Sunday, 5 January 2014

Why Are We Still Broke?

Our great and wise leader David Cameron has been on the television this morning making noises about how his new year resolution is to cut taxes for the lowest paid and pledged to increase the state pension.
With one eye on the election in 16 months time, the Prime Minister said that: 'If I had money in the coffers i would target that money at the lowest paid'.
After over three of severe austerity cuts, why is there not enough money in the coffers to throw a bit towards the lowest paid? All i hear is how the Conservatives are bringing down the national debt and how the economy has turned the corner and plan A was a roaring success after-all so why are we still staring into empty coffers?
The figures from HM Treasury show that the National Debt in 2013 was £1.16 trillion but when the Conservatives took office in 2010 it was £0.76 trillion.
That would mean that despite cutting and slashing everything in the name of austerity, the debt has actually gone up by £0.40 trillion under the Conservatives tenure.
Not being of a financial mind, maybe i am reading it wrong but the Treasury figures show that the Debt per GDP in 2010 was 52% but in 2013 it was 75%.
Something is very wrong with the ruling Government when they are taking credit for introducing austerity measures that have somehow led to even more debt and something is even more wrong with the opposition that they are not screaming these figures from the rooftops.   
With the election just over a year away, i'm sure if more people took the time to look at the figures the next time Cameron of Gideon tell us how well everything is going, it would make for interesting conversations in the queues of the food banks and unemployment office.


Nog said...

You're being unfair to Cameron by making the almost universally held fallacious assumption that the fact that a government has provided a service for 1, 10, or 100 years means that there must be a sustainable way for the government to provide those services forever. If you want to intelligibly understand the government's finances, you should start from zero taxes, zero services, and zero debt and work up from there instead of setting your zero, your conceptual starting point, at current taxes, current services, and the current debt level. By taking 2010 as your starting point, and in effect treating the 2010 budget as if it was the same as zero taxes, zero spending, and zero debt, you guarantee that you will reach absurd conclusions.

Also, here in the States, when it comes to government debt, there seem to be three numbers that are thrown around and often conflated:

1. The underlying national debt, which is the sum of money that taxpayers are going to have to pay back at some point via increased taxes and reduced services
2. The annual increase in the national debt
3. The geometrically growing rate at which the national debt is annually increasing

Usually, when politicians talk about "cuts" and "deficit reduction" here, they are talking about #3.

The cold hard truth is that for every major country, it would take several years of the government doing literally nothing (i.e. no health care, no retirement benefits, no paying the military, no providing a police force) but collecting taxes to actually get rid of the debt.


Lucy said...

Lots of words but you miss the point that after massive cuts to bring down the deficit, the debt is more than it started off at. When Cameron says austerity is working it plainly isn't because the debt keeps going up whatever way he tries to spin it. In three and a half years he has taken a debt of £0.76 trn and turned it into a debt of £1.16 trn. No spinning that or trying to flip tricks about how it is worked out, that's the bottom line and what the Labour Party should be hammering into Joe Public. Vote Tory, who will slash and cut at your services/wages/pensions/benefits while cutting cut for the richest (50% down to %45) and raising VAT and get an even larger debt for your woes.