What is Off-Balance-Sheet Debt and Why Does it Matter?
The UK government's official national debt figure — Public Sector Net Debt (PSND) of £2.91 trillion — is the number reported in the news each month. But it deliberately excludes several categories of real financial obligation that the government is committed to paying.
These hidden liabilities are not secret — they appear in the Whole of Government Accounts (WGA), published annually by HM Treasury. The WGA is compiled using the same accounting standards (IFRS) as FTSE 100 companies. On that basis, total public sector liabilities were £5.02 trillion at 31 March 2024.
The gap between the headline figure and the full picture is over £2 trillion — more than the entire official debt itself.
£2.99tn
Official PSND (excl. BoE)
£5.02tn
WGA Total Liabilities
£2.65tn
WGA Total Assets
£2.37tn
WGA Net Liability Position
🚨 The WGA shows £73,000 of liabilities per UK resident against only £38,500 of assets — a net liability of £34,500 per person. This is the true balance sheet of the UK public sector, not the headline debt figure.
Complete Hidden Liabilities Register
🏛️ Unfunded Public Sector Pensions (Pay-as-you-go)NHS, teachers, civil servants, armed forces, police — OBR estimate end 2024/25. Not in PSND or PSNFL.
£1.4tn
48% of GDP
🏗️ PFI / PPP Contract CommitmentsFuture payments on Private Finance Initiative contracts for hospitals, schools, roads. £126bn interest + services, £62bn on-balance-sheet lease liabilities.
£310bn
10.5% of GDP
🎓 Student Loan BookOutstanding student loans — expected ~40% never repaid. ONS treats as financial assets but OBR acknowledges significant write-off risk. Included in PSNFL but not PSND.
£237bn
8.0% of GDP
☢️ Nuclear DecommissioningCosts of decommissioning UK's nuclear sites over the coming decades. NDA provision.
~£23bn
0.8% of GDP
🚂 Network Rail / Great British Railways DebtClassified on government balance sheet since 2014. Included in PSND but worth highlighting separately.
~£54bn
1.8% of GDP
⚖️ OBR Contingent LiabilitiesGuarantees, indemnities, legal exposures reported by OBR — not on balance sheet but real risk.
~£250bn
8.4% of GDP
🏥 Clinical Negligence ClaimsNHS Resolution outstanding claims — growing rapidly due to maternity negligence and long-tail litigation.
~£56bn
1.9% of GDP
🌊 Flood & Infrastructure LiabilitiesMaintenance backlogs, flood defence commitments, road/rail infrastructure deficits not yet funded.
~£30bn
1.0% of GDP
TOTAL OFF-BALANCE-SHEET (excl. pensions)PFI + student loans + nuclear + Network Rail + contingent + clinical negligence
~£960bn
~32% of GDP
TOTAL INCLUDING UNFUNDED PENSIONSAll hidden liabilities combined — the gap between official PSND and true obligations
~£2.4tn+
~81% of GDP extra
Unfunded Pension Liabilities by Scheme (WGA 2022/23)
NHS Workers
£535bn
£535bn
Teachers
£335bn
£335bn
Civil Servants
£222bn
£222bn
Armed Forces
£156bn
£156bn
Police
£104bn
£104bn
Pre-priv. Royal Mail
£30bn
£30bn
TOTAL
£1.4tn
£1,419bn unfunded
⚠️ Important note on pension valuations: The WGA figure of £1.4tn uses an IFRS discount rate linked to high-quality corporate bond yields. The OBR's preferred measure uses a different discount rate and gives a similar £1.4tn figure for end-2024/25. Some estimates using lower discount rates put the figure at £3–6tn. The true cost depends heavily on assumptions about future wage growth, inflation and discount rates.
📋 These are unfunded, pay-as-you-go schemes — meaning there is no pot of money set aside. Pensions are paid from current tax receipts each year. Annual pension payments from these schemes currently cost ~£50bn/year and are rising as the workforce ages.
PFI / PPP — The Long Shadow of 1990s Deals
700+
PFI Contracts Outstanding
£310bn
Total Remaining Commitments
£57bn
Original Capital Value
5.4×
Cost vs Original Capital
🚨 The PFI scandal in numbers: The government borrowed £57bn of capital value through PFI — but total payments over the contract lives reach £310bn. For every £1 of hospital or school built under PFI, the taxpayer pays back over £5. The contracts run until the 2040s and 2050s, meaning future generations are still paying for hospitals built in the 1990s.
Top PFI Sectors by Commitment
⚠️ The government announced in 2018 it would no longer use PFI for new projects. However existing contracts cannot be unwound without paying significant termination fees, locking in these costs for decades.
Student Loan Book — The Hidden Write-Off
£237bn
Total Outstanding (2025)
~£95bn
Expected Write-Off (~40%)
£20bn+
New Loans Issued Per Year
30 yrs
Until Loans Written Off
⚠️ The ONS treats student loans as financial assets in PSNFL — but the OBR and independent economists estimate around 40% will never be repaid and will be written off after 30 years. This ~£95bn expected loss is not reflected in the headline debt figures. As the student loan book grows, so does this hidden liability.
Total Student Loan Book (£bn)
Estimated Write-Off (£bn)
Whole of Government Accounts — Full Balance Sheet Breakdown (31 March 2024)
Assets (£tn)
Liabilities (£tn)
📋 Source: Whole of Government Accounts 2023/24 (HC 917, July 2025). Prepared under IFRS accounting standards — the same standards used by listed companies. This is the most comprehensive picture of what the UK government truly owns and owes.
The Ladder of UK Debt Measures — From Narrow to Complete
Narrowest — Headline
£2.99tn
PSND excl. BoE
What's in the news
What's in the news
Broader
£2.47tn
PSNFL excl. BoE
Govt fiscal rule target
(83.3% of GDP)
Govt fiscal rule target
(83.3% of GDP)
Comprehensive
~£3.87tn
PSND + PFI +
student loans +
contingent liabilities
student loans +
contingent liabilities
Full WGA Basis
£5.02tn
Whole of Government
Accounts total liabilities
IFRS accounting standard
Accounts total liabilities
IFRS accounting standard
True Total
£5tn–£9tn
WGA + unfunded pensions
at various discount rates
£34,500 net per person
at various discount rates
£34,500 net per person
✅ Why governments use the narrow measure: PSND is internationally comparable (used by IMF, Eurostat), avoids disputed actuarial assumptions, and has a long historical series. It's not dishonest — but it's important to understand what it excludes. The WGA and PSNFL provide the fuller picture.