PoliticsHome | Only the latest five entries on the PhiWire are visible to non-subscribers
- Sign up to see last 24 hours
Dont have an account?Sign up here
Monday 19th March 2012 | 09:53
Institute of Economic Affairs press release
Commenting on the idea of nationalising the assets of the Royal Mail pension fund, Prof Philip Booth, Editorial Director at the Institute of Economic Affairs, said:
"The government's decision to nationalise the assets of the Royal Mail pension fund whilst taking on all future liabilities is short-sighted and dangerous. The assets will be used immediately to reduce the government's debt whilst the liabilities - made up of future pensions to workers - will no longer be funded and will have to be met by future generations of taxpayers. The liabilities will be hidden from the government's accounts.
"According to the government's own figures, the liabilites are £10bn greater than the assets which stand at £28bn. However, if valued properly, the liabilities would probably be well over £20bn more than the assets. Government accounts will show a reduction in the government's national debt of £28bn whereas, in reality, the national debt will be increasing by over £20bn.
"Although the government claims that it will not be spending the £28bn raised from taking over the assets because it will be used to reduce its borrowing, future governments are less likely to feel so constrained. The government would not allow a private sector company to get away with such shoddy - indeed, underhand - accounting practices."