Thread by @RichardJMurphy

Sunak's claim that he can't afford the cost of more borrowing is fabricated and involves inappropriate accounting for the cost of paying off index-linked bonds maybe many years from now. If inflation falls between now and then, which is likely, the Treasury will get a bonanza

In fact, the Office for Budget Responsibility is forecasting that interest costs will tumble to new record low levels in a couple of years for precisely this reason. Now guess what Sunak will do with the fall in his interest costs at that time?

Will he give a bonus to those he is pushing into poverty now or will he cut taxes for the best off just before an election? I think you know the answer to that. So does he. So don't be fooled by any of his claims as to unaffordability right now. They're fabricated nonsense.

If the supposed cost of redeeming those index-linked binds was based on the weighted probability of their cost of redemption the supposed rise in interest costs to £80 billion a year now that is being used to drive millions of families into despair would not exist.

The truth is that lousy Treasury accounting (and that's the kindest description) is being used to punish people to ensure that the reversal of that false accounting might deliver Sunak a pre-election bonus for tax cuts. There is no real increase in the cost of interest now.

As a result, there will actually also be no bonus in a couple of years if inflation falls and the cost of redeeming index-linked bonds also falls at that time. But by fabricating the national accounts Sunak will make it seem that both are true, when they're not.

Sunak is not trying to balance the books. He's fiddling them to suit his own agenda. It's just a shame children will starve, old people will die of the cold and countless families will lose their homes as a result of the accounting games he is playing to justify austerity.

If the OBR forecasts did not implicitly acknowledge in its interest cost forecasts that it knows this deceit is happening, meaning the Treasury does too, you might just think Sunak was making honest but misplaced claims. But their forecast reveals that the OBR know the truth.

In that case Sunak does too. And in that case his excuses for imposing poverty now are fabricated. If there is a place called hell it would, IMO, be too good for a man who can deliberately impose poverty on millions simply to advance his own ambitions using dodgy accounting data.

I have been asked to add some explanation to this thread. I stress, this issue is technical, but the essence is this. First, index linked bonds do pay interest, usually at very low rates. But what they really offer is a guarantee that if inflation rises you'll get your money back

But you don't just get it back: you get your money plus any change in inflation linked value from the date of issue to the date the bond's repaid.

That's complicated by the fact that index linked bonds are not issued at what's called par. Right now they are issued at much above that.

For example, a recent index linked bond with an interest rate of just 0.125% (or 12.5p interest on each nominal £100 invested) was issued at £356 per £100 of nominal value of bond issued. This really complicates things.

Unwinding the premium paid (of £256) on the issue of the bond and allowing for interest paid unless there is inflation of at least 2.39% this bond pays a real negative rate of interest - meaning the people owning the bond are actually paying the government to hold their money.

But, if inflation at the time of redemption is above that rate then the cost of paying out this bond at the end of its life (and I stress, at the end of its life, and these bonds run for years) rises.

What the Treasury is assuming in its budgeting is that the current inflation rate is going to continue until all these bonds mature. As a result they have added £40 billion to supposed interest costs this year. But there are no such costs, most especially in cash terms.

There is instead just what's called an accounting provision for those possible costs. And if, as both history and the Office for Budget Responsibility think likely, inflation falls (and the OBR says it will be 2% in two years time) then that accounting provision is not needed.

And if that likely fall in inflation rate happens then all the accounting provision for additional interest costs will disappear - and the cost of borrowing will fall to an all time historic low rate. And we know this is incredibly likely to happen. The OBR says it will

In that case good accounting would not make provision for a cost that is incredibly unlikely to be paid. It would instead provide for the likely cost - which is the one due at the inflation rate the OBR is forecasting, which means it likely no increased interest cost is due.

Sunak should know then that the chance he will actually have to pay out the interest cost included in his budget is next to nothing - because no one expects current inflation rates to last. So he is imposing poverty without justification - as the OBR inflation estimate shows.

And that is why I have reached the conclusion that I have that this is deliberate use of an accounting ruse to penalise the least well off now to provide additional funds for tax cuts for the well off in two years time.

At best it's cynically dishonest not to admit maybe £40 billion of additional interest cost in the budget may never be paid. At worst, this is manipulation to impose poverty for his own political gain.

Either way, the fact this is being used to justify austerity without any admission that it cannot do so galls me, hence my conclusion. There is not a shred of ethics in this - and that appals me.