The UK government borrowed £120 billion last year. It borrowed around £150 billion in each of the two previous years. The government's debt stock reached £1 trillion in January.
Before anyone says another emotive word about cruel expenditure cuts and the need to protect the welfare state, can we at least agree that this rate of borrowing is unsustainable? Is there anyone out there who thinks that UK economy is large enough to absorb this debt accumulation?
Since we all agree that the government deficit must be reduced rapidly, let us now work out the best way to do that. Do we need to raise taxes? What expenditures need to be cut? What social services should be protected and which ones can we reform?
13 comments:
I see progress in this chart. Not enough, but at least borrowing is falling.
Also worth noting this is the rate of the disaster. Even if net borrowing was zero we'd still be paying a fortune in debt repayments year on year.
Time for Growth and some serious pruning of the state. ( Dole has to be cheaper than employing civil servants. )
"Do we need to [increase] taxes?"
Certainly not, although we desperately need to shift taxes from earned income to the rental value of land.
"What expenditures need to be cut?"
That's easy. Total expected tax receipts for 2012-13 are £590 billion all in, so all you have to do is go back in time to find the most recent year where the government spent less than £590 billion (adjusted for inflation)
That year happens to be 2003-04, it's not as if we were running a teeny tiny state with no welfare system, public services and a fair chunk of theft/waste even then.
So let's just dust down the budgets for 2003-04, for every single department, school, hospital, police station, whatever, index them up for inflation and tell every single department, school etc what their budget is.
Problem solved!
I wouldn't disagree, in principle, with Mark wadsworth, but before just dusting down the 2003 - 2004 budget provisions and uprating them, can we first excise provision therein for any "protecting civil liberties" experiments, like ID Cards, the National Identity Register, and the like, plus also excise the provision for some (the evidence since 2003 - 2004 shows) plainly ludicrous "it will work this time" IT experiments.. . else the recipient departments might just see the now uprated provision for them still being there as an excuse to resurrect them !
on taxes, I merely pose the question. If the conclusion is that taxes should not increase, then imply something about expenditures.
The key point is that we need to be honest about the deficit. Its large, it hasn't come down much, despite the coalition's efforts, and as a consequence public sector indebtedness keeps growing.
It cannot keep growing ever.
Housing benefit. It distorts the market for housing, keeps people out of work ( they cannot afford to ), and it is mostly a subsidy for banks who make lots in interest lending to would be landlords.
How to solve it? No idea...
Oh, and Mark, if we add the inflation since 2003 - 2004 to the £590 billion tax take We'd be looking at about 22% inflation since then. Or about 130 billion extra spending. Or 130 billion borrowing. Roughly where we are at.
http://www.rateinflation.com/inflation-rate/uk-historical-inflation-rate.php
Tax rises are not needed just collect the taxes due by big cotporations and the 1% mainly non doms who want all the bensfits of british society but don't want to pay. Tax reduction measures, whilst legal, have reduced the UK tax take by 3-4000 GBP per head of population, put that into the coffers and suddenly our borrowing requirement is halved.
I feel that the howls from the BBC and the Guardian have reached the ratings agencies and done Osborne a great service.
I do wonder how long we're to keep our AAA.
The only way the welfare state will ever be cut back is if we go completely bust.
Anon at 16.08
"Debt accumulation."
It's still getting bigger every year despite lower levels of borrowing.
It's simply not good enough.
The real disagrace of that graph is that Brown was borrowing 35-40 billion during the peak of a boom...
So much for Keynesian counter cyclical spending that they now claim to support.
Nice graph but two questions 1) Why the jump in debt and 2) why is it coming down.
1) Debt jumped because of the need to save the banks and not because of an underlying cash give-away to the public sector i.e. structural
2.a)It's coming down because the structural element is reducing or
2.b)It's coming down because the non-structural element is reducing.
All the talk about the size of the state is unfounded unless we can see just how much the banks are draining out of the taxpayer, so leave the feckless alone - at least for the moment
Nonsense Anon.
Brown was borrowing nearly 40 billion at the peak of the boom.
That was not bank bailouts, it was reckless overspend.
The reason the deficit suddenly jumped was because previously the government had a lot of money incoming from the Banking industry in taxes, but when they all suddenly lost money in the crash those tax revenues disappeared leaving a massive hole in government finances.
I'm not 100% certain on that particular graph but generally bank bailouts are not included in these deficit figures.
Theres a lot of other stuff not included as well, such as the PFI con.
Post a Comment