Government Accounts show debt fell by £1.5 trillion and there is no £22bn black hole

It is not often we foray into national politics, but on this particular occasion we felt it necessary as the national debt fell by £1.5 trillion according to the Whole of Government Accounts (WGA) 2022/23 published in November 2024.

The WGAs represent all the government does, ie central government, local government; hospital trusts, schools and education trusts, quangos; Welsh and Scottish governments and the Assembly in Northern Ireland and everything else. All of that is added together to make up this set of accounts. This job is done by the National Audit Office, they are the Government’s auditor.

It’s a complicated process, one which takes a substantial amount of time, but nevertheless provides a comprehensive view of just what’s going on.  And what is going on in the WGAs 2022/23 is something quite remarkable. At the end of 2022, according to the Auditor of the WGAs, the UK’s total national debt, as shown in these accounts, stood at almost £3.9 trillion. Or, £3,874 billion.

This can be seen at page 124 of the WGAs where you can see the total liabilities owing.

Now the figure £3,874 billion is in the right-hand column as that shows 1 April 2022, and the figure in the left-hand column is the figure for 31 March 2023, and that figure is a lot smaller. It’s £2,389 billion, or £2.4 trillion the government owed in total at the end of the year. So the liabilities owing fell by 38% in one financial year, so say the WGAs.

The total fall is, £1,485.8 billion ,so near enough to £1,500 billion or £1.5 trillion. This amount is roughly half the total income of the UK for a year. And that’s a substantial amount of money the government no longer owes, according to its own accounts.

How did this substantial fall in debt happen? How did we become better off as a country because the government doesn’t owe money? The answer is very simple and can be found on page 123 of the WGAs . This line in these WGAs shows the total amount that’s owing in respect of pensions due to people who have been employed by the government but who have yet to enjoy the pension in question. In the year to March 2022, (right hand figure) this stood at £2,639 billion owing in the future to those pensioners. That’s £2.6 trillion.

By the end of March 2023, according to the WGAs audited by the NAO, that figure had fallen to £1,415 billion, or £1.4 trillion.

So why has the pension liability fallen? The answer to that is because interest rates went up between 1 April 2022 and 31 March 2023. What then has this got to do with pension liabilities in the future? The interest rate is presumed to indicate the rate of return that will be made on investments. And as the rate of return on an investment rises, then the cost of servicing the future debt obligations due to pensioners will fall because more investment return will be made in the meantime. So, because interest rates rose, the government owes a lot less in the future.

Now, you know interest rates went up (especially if you’ve got a mortgage) because the government was in a financial mess, inflation was high, and the wheels were going to fall off the economy. But the WGAs tell a totally different story. Because the interest rate went up this created a major upside in the accounts. And that upside is our total debts, owing, as explained above, have fallen from £3.9 trillion, or £3,900 billion, to £2.4 trillion ,or £2,400 billion

All to often the government’s narrative is the national debt is too large and this prevents it from doing the things it would like to eg spend more money on schools, hospitals, local government, roads, infrastructure etc.

However, that is not the case, there is money available to reinstate the winter fuel allowance. There is no financial black hole of £22bn as claimed by the current Chancellor of the Exchequer Rachel Reeves.

These WGA for 2022/23, show that national debt has fallen by £1.5 trillion, and we do not have a government financing crisis. All this happened under a Tory Government, and yet not a single Tory is taking credit for reducing the national debt by £1.5 trillion. Nor is a single Tory telling Rachel Reeves MP that there is no £22bn black hole.

One has to wonder about those we elect to Parliament , especially as so many of them are financially illiterate they cannot even read a set of accounts; which show we are much better off than our elected politicians like to inform us.

The Shepway Vox Team

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