Royal Mail and HMG's creative accounting
Here's today's riddle: which financial black hole could be transformed into a mountain of gold simply by moving the ownership of the black hole from one part of the public sector to another?
The answer is Royal Mail's pension fund.
Here's the Alice-in-Wonderland financial engineering.
Royal Mail is a plc with a single shareholder, viz HMG. And our somewhat battered postal service has a massive pension fund that's burdened with a huge and troubling shortfall between assets and liabilities.
Because Royal Mail can't afford to fill the deficit in the fund, the government has proposed to take responsibility for all its liabilities as of 16 December last year (as part of wider plans to rehabilitate Royal Mail that include a highly contentious sale of a stake to the private sector).
Under this pension rescue plan, the government would also inherit Royal Mail's assets.
These are the numbers.
Royal Mail's assets - at 16 December - have a value today of just over £20bn. But its liabilities are worth around £30bn.
So for poor, beleaguered Royal Mail, there's a gap between the assets and liabilities - a de facto and crippling debt - of around £9bn.
Horrid. And you can understand why Royal Mail's executives are desperate to be shot of this financial millstone.
But a millstone for Royal Mail looks altogether more glistening and shiny to ministers - because of what happens to these assets and liabilities when they are transferred to the government?
The assets can be sold, to reduce the official national debt by around £20bn. Which wouldn't at a stroke sort out the UK's overstretched public finances, but would be jolly useful.
And the government has indeed said it would sell these assets over a few years to "protect value for money for the tax payer".
So by taking control of Royal Mail's pension fund, it eliminates one black hole (Royal Mail's) and shrinks another (the national debt).
But hang on a sec, you are surely saying. What about those £30bn of liabilities to Royal Mail's current and future pensioners? Isn't that a burden of a hideous and lethal kind?
Do we as taxpayers really want to become directly responsible for all that (as opposed to our indirect responsibility, as of this moment)?
Well, the logic of ministers appears to be that we won't notice we've taken on this burden, because the government's commitment to pay pensions to public-sector workers in unfunded pay-as-you-go schemes - which is what the Royal Mail one will become - is not part of the national debt.
That said, the government's Actuary's Department estimated that the total liability of unfunded public service occupational pension schemes as at 31 March 2006 was £650bn - or about 50% of GDP in that year.
The liability will be rather bigger now.
So there are two ways of looking at the conversion of the Royal Mail fund into an unfunded pay-as-you go scheme: as a rounding error, almost irrelevant, in the context of the extant public-sector pension liabilities; or as evidence that ministers don't have the beginning of an idea how to curb the growth of an incredibly expensive set of pension promises.
Little wonder that John Ralfe, the pensions analyst, describes what's happening to the Royal Mail pension scheme as a colossal fiddle.
Some of you may think he could use stronger language.