Where does our money go ?
What is it spent on ?

For over 50 years the United Kingdom has had a policy that deprives British State Retirement Pensioners of indexation on their pensions if they choose to retire to almost any of the old British Commonwealth Countries, or almost any other country, except the European Union or the United States, countries powerful enough to force Britain's hand.

During that time Britain has saved many Billions of Pounds, which now form a significant part of the current balance in National Insurance Fund (NIF) - about 45 Billion Pounds Sterling.

This balance is earning interest at the rate of over 200 Million Pounds a month. Two months of that Interest would be sufficient to upgrade the pensions of the 525,000 British pensioners still alive, and grant them full indexation.

What is the Government doing with that money ?

They tell us, the Frozen Pensioners, that they cannot afford to pay us the pensions we earned through a lifetime of contributions to the NIF because they need the money for Capital Projects such as Schools and Hospitals.

There is a National Insurance Fund. The National Audit Office audit the NIF accounts maintained by HMRC each year. In the last single year audited, there was a balance of around £9 billion of receipts over expenditure.  See www.nao.gov.uk

The Government Actuary Department prepares a report on the state of the NI Fund each year so that Parliament can decide the annual pension increase.  See www.gad.gov.uk

The GAD forecasts the NIF balance to grow from its present value of £45 Billion to over £100 billion over the next few years.
The £45 Billion balance in the NI Fund is ring fenced and under the rules cannot directly be used for other government expenditure. The balance is invested with the Government's Debt Management Office.  See www.dmo.gov.uk

The money is loaned from the NI Fund through the DMO to the Government and in return the government pays the NI Fund interest - last year it was around £1.3 billion in interest. I have a FOI Act response from them to confirm this.

If you were a billionaire and went into your bank and asked to see all your money, the bank could not do it because the money is invested in loans and mortgages, etc. and that is exactly the same for the NIF. It does exist and it is in surplus. In fact, billions of pounds, real money, goes into the NIF each month and less money goes out each month and that is how the balance has been created.

Let's take a closer look at that

Current policy is that the Government is not building Schools or Hospitals. Instead it is setting up Public Private Partnerships (PPPs) the umbrella name given to a range of initiatives which involve the private sector in the operation of public services. The Private Finance Initiative (PFI) is the most frequently used initiative. The key difference between PFI and conventional ways of providing public services is that the public does not own the assets. The Government makes an annual payment to the private company who provides the building and associated services, rather like a mortgage.

A typical PFI project will be owned by a company set up specially to run the scheme. These companies are usually a consortium including a building firm, a bank and a facilities management company. They are, of course, in it for a profit.

On the left is an artist's impression of a new school building, one of a series of PFIs in the Redcar and Cleveland area. Redcar and Cleveland Council currently has arranged PFI contracts to the value of over 650 Million Pounds, 8 school building projects. That is just one Council area. There are hundreds, if not thousands more projects of this nature across Britain. These new schools will be the property of the Private Association of Companies that builds them - not the property of Council - not the property of the Government. The Association that supplies them will, however, be paid well for their services for many years to come.

On the right is an aerial view of the largest new hospital development in Europe. It is a complex of hospitals costing 500 Million Pounds on the Oxford Road in Manchester. It includes the largest integrated children's hospital outside America, and is due to open in 2009. This is a National Health Service Foundation Trust project. Click on picture to enlarge. Both School and Hospital projects are excellent and, no doubt, essential to the well being of Education and Health in Britain. We do not question that. What we do question is why they should be regarded by the UK Government as a reason for their failing to pay us our full pensions. Pensions we have contributed to at the same level as all those pensioners in Britain, and favoured countries, who have their pensions indexed every year.

More about PPPs and PFIs

You can learn a great deal more about PPPs and PFIs by going to:
www.unison.org.uk/pfi/index.asp The Web page of UNISON, the Public Sector Union.