Sunday, October 24, 2010

£120m a day...

... that's how much the country's debt is currently costing us in interest alone. It adds up to roughly £44bn a year, or over £1,000 per tax payer. Imagine how that could be spent instead.

All these savage cuts do is eliminate the deficit, so this debt stops growing. They won't actually do anything to bring the debt back down to a manageable level - say £1trn lower than they'll eventually total by the end of this parliament.

But just to reiterate: £120m a day. It's why all these emotive arguments about the cuts that are currently going around miss the point entirely: we are up to our necks in debt having lived beyond our means. There are other hidden debts to be paid for in the years ahead too, thanks largely to the last government's inept PPI schemes (and never mind the pension deficit), and still people are making a case against any kinds of cuts.

My view is this: yes, in times of recession you normally hope the government of the day will step forward and increase public spending - and take on more debt by running a deficit for a few years. That approach works - if said government spent the good years paying off the last debt and running a budget surplus for tough times ahead. The last Labour government didn't do that, running big deficits during the "good" years with no thought to the future. They left a mess that - however unpalatable, however unfair and however tough - must now be dealt with.

I loathe debt - I have sat through the last decade shaking my head at the staggering sums of personal and public debt that have been racked up, as people stick their head in the sands and think they can have their cake, eat it and get away without paying for it - certainly not now, and maybe even ever, judging by the rise of those ads telling people they could write off 95% of their debts thanks to "little-known" government legislation. We attack the banks for plunging us into crisis, but we turned a blind eye while times were good and happily snaffled up cheap debt while it was available. Now we seem to have adopted the view that it's someone else's fault, where in reality we're all responsible.

I hope our generation pays it all back, so my children can hopefully enjoy a future where governments finally learn the lesson of debt. If I could enact one piece of legislation in the wake of this debt crisis, it would be this: governments would no longer be able to run up deficits without a thought for the future. They would be forced to balance the books over the term of a parliament, so a deficit one year would need to be recouped the next. If it meant the last year of parliament left them so strait-jacketed they had to face up to savage cuts in order to balance the books, then let them, and let the electorate judge them on it.

I consider myself left-leaning in most respects: I loathed New Labour for many things, but one of the most unpalatable things to swallow was their right-wing economic policies, allowing the gap between rich and poor to widen, encouraging tax avoidance (and blocking attempts within the Treasury to close those loopholes on at least one occasion), wasting huge sums of money on PPI schemes instead of spending the money more sensibly, the list goes on. How ironic, then, that their past reputation for mismanaging the country's finances should once again rear its head, and if anyone cares to look closely enough, it was there from the very beginning: it's just that Brown was able to sell off gold, raid people's pensions and enjoy the benefits of a recovering economy before he turned to running up huge debts.

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