The government today published an unaudited summary of the Whole of Government Accounts for 2010-11. The accounts are a comprehensive record of government tax and spend in that year and are part of a wider drive towards greater transparency in the public finances.
The government also published its response to the Office of Budget Responsibility’s (OBR) Fiscal Sustainability Report 2012. The Whole of Government Accounts is a snapshot of assets and liabilities at 31 March 2011, whereas the OBR’s report shows how it believes the public finances will change over the next 50 years.
The Fiscal Sustainability Report looks at public finances over a fifty year period, analysing the impact of demographic trends, such as longevity. The Report includes the first official forecasts of the savings delivered by public service pensions reforms. The OBR estimates that the Government’s reforms will cut the costs of public service pensions by 40 per cent over the next 50 years, with net costs falling from 1.5 per cent of GDP without reform to 0.9 per cent with reform in 2061-62.
Chief Secretary to the Treasury, Danny Alexander, said:
The government is committed both to shoring up our fiscal position now and making it sustainable for the long term. The OBR analysis makes it clear that our medium-term consolidation plan is essential to restoring long-term sustainability in the public finances.
The government’s reforms will bring total spending on public service pensions in line with the long run average over the last 40 years. This will save 40 per cent of net expenditure by 2061/62, so freeing up funding for other services. The Treasury estimates that this represents around £430 billion of savings in current GDP terms over the next 50 years.
This shows that the deals confirmed last week are good for taxpayers, as well as public sector workers, who will continue to receive pensions that are among the very best available, providing a guaranteed pension level for all members.
Notes for Editors
The OBR’s Fiscal Sustainability Report 2012 can be found on the OBR website: http://budgetresponsibility.independent.gov.uk. It provides a 50 year projection of the public finances, based on historic and anticipated assets and liabilities, taking into account policy changes up to Budget 2012.
Written Ministerial Statement by the Chief Secretary to the Treasury responding to the Fiscal Sustainability Report
The unaudited summary of the Whole of Government Accounts 2010-11 is now available. The Accounts are for the 2010-11 financial year and only show assets and liabilities at 31 March 2011. Therefore, the Whole of Government Accounts disclose the impact of the government’s decision to change from RPI to CPI for the indexation of public service pensions, but exclude more recent government reforms.