Keir Starmer is sitting on a multibillion-pound ticking time bomb – it's about to explode
Keir Starmer grilled on tax rises by Rigby in June
The PM’s promises to contain tax increases are beginning to look as thin as the “thin ice” on which this administration is skating. With only 33% of the vote and a negative rating, Mr Starmer appears quite gutsy to decide to steal hard-earned savings from pensioners in order to fund Labour’s spending jamboree, if the rumours are to be believed much of this tax raid was not declared in the pre-election manifesto. This will be a major blow to the voters, many of whom may quickly regret leaving behind an incompetent Conservative government in favour of a regime yet to prove its competence but already showing a propensity to make the people of Britain poorer.
All of this may seem alarming but it is as nothing by comparison with the small matter of debt which will impact not just present generations of British people, but also generations to come.
When Mrs Thatcher was in power her economic policies and good housekeeping ensured that our national debt to GDP (how much the economy produces each year) ratio was just 32%. By the time Tony Blair was in power debt dropped to 29% but that debt pile then grew to 37%. Now it is approaching a scary 100% of GDP. The debt is equivalent to an entire year’s worth of everything we produce in the UK and that debt is producing a huge interest cost paid for by us, dear reader, the taxpayer. And make no mistake we are all taxpayers. Even if we don’t pay income tax or national insurance we do pay: VAT, Council Charge, CGT on investments, duty on alcohol, ULEZ, petrol duty, excess charges for energy to pay green subsidise etc etc. It sometimes seems that the government would tax our very existence if it could.
And perhaps they are.
But this is not the whole story, sadly, because the Blair administration sneakily introduced off-balance sheet mechanisms of raising money, in particular unaffordable student loans, the vast proportion of which will be paid by taxpayers in the end and Public Finance Initiatives (PFIs) which were a disaster for organisations like the NHS.
I know of which I speak because PM Blair’s former health czar, Paul Corrigan, asked me to go into the largest health trust in the UK to help them commercialise and become more cost-effective. Therein lies another story but I can say that the PFI was crippling the hospital. NHS administrators were simply incapable of negotiating commercial contracts, the debt often lasted extraordinary periods and any variation down to the number of toilet rolls, carried heavy penalties.
I mention PFI because it appears to be once again raising its ugly head as the new Chancellor grapples with how to fund a bloated and ever-expanding state.
Student loan debt and PFI together will and do add up to hundreds of billions of pounds of debt off the balance sheet but are still a liability to taxpayers and to an extent driving currency valuation and interest rates.
On top of this horror upon horrors ahead, we have totally unaffordable, gold-plated and growing public sector pensions paid for by workers out of hard-earned monies, adding insult to a raid on private sector pensions.
All of this adds up to a vast sinkhole into which our national wealth will disappear. If only it were even deployed usefully to train apprentices to do productive work, PFI to fund toll roads which pay back, a productive and smaller state rather than the diminished public sector productivity of recent years.
But it is not.
The population of our country was funded not to work through furlough when they should have been encouraged to work. Businesses had loans, some of which were dodgy. We ate out to help out. Thank you, Mr Sunak, and marvellous to see the architect of our economic demise in government, Lord Vallance. Hope your spreadsheets have improved.
The cost of all this was enormous and it is the avoidable cost of lockdown that we are all paying for, partly the cause of on balance sheet debt – but only part.
Governments cannot continue spending beyond our means, because it is our money, not theirs, and pretending everything is ok in order to boost their popularity. The chickens will come home to roost, there will be a reckoning and this government is likely making it disastrously worse.
John Longworth is a businessman and entrepreneur, Chairman of the Independent Business Network of family businesses and a former MEP.
