Britain's official public sector debt has surpassed £3 trillion for the first time. However,the Taxpayers' Alliance (TPA) argues that unfunded obligations could drive that figure up to £11.7 trillion.

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The £8.6 trillion gap in hidden liabilities

While official government figures place public sector debt at just over £3 trillion, a new analysis by the Taxpayers' Alliance (TPA) suggests the true figure is much higher. The campaign group claims that when unfunded state pensions, PFI contracts,and nuclear clean-up costs are included, the national debt reaches a staggering £11.7 trillion.

This discrepancy represents an additional £8.6 trillion in liabilities that are not reflected in the primary debt tally. According to the TPA,this massive sum translates to a burden of £168,184 for every single person living in the UK. The scale of this obligation is so vast that the TPA calculates it would take 1,334 years to clear the balance, even if the nation paid off £1 million every single hour.

Andy Burnham’s spending vs. the £130 billion interest bill

Prime Minister Andy Burnham has attempted to drive political momentum through a series of new spending initiatives, such as scrapping VAT on energy bills, cutting business rates for pubs, and introducing a £2 cap on bus fares. However, these ambitions face a significant mathematical hurdle. The Office for Budget Responsibility (OBR) has warned that the state's interest payments on existing debt are expected to exceed £130 billion this year alone.

The report says that the Burnham administration may seek to use "flexibility" to fund these goals, potentially allowing for an extra £9 billion in annual borrowing while technically remaining within fiscal rules.. This approach, which involves offsetting borrowing against investments, has raised concerns that the total debt pile will continue to swell despite the government's stated commitment to fiscal discipline.

Rathbones and the fear of a "Truss" moment

Financial markets are expressing growing unease regarding the UK's fiscal trajectory. The investment firm Rathbones recently reported selling off some of its holdings in UK government debt, signaling a lack of confidence in the current direction. David Coombs, the boss at Rathbones, noted that there are palpable fears that Prime Minister Burnham could "do a Truss."

This reference points to the 2022 mini-Budget of former Prime Minister Liz Truss, which caused a massive spike in UK borrowing costs after uncosted tax cuts were announced.. Investors are wary that a similar lack of fiscal rigor could trigger another period of extreme market volatility and soaring interest rates.

Will John Healey’s October 28 Budget satisfy the markets?

As Chancellor John Healey prepares for his first Budget on October 28, several critical questions remain.. It is unclear whether Healey will have the political capital to curb the unfunded commitments highlighted by the TPA, or if he will succumb to the pressure of funding Burnham's policy goals. Furthermore, the markets are waiting to see if the proposed £9 billion in "flexible" borrowing will be viewed as a calculated investment or a dangerous slide toward unchecked deficit spending.