The Office for National Statistics has said it is overhauling its assessments of public sector finances to provide a more accurate picture of the sector’s assets and liabilities.
The agency’s latest survey put the public sector’s net worth at £317bn, down £97bn since 2007.
However, it conceded the figures did not take into account off-balance sheet items such as pay-as-you-go pensions, state pensions, Private Finance Initiative schemes, contingencies, provisions and guarantees, and the impact of government intervention in the banking crisis.
The ONS said that while estimates of the scale of the liabilities are disputed, they plausibly run into trillions of pounds, adding it would work with the Office for Budget Responsibility and the National Institute for Economic and Social Research to produce ‘generational accounts’ analyses.
These are intended to show the potential future tax rates which will be needed to balance estimated future spending commitments, including pensions and health care costs, set against assumed economic growth.
ONS Chief Economist, Joe Grice, said “Today has seen two important steps to help assessment of the public finances and their sustainability. More comprehensive information about the public sector balance sheet and the ability to produce regular generational accounts both help reliable analysis of the potential future tax burden.
“We look forward to supporting the Office for Budget Responsibility in the future work in this area, and helping inform public understanding and decision making.”