the mortgage borrowers who have had exceptional low rates?

                  Or the PPI scam that has stolen £20bn from banks to repay stupid people who took out loans without understanding the insurance implications?

                  Labour nearly destroyed this country, they will pay forever hopefully personally in great pain.

                • Tim Chiswell

                  You repeatedly used the term ‘nationalisation’. It’s deeply misleading, I suspect intentionally so.
                  None of the UK banks were ‘nationalised’ in 2008, or at any time afterwards. None are currently in public ownership. Arguably they should have been, but that was not the course the government chose.
                  Do you really not understand the difference between bail out and buy out, or are you using the term ‘nationalisation’ out of context to obfuscate the facts of that matter?

        • Tim Chiswell

          That’s not what Mervyn King says on the subject – he’s quite unequivocal on the fact that government debt increased as a result of the banking crisis, and that he did not regard it as Labour’s fault, but rather “a shared intellectual responsibility across the political parties and financial institutions” (Today programme, dec 2014).
          Or do you feel yourself to be a greater authority on the events of 2008 than the then Governor of the Bank of England?

          • HJ777

            You are confused.

            I did not say that debt didn’t increase as a result of the banking crisis. Clearly it did.

            What I said was that most of the debt increase was not due to the cost of nationalising the banks (or taking large stakes in them or guaranteeing their liabilities).

            So you are misrepresenting Mervyn King.

      • HookesLaw

        I don’t think the banks count in the debt figures, they are usually given withiout the bank bail outs.
        Thats the point – if we had had only a spike of bebt because of the bail outs then the following years would not have been so bad.
        And of course with over 7% of the economy’s capacity wiped out its not easy to restore those revenues and at the same time cut out the bloated spending.

        Mr Nelson is shameless in his hypocricy. To say his articles on this subject are a load of self serving bigoted slanted rubbish would be an understatement.

        The government have back loaded the austerity measures. they teod a fine line between controlling expenditure raising rvenues where thy cu=olud and not soing so much as to ruin the economy. broadlt they have been supporeted by the IMF.
        Again against this background Mr Nelsons comments are those of an editor who deserves the sack.

      • Shinsei1967

        The bank bailouts aren’t included in these figures. They are net of bank interventions.

        Of course, the debt started rising sharply with the financial crisis because the economy collapsed and with it tax revenues. However government spending continued (no cuts) and actually increased (higher unemployment benefits).

        The argument (as always) against Brown’s economics is that the UK was particularly susceptible to a massive increase in the deficit as our tax revenues were so geared to housing and financial services (which were hit hardest in banking crash).

        Your point about growth in 2010 is just silly. The monetary & fiscal boost post the crash was always going to have to be unwound as running anything close to a 12% deficit wasn’t sustainable for more than a year or so. Darling would have imposed “austerity” in much the same way as Osborne did had Labour won the 2010 election.

        • LB

          Bank bailouts are irrelevant. In most cases it was loans. It increased the liabilities, but there were matching assets. Since most of the loans have been repaid, the assets have dropped

          If you look at the bailout scheme, it was done for a profit – 35 billion, and it was collateralised with a haircut. They received in collateral more money than they loaned out. It made the net debt smaller.

          What’s missing is the pensions. All off the books, and that’s a debt.

      • HJ777

        By far the biggest reason why the deficit (and hence debt) spiked is because public sector spending rose and tax receipts fell dramatically – nothing to do with bailing out banks (which was largely a one-off anyway, whilst the deficit is annual).

        If it had been because of the bailout, the deficit (rate of debt increase) would have fallen rapidly afterwards – it didn’t.

        • LB

          Borrowing rose.

          Debt is not borrowing .There are more debts than the borrowing.

          Another 6.8 trillion – at least.

      • Andy

        Twaddle. Look at the NAO website.
        Total support at its peak to Banks was £1,162 billion.
        Of this as of 1st April of this year £141 billion is outstanding -:
        RBS shares £46
        Contingent Capital, £8
        Lloyds shares £21
        Northern Rock £29
        Bradford and Bingley £16
        Insolvent Firms £21.
        Of the above £141 billion £105 is cash outlay.

        • Daniel Maris

          £1,162 billion = something like £20,000 for every one of us?

          • Andy

            Try reading: the total amount outstanding now is £141 billion of which £105 is actual cash. You will note that the purchase of RBS shares cost £46 billion and Lloyds £21 billion. It is possible that the taxpayer will end up not with a bill for £105 billion, but a profit.

