Government debt: Thatâ€™ll be Â£2.2 trillion, please

Posted: Thu 25 Jun 2009 8 14 am

Government debt: Thatâ€™ll be Â£2.2 trillion, please
The amount of money owed by the Government is huge and rising, says Eamonn Butler, so why arenâ€™t we pursuing simple, effective ways to reduce the burden?

by Eamonn Butler

http://www.telegraph.co.uk/finance/economics/5627352/Government-debt-Thatll-be-2.2-trillion-please.html

Today is Cost of Government Day. Average taxpayers in Britain now have to work almost half the year â€“ 176 days â€“ to pay their share of the cost of running Gordon Brownâ€™s administration. Every penny we have earned since January 1 has gone to feed the state leviathan. It is only from today that, at last, you have started working for yourselves and your families.

More than five months of our servitude â€“ from New Year until May 14 â€“ were spent working to pay taxes, such as income tax, national insurance, council tax, VAT and many others including the notorious â€œstealthâ€ taxes. But all that effort was still not enough to feed the monster, and when he had run out of our money, the Chancellor, Alistair Darling, had to borrow â€“ at Â£20â€‰ million an hour â€“ to pay his bills.So for the past six weeks, day in, day out, we have been working to fund that borrowing. No wonder Mervyn King, the governor of the Bank of England, warned yesterday of the â€œtruly extraordinaryâ€ scale of deficits.

We have had to put in 10 daysâ€™ more work than last year in order to keep the Government afloat. It is not just the money that Brown and Darling borrowed to bail out the banks. It is the fact that every bit of public spending â€“ national and local â€“ is rising faster than taxpayersâ€™ incomes. In 1999 â€“ when Brown had finished with New Labourâ€™s 1997 election pledge to match Conservative budgets â€“ government spending was just 36 per cent of the nationâ€™s income. Now it is a third more â€“ 47.5 per cent this year â€“ and rising.

Not that you can believe official figures. The International Monetary Fund thinks things will be far worse. Our national income will take a knock, and more people will be out of work and receiving benefits from the Government rather than paying it taxes. That makes it probable that public spending will be more than 50 per cent of our income â€“ sending Cost of Government Day into July.

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And still he boasts, in PMQs, that Labour will be spending vastly more than the Conservatives! "Investment" he calls it!

And he can't even boast about tractor production!

How we pay for electing these "progressives"! Mad

These debts are so mind-boggling that we have to wonder whether any government will ever be able to get us out of the Brown mire. Is engineered inflation the only answer?

Posted: Thu 25 Jun 2009 8 22 am

Merv.....

Mr King told MPs that whoever is in office after the next election will have to set out clear plans to reduce borrowing, something that could only be achieved by cutting spending, raising taxes or a combination of the two.

"The scale of the deficit is truly extraordinary," Mr King said. "There will certainly need to be a plan for the lifetime of the next parliament, contingent on the state of the economy, to show how those deficits will be brought down".

Posted: Thu 25 Jun 2009 8 28 am

But even Merv seems to be missing the point a bit. It will not just be a matter of "bringing the deficit down". That would be simple enough, with a ruthless cull of the public sector - abolition of Quangos and feather-bedded officialdom. Reducing Labour's client-state, in other words.

The long-term need is to reduce the debt already incurred. Anyone who has ever got into a debt-mess in his personal and family management knows that it is easy enough to service the debt, but a bloody business repaying it.