On 4 March The Sunday Times in the UK published an article in its business section describing how George Osborne, the UK Chancellor of the Exchequer, was “poised to receive a surprise £28 billion windfall” from a “state takeover of the Royal Mail”. The “bonanza” is reported as likely to come about as a consequence of the planned nationalisation of the Royal Mail retirement fund. The UK government is to take over the fund to help prepare the postal service for privatisation. It seems the pension fund has a shortfall of about £4.6 billion: liabilities, essentially promises made to current and future pensioners, exceed the assets in which the fund is invested, by that amount. But somehow, when the government nationalises the fund, they will bring the assets (cash and investments) onto their balance sheet but not the liabilities. Those assets amount to around £28 billion, the “windfall”. The article, and subsequent coverage in the British press, then goes on to describe the differences of opinion there are over how this “windfall” should be spent. Some (notably the Treasury) want to use it to pay off debt. Others (“top Tory donors”) want to see it used as the foundation of a new sovereign wealth fund to build roads, schools and power stations.
This, like crime in a multi-storey car park, has to be wrong on so many levels. That any set of accounting rules can sanction accounting properly for assets but not liabilities is crazy. Whatever rules the Treasury is relying on are bonkers and need to be changed. How apparently sane and sensible individuals can claim part of what is essentially a net liability and argue the case for how it should be used to do good is similarly daft. And you have to worry about the mentality of people who appear to genuinely believe that there are actually assets here to be spent.
Beam me up, Mr Scott.