            • Makroon

              If people would just ignore Nelson’s witterings (designed to increase the post count), and just look at the ONS press release – which is admirably clear and easy to understand, they would be better informed, and encouraged (since control of the deficit and net borrowing are making decent progress).
              Of course, the post count would suffer.

      • LB

        So how much tax has the banking sector contributed since the crash?

        How much interest has the government booked as a profit?

        Why hasn’t Gordon Brown been charged with incompetent share trading?

      • Chris Morriss

        If they had let Northern Rock collapse, it would have given a salutary warning to the rest of the banks. Perhaps they would have tidied up their acts and the disaster of the last 5 years might have been averted.
        All ‘might have been’ of course…

      • LB

        Where have you included the pensions debt? 734 bn a year increase under Labour.

    • Holly

      ‘I expect better from you Mr Nelson’…
      And you were doing well up to that.
      This is about Mr Nelson’s limit.

    • DavidL

      Agree totally with what you say, Neotel. It’s perhaps worth adding that had Mr Osborne gone all out to eliminate the deficit in five years, despite the impact of the Eurozone crisis, he would have had to impose his own brand of Merkonomics on our public sector. This would have been both economic and electoral suicide; check out Spain, Italy, Portugal, Greece for corroboration. He set out in 2010 to remove the deficit in five years. The Eurozone crisis put the kibosh on that aim. Events, dear boy…….

      • HookesLaw

        You make a good point. One that ought not to be beyind the wit and wisdome of a balanced writer to put in his article. As it is we have Mr Nelson.
        The other point is the aim was to eliminate the structural deficit.

      • Daniel Maris

        Get over it – remember how you were all predicting EZ meltdown.It never happened. Merkel knew better than you lot.

        • dalai guevara

          Oh no, don’t blame yourself, blame others. It feels so


        • Span Ows

          wrong: the prediction of EU meltdown was very real and Merkel knew she had to act. Germany fund the EU, they are keeping it afloat, those that predicted thought that the Germany people and Merkel wouldn’t take any more. The former can’t the latter did and does.

      • Daniel Maris

        Get over it – remember how you were all predicting EZ meltdown.It never happened. Merkel knew better than you lot.

      • Tim Chiswell

        So Osborne’s economic failure is entirely due to ‘events’ in the eurozone, while Labour’s performance was utterly unaffected by the 2008 global crisis then? (despite what the former Governor of the BoE says).
        Even a cursory look at the first chart shows the lasr government holding the public debt more or less stable until it starts upwards in 2008 – a trajectory that Osborne has done nothing to slow, let alone reverse.

    • Count Dooku

      Fraser has been peddling this tosh for a few years now. What did he expect Osborne to do with a 160 BILLION deficit? 11% of GDP!
      Regulars on here know I’m a deficit hawk and I’ll conceed Osborne isn’t being brave enough on the deficit but you have to be realistic. He’s in a coalition with Left Whingers who have blocked many serious Tory cut proposals and he is hamstrung by the foolish Cameron promise to “protect” the NHS.
      I would like to know Mr Nelson’s proposals on how to cut £160 BILLION in 3 years TYVM.

      • Joshua Calvert

        Well according to Osborne himself the deficit should have been reduced to £60billion by now so the fact that he has failed to do so suggests a sizeable chunk of the debt is down to his failed policies not Labour…

        • HJ777

          No. That was his target.

          Just because he has not met his target is not evidence that any other set of policies could or could would have been more successful in doing so.

          It is simply disingenuous to argue that the only plan that has actually been tested is evaluated purely on actual results, whereas all the others should be evaluated purely by the results predicted by those who advocate them.

          And I am a critic of Osborne.

          • Tim Chiswell

            You dont sound like a critic.
            A man who sets a target and then fails to meet it is a man who has failed.
            Now we can thrash through reasons or excuses for that failure, but let’s stop beating around the bush and call a spade a spade here. His plan failed. By £250billion. That’s not even remotely a ‘near miss’, that’s an extra £5,000 added to the national debt for every man, woman and child in the country in ADDITION to his original predictions.
            That anyone can paint that as anything other than utter failure shows either a level of dishonest bordering on the sociopathic, or else an astonishing degree of economic and political illiteracy.

    • Mynydd

      The ONS figures show, “debt increase under Labour: £407bn” and “debt increase under Osborne: £417bn” With 417 being a bigger number than 407 means Mr Cameron/Osborne as borrowed more in their short time in office than Mr Blair/Brown/Darling borrowed in 13 years that they were in office. The deficit is the difference between the government income and expenditure and is added to the National Debt once and therefore cannot be recurring.

