In the twenty-second IEA Discussion Paper, respected actuary Nick Silver uses standard accounting practice to calculate the level of UK government debt.
He estimates the true level of public debt at £4,097 billion - £70,000 per person.
This means national debt is actually 276% of GDP, compared with the official figure of 43% of GDP.
Silver argues that government debt should include pension liabilities to public sector workers as well as state pension liabilities. These are excluded from official figures.
In the absence of radical pensions reform, the debt situation is likely to deteriorate further as the population ages. By 2050, half the population will be aged 55 or over.
The study casts severe doubt on the government’s long-term ability to fund tax cuts. In fact, to avoid bankruptcy future governments will have to raise taxes, cut public spending and probably break their pension promises.
2008, Discussion Paper 22
A Bankruptcy Foretold 2010: Post-Financial-Crisis Update by Nick Silver.