If you wanted proof of just how crackers our system of valuing pension promises has become, then the Purple Book provides it. This annual actuary-fest comes from the Pension Protection Fund, and it calculates the cost of buying out all UK pension schemes in deficit. The result is a fine demonstration of the rule that bad figures take longer to add up than good. At March 31 last year, the deficit had ballooned out to £470 billion, or 20% of the UK’s GDP.

The same calculation today would show an even bigger figure, thanks to the way the actuaries do their sums. Yields on bonds have fallen further – 10-year government securities return 2.0% now, compared to 3.7% last March, a move which raises the present value of future liabilities. On a more conventional measure, the gap to make a scheme balanced in the eyes of the actuaries was a mere £78 billion. It, too, will be much higher today. There is no realistic possibility of companies meeting even that lower figure, and it would be self-defeating were they to try and do so.

The rise of pension liabilities through the ranks of commercial creditors, thanks to a series of well-meaning changes to the law, is already threatening some perfectly good businesses. Rather than invest to ensure that they have a future, they are obliged to put more capital into pension funds to make up the actuarial shortfall. Even the strongest are finding to cost too high. Shell has recently joined the other 99 companies in the FTSE100 index in closing its defined benefit scheme to new members.

Company managers can see that the more they pour into the pension fund, the less the chances of the business surviving long enough to pay the pensions it has promised, but that’s not the actuaries’ problem. The Purple Book calculations have the same sort of relentless internal logic as Ian Paisley’s view of Ireland; it’s just not a world that most of the rest of us recognise. The idea that UK industry can generate £500 billion to buy itself out of its pension liabilities is self-evidently daft. The insurance companies aren’t big enough, and the last thing their fund managers would want to invest in is a business which has been reduced to an adjunct to its pension fund.

The actuaries’ calculations are driving capital away from where its needed to generate future wealth. Rather than support long-term equity investments, the money is going into bonds and government securities. The latter are no more than liabilities on future generations of taxpayers, in exactly the same way as the unfunded promises to civil servants. This is the economics of the madhouse. Just as the accountants have toiled for years, with the result that company accounts are much more accurate but almost incomprehensible, so the actuaries have run amok with their pension calculations, making them much more accurate, at the cost of draining the lifeblood from what’s left of UK industry.