Politicians: time to get a grip - and a spine
Chief Executive
£105 billion.
That's how much we spent on debt interest payments last financial year. Let me put that in perspective, the MOD's budget that year was less than £60 billion (hitting 3% of GDP would take us to around £70 billion); the Ministry of Justice's budget was less than £13 billion; it cost £19 billion to deliver the Elizabeth Line (Crossrail, over budget of course), delivering over 200 million passenger journeys a year.
Imagine what you could do with that £100 billion.
Particularly worrying, the OBR forecasts the share of GDP going on debt interest will remain basically the same across the Parliament - that's well over £500 billion of taxpayers' money.
And of course, as Simon French wrote in The Times a few days ago, the cost of borrowing is only going to get worse if "investors simply do not believe that there is a political path to more sustainable debt level". Let's hope they're not reading the OBR's long-term projections (debt to GDP surpassing 300% if we experience further shocks, which seems highly likely).
All of which means we have to get serious about making tough choices about what the State can and can't do, and where we want to prioritise spending. Borrowing even more really isn't an option, and it's deeply irresponsible - not to mention lazy thinking - just to keep calling for government to do so.
It also puts in stark relief the need for growth. I remember a few years back discussing on a panel show whether the answer to the UK's public finance woes was loading more taxes on wealth creation - that easy to reach for answer to where more money can come from - and I'll repeat what I said then: there are no public services without profit.
The trouble is, it's hard to argue for tough decisions on public spending when by definition that means losers. If you are cutting costs, or indeed reprioritising spend, then you are removing money from something (if indeed you're not calling for more borrowing). And where is the lion's share of spending? Health, welfare and pensions - and the NHS is always protected.
And it is of course the job of each secretary of state to champion their department; it's completely rational to push against funding settlements that you think will put delivering your objectives at risk. But there is also a collective responsibility to tackle this doom loop of low growth (which also means poorer households), high debt and collapsing public services.
Imagine if bids for more cash had to be accompanied with ideas for where that money should be taken from - would the education secretary tell the Chancellor to cut the police budget in favour of extending breakfast clubs to all schools? Would the secretary of state for net zero suggest less investment in housing, or further cuts to welfare? Because that is the reality of public spending, they're the trade-offs.
And it's not just the frontbench, to all the MPs railing against the Winter Fuel Allowance and welfare cuts, and calling for the reversal of the two-child limit and more spending on [insert MP interest area], where is the money coming from? Or what's your alternative approach that will reform services to deliver more for less?
Which is why it is brilliant to see the biggest parliamentary caucus, the Labour Growth Group (over 100 MPs) coming out swinging ahead of next week's Spending Review - and they're bang on.
Chris Curtis MP, co-chair of the group, said:
“We’re not living in a fairytale where everyone gets what they want without trade-offs — this is a fight for Britain’s future. Those demanding ‘jam today’ are ignoring the reality that without growth, public services and living standards will stagnate further. We’ve got to make tough choices now or we’ll soon be facing impossible ones.”
There is no route to prosperous Britain without growth. There is no route to an effective, sustainable State without ruthless prioritisation, bold reform and a hard grip on the public finances.
"We’ve got to make tough choices now or we’ll soon be facing impossible ones.” Amen.