      • Neotelemachus

        Well Idiot #4, you are doing a good job of getting a promotion to the number 3 or even number 2 slot. Just iso you understand how these things are calculated, the deficit, and most specifically a structural deficit, increases the debt on a continuous basis. It doesn’t stop after the first year, anymore than it stops after the first month, or until the deficit is reduced to zero. You really shouldn’t post a comment that makes you look like the most stupid person here – I suggest you leave that to the other Idiots, telemachus, Lindsay and guevara. Idiot.

        • Mynydd

          As I have said, the deficit is the difference between the government’s income and expenditure. Note the word “government” not the opposition, or the City of London, or anyone else for that matter, the deficit is solely down to the government of the day, and how they balance the books, or not, as the case may be. The latest figures show Mr Cameron/Osborne borrowing £8.1bn in just one month. Once this as been added to the National Debt it plays no further part in subsequent deficits. Now if you add up all these monthly deficits you come to a total of £417bn being added to the National Debt during the time they have been in office, which is more than the £407bn borrowed by the Labour government during their time in office. No matter how you twist and turn, and call people childish names, you cannot get over the fact that Mr Cameron/Osborne have borrowed more than Mr Blair/Brown/Darling.
          A further couple of points, Mr Cameron said during a Party Political Broadcast on behalf of the Conservative Party that his government had reduced the debt. The graph published by the ONS above, clearly show that for each month Mr Cameron has been Prime Minister the National Debt has risen not fallen. At the 2010 general election Mr Osborne set out a plan to reduce the deficit to zero by 2015, he as had to admit he will failed to achieve this, but thinks, figures crossed, he can do it by 2018/2019.

          • Neotelemachus

            Too thick too bother with anymore. If you you don’t understand basic finance why comment Idiot #4.

          • Makroon

            When Labour left office, the deficit was 11% of GDP.
            According to the IMF (which is probably conservative), in 2013 the deficit will be 6.1% of GDP.

            • LB

              Only if you ignore all those debts off the books, such as pensions.

      • LB

        the state pension schemes’ obligations was produced by the Government Actuary’s Department (GAD), as at 31 March 2005, at £1.347 trillion

        the estimates in the new supplementary table indicate a total Government pension obligation, at the end of December 2010, of £5.01 trillion

        Just over 5 years increase, all under Labour.

        Then there is the borrowing on top;

    • sarah_13

      Unfortunately when any Labour Party leaves the mess is so huge that it simply could not be cleared up in a couple of years. I do think George, because of the lib dems, has never been able to insititue the policies he would have liked which would have been hugely unpopular initially but would be reaping benefits today. He is unfortunately will always suffer for the compromise with the lib dems, he should have been even more unpopular over the first three years so that he could be now reaping the rewards. He has the lib dems to thank for the luke warm position the Tories find themselves in today and probably will still be in at the time of the election.

    • Makroon

      Don’t be silly Fraser, of course you like saying it. That’s why you’ve been repeating it on a monthly basis, come rain or shine for a few years now.
      Still, it’s a regular reminder that you haven’t a clue and probably don’t even understand what your researchers are telling you.

    • Ray Hepburn

      Don’t you mean the banks?

      • Neotelemachus

        No. Idiot.

        • Ray Hepburn

          Ah, we seem to have reached the limit of your vocabulary

          • Neotelemachus

            Possibly, but certainly the limit to your intelligence. Idiot.

            • Ray Hepburn

              Time you were tucked up, sorry about the spelling

              • Neotelemachus

                I think you will find I am ticked up quite a lot you little sucker.

    • Socialismo

      If that deficit were frivolous, stupid or pointless, why wasn’t it just cleared?

  • dalai guevara

    Oh yes we do know. For the Ponzi scheme not to collapse we need to raise the value of all hard assets. We need to find the next generation of mugs willing to buy into that. And I think it’s safe to say that we have. So all is good.

    • the viceroy’s gin

      Well, congratulations on that, then. You socialist nutters do like you some mugs.

      • dalai guevara

        Ah, so you agree with me, but you’re still voting it down.
        That makes you a senile moaning idiot, tovarishch.

        • the viceroy’s gin

          Is that what the voices are telling you, lad?

          Do they speak the same gibberish you do?

          • Nicholas chuzzlewit

            Nobody speaks indecipherable gibberish like him voices or no voices.

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