Pants on Fire
The prime minister told MPs that it was because the government had repaid so much of its debt in previous years that it was able to borrow more now.
At the end of August 2008, UK National debt was £637.4 billion. (or 43% of National GDP) - Source: Office National Statistics
National Debt has increased sharply in the past 12 months because of:
Slowing Economy (lower tax receipts, higher spending on unemployment benefits)
Financial bailout of Northern Rock and other banks.
However, it can be argued that UK’s national debt is actually a lot higher. This is because national debt should include pension contributions which the government are obliged to pay.
The Centre for Policy Studies argues that the real national debt is actually £1,340 billion, which is 103.5 per cent of GDP. This figure includes all the public sector pension liabilities such as pensions, Private Finance Initiative contracts e.t.c (Northern Rock liabilities).