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Friday, 28 January 2011

Honest politician shocker.

The National Debt may be about to jump by £23 billion. Except it isn't because really because the current figure should be at least £23 billion higher that it is already.

According to the Times, ministers are prepared to put £23 billion worth of Network Rail debt back on to public books to secure greater leverage over the private company. Such a move could also be seen as an attempt to increase transparency. Philip Hammond, the Transport Secretary, is preparing to sit down with leading figures from the rail industry to forge a future framework for Network Rail.

It is nice to see a little straight dealing from time to time. The last government decided the Network Rail borrowings should be off the government's books because they were borrowed by a separate "not for profit company" (actually a company limited by guarantee which is not necessarily the same thing at all), which has never been a reason for deconsolidation because the shares were held by the government.

For some unknown reason it was deemed that the fact that all of the company's borrowings were wrapped with a government guarantee was also immaterial. In any other world, that would have led to a DTI referral and an unfit and improper person ruling on the controlling shareholders - the government.

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