Britain's national debt may be as high as £12 trillion, far exceeding the £3 trillion figure recently announced, according to analysis by the campaign group the Taxpayers' Alliance (TPA). The TPA's assessment includes previously undisclosed liabilities such as unfunded state and public sector pension commitments, Private Finance Initiative (PFI) contracts, and nuclear clean-up costs, which the group estimates are worth an additional £8.6 trillion.
The TPA calculated that the true national debt stands at £11.7 trillion, which equates to approximately £168,184 for every person in the United Kingdom. The group further estimated that even if £1 million were repaid every hour, it would still take 1,334 years to clear the entire balance.
Shadow Chancellor Mel Stride commented on the findings, stating, "Every pound borrowed today is largely taxation deferred and will have to be paid off further down the line." He added, "The scale of what we are passing on should give any Chancellor pause for thought." Stride suggested that Chancellor John Healey's upcoming first Budget on October 28 presents an opportunity to demonstrate an understanding of this fiscal challenge, warning that families should "brace for more borrowing, more taxes and a bigger bill for future generations."
John O'Connell, chief executive of the TPA, emphasized the need for fiscal discipline, saying, "Public sector debt is out of control but adding inevitable bills, like unfunded pension commitments, reveals the true extent of the debt we are passing down to our children and grandchildren." He urged the new Chancellor to "curb these commitments for the sake of generations of future British taxpayers."
The significant national debt poses a considerable challenge for Prime Minister Andy Burnham, who has recently announced several spending initiatives, including the scrapping of VAT on energy bills, reductions in business rates for pubs, and a cap on bus fares. While Burnham has pledged to adhere to the fiscal rules established by Rachel Reeves, he has also indicated a desire to utilize "flexibility" for increased spending, potentially by offsetting borrowing against investments. This approach could allow the government to borrow an additional £9 billion annually while remaining within the existing fiscal framework.
However, this strategy is expected to contribute to the overall debt and increase the state's interest payments, which the Office for Budget Responsibility projects will exceed £130 billion this year. Concerns have also been raised in bond markets regarding Burnham's commitment to fiscal discipline, with some observers drawing parallels to the market instability caused by former Prime Minister Liz Truss's unfunded mini-Budget in 2022. Investment firm Rathbones confirmed it had divested some of its UK government debt holdings due to fears that Burnham might prioritize policy goals over fiscal prudence.