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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Jeremy Corbyn challenged by Labour MPs to sack Ken Livingstone from defence review

Former mayor of London criticised at PLP meeting over comments on 7 July bombings. 

After Jeremy Corbyn's decision to give Labour MPs a free vote over air strikes in Syria, tonight's Parliamentary Labour Party (PLP) meeting was less fractious than it could have been. But one grandee was still moved to declare that the "ferocity" of the attacks on the leader made it the most "uplifting" he had attended.

Margaret Beckett, the former foreign secretary, told the meeting: "We cannot unite the party if the leader's office is determined to divide us." Several MPs said afterwards that many of those who shared Corbyn's opposition to air strikes believed he had mishandled the process by appealing to MPs over the heads of the shadow cabinet and then to members. David Winnick declared that those who favoured military action faced a "shakedown" and deselection by Momentum activists. "It is completely unacceptable. They are a party within a party," he said of the Corbyn-aligned group. The "huge applause" for Hilary Benn, who favours intervention, far outweighed that for the leader, I'm told. 

There was also loud agreement when Jack Dromey condemned Ken Livingstone for blaming Tony Blair's invasion of Iraq for the 7 July 2005 bombings. Along with Angela Smith MP, Dromey demanded that Livingstone be sacked as the co-chair of Labour's defence review. Significantly, Benn said aftewards that he agreed with every word Dromey had said. Corbyn's office has previously said that it is up to the NEC, not the leader, whether the former London mayor holds the position. In reference to 7 July, an aide repeated Corbyn's statement that he preferred to "remember the brilliant words Ken used after 7/7". 

As on previous occasions, MPs complained that the leader failed to answer the questions that were put to him. A shadow minister told me that he "dodged" one on whether he believed the UK should end air strikes against Isis in Iraq. In reference to Syria, a Corbyn aide said afterwards that "There was significant support for the leader. There was a wide debate, with people speaking on both sides of the arguments." After David Cameron's decision to call a vote on air strikes for Wednesday, leaving only a day for debate, the number of Labour MPs backing intervention is likely to fall. One shadow minister told me that as few as 40-50 may back the government, though most expect the total to be closer to the original figure of 99. 

At the end of another remarkable day in Labour's history, a Corbyn aide concluded: "It was always going to be a bumpy ride when you have a leader who was elected by a large number outside parliament but whose support in the PLP is quite limited. There are a small number who find it hard to come to terms with that result."

George Eaton is political editor of the New Statesman.