Brown faces £12.2bn pensions gap

A BLACK hole has emerged in Gordon Brown's accounts totalling £12.2bn over the next three years.

The Government's finances have been hit by higher than expected deficits in the final-salary pension schemes for State employees.

Under accounting standard FRS17, the extra charges totalled £5.6bn this year and £3.3bn in each of the following two, making £12.2bn in all.

The Treasury calls the higher charges 'purely an accounting issue'.

A spokesman said: 'There hasn't been any change in the pension liabilities, it's just that they're now being reported correctly. It has taken the people running these pension schemes a while to get their act together.'

It notes the charges are not 'cash' items requiring immediate payment. But it concedes they are still extra liabilities that will need settlement in due course.

Brown did not reveal the black hole in Wednesday's Budget speech. It can only be found in the 'accounting adjustments' tables of the accompanying documents.

But City economist Douglas McWilliams, of the CEBR think-tank, drily noted that 'if a private company had failed to disclose pension liabilities on this scale, the directors could expect to face a Government investigation'.

Separately, another think-tank, the Institute for Fiscal Studies, questioned Brown's optimism about Government borrowing. It warns that the Chancellor may have to raise taxes further in the next few years in order to keep within his own fiscal rules.