TWO senior Tories have warned the Government may need tax hikes and spending cuts because of the size of the national debt.
In a letter to Chancellor Philip Hammond, veteran Ken Clarke and ex-Cabinet Office minister John Penrose said official figures gave an over-optimistic picture as they did not include private finance initiative contracts.
They called on the Chancellor to instruct the budget watchdog to publish a full “national balance sheet” at future Budgets.
Traditionally, the figures for net public sector debt, currently around £1.8trillion, are largely based on the value of gilts – the bonds issued by the Government to raise money.
The MPs wrote to Mr Hammond last week after he declared in the Spring Statement that Britain was heading for its first sustained drop in debt in 17 years, as well as a falling deficit.
His pronouncements were based on new figures issued by the Office for Budget Responsibility.
In their letter to Mr Hammond, Mr Clarke and Mr Penrose warn: “We are concerned that the Treasury’s traditional focus on gilts as the principal measure of Government debts gives an over-optimistic picture of the true scale of long-term IOUs which taxpayers are committed to paying.”
The Treasury insisted: “The Government takes a balanced approach to repairing the public finances and investing in vital services.”