Yesterday, we learned “public sector net borrowing was £0.6 billion in July 2012; this is £3.4 billion higher net borrowing than in July 2011, when net borrowing was -£2.8 billion (a repayment)”.
Compared to say May, when we borrowed £17.9 billion, £600 million seems relatively modest. It’s still the gross annual earnings at the national average wage of over 23,000 people.
As far as I recall, I have never received a letter from a constituent expressing concern about the public debt. I have received a great many on the height of the most egregious taxes — VAT, fuel duty, air passenger duty — many worrying about public spending cuts and many proposing measures which would raise spending. But none, I think, complaining about the accumulation of debt.
On 22 June 2010, I first referred in Parliament to the Bank for International Settlements’ Working Paper No 300 The future of public debt: prospects and implications. Amongst other things, I said,
By 2040, our interest payments would be more than a quarter of GDP. I do not know about the rest of the House, but I do not believe that we will ever get there. Long before interest payments reach 25% of GDP, we will have a social catastrophe. We cannot allow that to happen.
That BIS paper looks ahead at the consequences of our inability to meet the liabilities the British state continues to accrue. The Government’s total liabilities on our behalf have been estimated at between £4.8 trillion and £6.3 trillion, depending whether the banks’ liabilities are included. The Channel 4 documentary Britain’s Trillion Pound Horror Story made a compelling case: I promoted it and held a panel discussion on it in Parliament. It received less attention than it should.
However, the top items of state spending by a wide margin are pensions & welfare, health and education.
All that is extremely hard for elected politicians to cut: perhaps that’s why Italy appointed Mario Monti.
Ultimately, I am optimistic about humanity’s ability to prosper. For now, the public overall are not demanding that governments live within their means, spending only what they can raise in taxes. If and when that is the demand, I feel sure that democratic parties will provide what the public want. To that end, I was glad to discover that Martin Durkin’s excellent documentary is still available online.