It’s official – British politicians are idiots.
Oh no, that’s not what I meant to say. What I meant to say is: Britain’s debt is now officially recognised as topping a trillion pounds.
The British may perhaps be forgiven for being slightly in shock about their vast national debt. Former Chancellor of the Exchequer and former Prime Minister, Gordon Brown spent most of his 13 years in office adamantly assuring British voters that his catchword was “prudence” and that under Labour there’d be no more “boom and bust.”
Well pardon us for falling about laughing, Gordon.
Brown is widely referred to in Britain as “psychologically flawed” – a description which is a bit tame if you ask me. Everyone knows that one of the differences between British conservative governments and labour governments has historically revolved around public spending. The Tories have tended to go for less public spending and fewer jobs while Labour tends to go for more jobs and higher public spending.
Everyone agrees in general that low unemployment rates are better than high unemployment rates. Between 1997 and 2010, though, Labour went completely crazy with public money. Quangos popped up around Britain like daisies, populated by enormously highly paid bureaucrats who were simply a drain on public finances. The NHS was created in the postwar period to manage preventive, diagnostic and curative healthcare for citizens who, mostly, contributed to its costs. Under Labour, this rational service turned into an inefficient money pit. Every imaginable treatment resulting from medical advances was made available to anyone who happened to be in Britain, regardless of contributions. Add to this limitless health provision a vast layer of ‘management’ bureaucrats and costs quickly spiralled out of control.
Labour also created a vast army of public sector workers with the managers and ‘executives’ on hugely inflated salaries in order to ‘compete with the private sector’. Absurdly, it became quite common to find tinpot chiefs of local councils who were earning more than the Prime Minister of Britain. An old acquaintance of mine – who is a solid Labour supporter and lives with just such a Labour council chief – took a job as a functionary some years ago in a small Housing Trust. Her salary today is 130,000 pounds a year. Yep – that’s 206,000 dollars for toddling into the office and pushing papers around from one of her secretaries to another.
Labour ran up more huge bills on welfare spending. Unemployment benefits and sickness benefits were, again, heroic developments in the post-war period. Meant as safety nets, the idea was that the nation would rally round and help people going through a bad patch until they got back on their feet and could once again support themselves. Under Labour rule, the idea became firmly entrenched that a vast army of unemployed Brits could live for years, or decades, on handouts from those who worked – without any intention of seeking employment. The last 13 years of Labour rule created a situation where citizens who don’t fancy working can simply use others’ taxes – lifelong – to get money for themselves, their kids, their rent, all the free health care they can use, exemption from paying local taxes and a host of other benefits. Fairly often, these benefits add up to more than a taxed salary. Not surprisingly, this has been pretty divisive in British society as millions of people who work and earn small salaries see their taxes paying to permanently support people who have no intention of working.
Foreign aid was doled out without restraint by Labour and with virtually no checks to verify how it was used. Spending on defence was badly handled, with many complaints about cuts in defence capability and poorly equipped troops. Finally, Labour bailed out the British banking system before it lost office – pouring billions into empty bank coffers. (See below.)
The upshot of Labour government rule between 1979 and 2010 – Gordon’s prudent regime – was a trillion pounds of debt. The British will pay £43 billion (68 billion dollars) in interest alone in 2011. That may not sound too terrible to, say, American ears – but Britain’s a small country.
Such was Labour’s contempt for the British population that when they were kicked out of power, the former Chief Secretary to the Treasury, Liam Byrne, left a one-line note for his successor which said sarcastically ‘‘I’m afraid to tell you there’s no money left.” The breathtaking irresponsibility and immaturity of that note epitomises the Labour years.
In 2010, the Conservative-Liberal Democrat coalition government took over with a mandate to cut public spending and get the national debt back under control. It’s a difficult task but the Chancellor, George Osborne, plans to cut spending by £80 billion and raise another £30 billion in taxes in the next few years.
There is however an even greater sting in the tale of Labour’s economic profligacy. The official national debt of one trillion pounds doesn’t include major liabilities such as the cost of public sector pensions or private finance initiatives. Neither does it include people’s mortgages, credit cards, overdrafts or personal loans. And it doesn’t yet include the massive bank bail out in which Labour poured money into the state-backed Royal Bank of Scotland and Lloyds Banking Group. The bank bail out alone will add an extra £1.5 trillion to national debt when official figures are updated in January 2011.
Britain’s TaxPayers’ Alliance estimates that the true British national debt is nearing 8 trillion pounds.
Britain is not alone in Europe in struggling with vast national debt. Greece, Ireland, Portugal, Italy and Spain are all beleaguered with public debt. All these European countries are taking steps to cut public spending and impose austerity measures on their citizens. For the most part, political debate revolves around how far and how fast to cut spending. But reducing politics to raising or cutting public expenditure is illusory. The underlying problem is that there is no political leadership – right, left or middle – which seems capable of addressing the even more difficult problem facing Europe’s economies. That problem is how to develop a new engine for growth in European countries and create wealth and jobs that are not founded on the fragile bubble of unaffordable public spending.