Why the national debt is about to increase by £30bn

The ONS's decision to reclassify Network Rail as a public sector body is a headache for Osborne.

George Osborne was finally able to boast of improved borrowing forecasts in the Autumn Statement (even if this year's deficit, at £111bn, is still £51bn higher than expected in 2010) but the national debt will soon be £30bn larger. Painfully for the Tories, the increase is due to new EU accounting rules, which have forced the ONS to reclassify the state-owned Network Rail as a public sector body. Oddly, it had previously been classified as a private body despite having no shareholders. 

As a result of the change, Network Rail's current liabilities of £30bn (2% of GDP) will appear on the national accounts for the first time from 1 September 2014. That will make it even harder for Osborne to meet his target of reducing debt as a share of GDP by 2015-16 (already pushed back to 2016-17), with the level now forecast to peak at 82%. The change is also expected to increase annual borrowing by an average of 0.2% from now on. 

Another consequence is that ministers are now responsible for approving bonus payments to the body's executives and for other financial decisions. With five bosses set to receive £2m if performance targets are met, this is likely to become a matter of political controversy in the future. Labour MP Tom Harris tweeted earlier: "Now that Network Rail debt is officially govt debt, no excuse for ministerial "hands off" approach. 1st casualty should be directors bonuses". 

George Osborne during a visit to AW Hainsworth and Sons in Leeds. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

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Commons Confidential: Fearing the Wigan warrior

An electoral clash, select committee elections as speed dating, and Ed Miliband’s political convalescence.

Members of Labour’s disconsolate majority, sitting in tight knots in the tearoom as the MP with the best maths skills calculates who will survive and who will die, based on the latest bad poll, observe that Jeremy Corbyn has never been so loyal to the party leadership. The past 13 months, one told me, have been the Islington rebel’s longest spell without voting against Labour. The MP was contradicted by a colleague who argued that, in voting against Trident renewal, Corbyn had defied party policy. There is Labour chatter that an early general election would be a mercy killing if it put the party out of its misery and removed Corbyn next year. In 2020, it is judged, defeat will be inevitable.

The next London mayoral contest is scheduled for the same date as a 2020 election: 7 May. Sadiq Khan’s people whisper that when they mentioned the clash to ministers, they were assured it won’t happen. They are uncertain whether this indicates that the mayoral contest will be moved, or that there will be an early general election. Intriguing.

An unguarded retort from the peer Jim O’Neill seems to confirm that a dispute over the so-called Northern Powerhouse triggered his walkout from the Treasury last month. O’Neill, a fanboy of George Osborne and a former Goldman Sachs chief economist, gave no reason when he quit Theresa May’s government and resigned the Tory whip in the Lords. He joined the dots publicly when the Resolution Foundation’s director, Torsten Bell, queried the northern project. “Are you related to the PM?” shot back the Mancunian O’Neill. It’s the way he tells ’em.

Talk has quietened in Westminster Labour ranks of a formal challenge to Corbyn since this year’s attempt backfired, but the Tories fear Lisa Nandy, should the leader fall under a solar-powered ecotruck selling recycled organic knitwear.

The Wigan warrior is enjoying favourable reviews for her forensic examination of the troubled inquiry into historic child sex abuse. After Nandy put May on the spot, the Tory three-piece suit Alec Shelbrooke was overheard muttering: “I hope she never runs for leader.” Anna Soubry and Nicky Morgan, the Thelma and Louise of Tory opposition to Mayhem, were observed nodding in agreement.

Select committee elections are like speed dating. “Who are you?” inquired Labour’s Kevan Jones (Granite Central)of a stranger seeking his vote. She explained that she was Victoria Borwick, the Tory MP for Kensington, but that didn’t help. “This is the first time you’ve spoken to me,” Jones continued, “so the answer’s no.” The aloof Borwick lost, by the way.

Ed Miliband is joining Labour’s relaunched Tribune Group of MPs to continue his political convalescence. Next stop: the shadow cabinet?

Kevin Maguire is Associate Editor (Politics) on the Daily Mirror and author of our Commons Confidential column on the high politics and low life in Westminster. An award-winning journalist, he is in frequent demand on television and radio and co-authored a book on great parliamentary scandals. He was formerly Chief Reporter on the Guardian and Labour Correspondent on the Daily Telegraph.

This article first appeared in the 27 October 2016 issue of the New Statesman, American Rage