Debts Must Be Paid

In these times, every day that passes seems to bring some new reasons to worry about the state of the British economy and particularly the scale of the debts.  Unfortunately, those in power in government and the banks don't seem to worry at all.  Is it because they feel there is no need to worry — like Mr Micawber, they expect something to turn up — or is it that they simply do not understand how serious things are?

The Coalition Government of David Cameron came into power committing itself to tackling the problem of government debt.  A reasonable and essential policy decision when they owed so much.  Cutting the debt is the foundation of their five year programme.  Yet, in spite of all the claims and public speaking and policy programmes, they are achieving nothing.  Just look at the figures.  When they came into office in May of 2010, the government debt was £700,000,000,000 — £700 billion.  If all goes well, when they leave in 2015 that debt will only have increased to £1,400 billion.  Some achievement for a government whose primary policy is to cut their debts.  Such a debt will require interest payments of nearly £100 billion per year — about 15% of total government expenditure.  They will have to cut back on spending on real services and projects in order just to pay the interest on the debts.  It is appalling.  And it is not even complete.  The figures do not take into account an every increasing burden of pay outs to subsidise public sector pensions — already costing £45 billion per year.

In order to eliminate the governments vast debts they must first of all stop spending more than they receive in income.  This is simple domestic economics — I refer to Mr Micawber again.  If expenditure exceeds income, the result is misery.  The government can no longer ring fence any part of the expenditure programme,  The NHS takes 20% of all government spending.  During the Labour years spending on the NHS doubled but 70% of that extra spending went on administration — plus interest payments on PFI deals that leave hospitals with 30 year debts while keeping the numbers hidden from government balance sheets.  Every hospital bed now has its own administrator.  Surely considerable savings could be made here and the service made both more efficient and more effective!  Further, the government via HMRC must try harder to collect all its taxes.  There is far too much avoidance and evasion.  From plumbers and builders to bankers and large corporations, they are all evading their taxes.  Only yesterday, it was revealed that many employees — including teachers and other public servants — are paid via off-shore companies to avoid NI deductions.  It has to be stopped. Osborne cannot continue protecting his mates in the City, allowing them to pay themslevs millions every year in pay, bonuses and perks and then shuffle it all off to the Cayman Isles.  Then in some areas the government needs to increase its tax rates.  They have to get the difference between income and expenditure to zero — and then set about tackling the rest of the debt.  They have to face up to the public sector pension plans.  I have no problem with public sector workers having gold -plated pensions — provided they pay for them.

The present Bank of England programmes of printing money devalues the currency, stokes up inflation and leads us towards bankcruptcy.  Greece, Portugal and Ireland have been bailed out by the ECB — and hence the Germans.  But when we go bust there is no-one to help us.  We have to sort out our own debt problems.
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