Deficit reduction has ‘stalled’ and treasury distorting figures with ‘gimmicks’, say NIESR

Deficit reduction has 'stalled' and treasury sistorting figures with 'gimmicks', say NIESR

The public finance numbers have been severely distorted by a number of what are essentially accounting gimmicks and deficit reduction has stalled, the National Institute of Economic and Social Research (NIESR) has said in its response to the 2013 Budget.

NIESR’s also said that the government’s ‘Help to Buy’ scheme “largely represents a subsidy to an unreformed banking sector”.

“The public finances have been distorted by a flurry of transfers and adjustments. Looking through these, deficit reduction has stalled, as receipts fall as a consequence of the weak economy,” NIESR said in its response to Wednesday’s budget.

The slight fall in borrowing in 2012/13 is entirely due to the government’s decision to delay certain payments, including to international institutions, the report says, adding that this is “unlikely to enhance the UK’s reputation for sound and transparent management of the public finances”.

Of the chancellor’s coveted ‘Help to Buy’ scheme, NIESR calls it “a not-so-hidden subsidy from taxpayers at large to the banking sector“.

“It may push up house prices in London and the South-East, but it will do nothing to address the fundamental problems in our housing finance system”.

The report continues:

“But the real news is the £12 billion contingent liability created for a mortgage guarantee on the riskiest slice of riskier mortgages is an entirely new proposal. The economic rationale for designing a mortgage market intervention in this way is almost impossible to understand.”

It adds that the scheme will push up prices and ultimately result in a “further re-distribution of wealth from non-house owners to house owners”.

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4 Responses to “Deficit reduction has ‘stalled’ and treasury distorting figures with ‘gimmicks’, say NIESR”

  1. LB

    Of course its been fiddled.

    Just as Labour fiddled the debt figures too.

    e.g 736 bn a year increases in pensions debt hidden off the books – ONS figures.

    They are a contigent liability.

    Now what does the government mean by contingent?

    Less than 50% chance it will be paid.

    Why would that be the case with the state pension?

  2. P.J.S.

    It is called cooking the books.

  3. Mason Dixon Autistic

    ONS figures…but they’re ‘off the books’? You’re not getting any closer to convincing anyone you know what you are talking about.

  4. LB

    It’s very simple.

    First ask yourself a question.

    Does the government owe people a pension for all those contributions? State pension, state second pension and civil service pensions.

    The answer is yes.

    Next question.

    The reported debt figure. What’s included? Answer, its just borrowing, and just the gilts part.

    So how much is owed for the pensions? 2 years ago, it was estimated at 5,010 bn. That’s reason by over 2.5% a year, so its now 5,300.

    An ONS paper on it. Quite short.

    All the answers in there. Eg. Off the books, and the numbers.

    So let me ask the answer to you.

    Convince me that the state pension is included in the debt figures.

    You’ve not put any evidence on the table

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