"In spite of the widespread expectation that almost all PFI projects would go on the books as the Treasury fulfils a longstanding promise to move the public sector to international financial reporting standards, the Treasury has now issued all-but-final guidance to Whitehall departments indicating that, while they will count on departmental accounts, a different accounting standard will apply for the Treasury’s budgeting purposes.That will be based on the European accounting standard that is applied by the Office for National Statistics to the national accounts. It has the effect that many projects will continue to count as off-balance sheet.
'The expected effect is that things will go on much as before,' a leading PFI accounting expert said. 'There may be some changes at the margins over which projects count as on the books or off.
'But broadly speaking, where a project would have been off the books up to now, they will remain off the books.'"
This kind of thing should terrify future governments and taxpayers, who will be left to tackle the debt that Brown's accrued both on and off the balance sheets. As Fraser and I set out in an article last year, the Treasury's PFI commitments could total around £110 billion; which is no inconsiderable sum, even when set aside the £628 billion (and counting) of official national debt.
And that's why future Chancellors will be tempted to stick by these Enron-style accounting practices. After all, the bigger the debt burden seems, the more spending cuts and tax rises they'll have to commit to. But Cameron & Co. should avoid copying Brown's disingenuous approach. If they're to deal with the problem - and if they're to rally public support behind the measures that will be necessary to do so - then they need to reveal just how big that problem is.