Senior Tories warn Hammond public spending figures 'hiding economic reality'

Posted On: 
18th March 2018

Voters face further deep spending cuts or "substantial" tax rises to shore up the public finances, two senior Tories have warned Philip Hammond. 

Philip Hammond delivering his Spring Statement on Wednesday

Former chancellor Ken Clarke and ex-minister John Penrose said the Government were "kidding ourselves" about "scale and depth" of the problem.

The pair wrote to the Chancellor last week setting out their concerns about the way public debt is calculated, the Sunday Telegraph reports.

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They express concern that the Government's future liabilities, such as paying out public sector pensions, are not included in the figures published by the Treasury. 

“We are concerned that the Treasury’s traditional focus on gilts as the principle measure of Government debts gives an over-optimistic picture of the true scale of long-term IOUs which taxpayers are committed to paying," they wrote.

“No company CFO [chief financial officer] would last long if they only bothered with their firm’s bonds and ignored all their other liabilities completely.”

They add: “Under-reporting or ignoring the problem just means we are kidding ourselves about the scale and depth of the problem which we are bequeathing to future generations of taxpayers. It is neither honest nor fair to let accountancy hide economic reality.

“You or your successors will either have to raise taxes substantially, or cut important public services deeply and none of us, as Conservatives, want to leave such a cold, mean future to our children and grandchildren.”

A Treasury spokesman said: “The Chancellor set out the economic and fiscal position in the Spring Statement. The Government takes a balanced approach to repairing the public finances, reducing debt and investing in our vital public services.”