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.

Ukip's Nigel Farage and Paul Nuttall. Photo: Getty
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Is the general election 2017 the end of Ukip?

Ukip led the way to Brexit, but now the party is on less than 10 per cent in the polls. 

Ukip could be finished. Ukip has only ever had two MPs, but it held an outside influence on politics: without it, we’d probably never have had the EU referendum. But Brexit has turned Ukip into a single-issue party without an issue. Ukip’s sole remaining MP, Douglas Carswell, left the party in March 2017, and told Sky News’ Adam Boulton that there was “no point” to the party anymore. 

Not everyone in Ukip has given up, though: Nigel Farage told Peston on Sunday that Ukip “will survive”, and current leader Paul Nuttall will be contesting a seat this year. But Ukip is standing in fewer constituencies than last time thanks to a shortage of both money and people. Who benefits if Ukip is finished? It’s likely to be the Tories. 

Is Ukip finished? 

What are Ukip's poll ratings?

Ukip’s poll ratings peaked in June 2016 at 16 per cent. Since the leave campaign’s success, that has steadily declined so that Ukip is going into the 2017 general election on 4 per cent, according to the latest polls. If the polls can be trusted, that’s a serious collapse.

Can Ukip get anymore MPs?

In the 2015 general election Ukip contested nearly every seat and got 13 per cent of the vote, making it the third biggest party (although is only returned one MP). Now Ukip is reportedly struggling to find candidates and could stand in as few as 100 seats. Ukip leader Paul Nuttall will stand in Boston and Skegness, but both ex-leader Nigel Farage and donor Arron Banks have ruled themselves out of running this time.

How many members does Ukip have?

Ukip’s membership declined from 45,994 at the 2015 general election to 39,000 in 2016. That’s a worrying sign for any political party, which relies on grassroots memberships to put in the campaigning legwork.

What does Ukip's decline mean for Labour and the Conservatives? 

The rise of Ukip took votes from both the Conservatives and Labour, with a nationalist message that appealed to disaffected voters from both right and left. But the decline of Ukip only seems to be helping the Conservatives. Stephen Bush has written about how in Wales voting Ukip seems to have been a gateway drug for traditional Labour voters who are now backing the mainstream right; so the voters Ukip took from the Conservatives are reverting to the Conservatives, and the ones they took from Labour are transferring to the Conservatives too.

Ukip might be finished as an electoral force, but its influence on the rest of British politics will be felt for many years yet. 

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