This week, it was confirmed that our national debt has now surpassed the dismal milestone of £3trillion. Such an enormous number is hard to comprehend, so let me put it in context.
With £3trillion, we could build ten million new homes, 30 HS2 rail networks or 2,000 Shard skyscrapers.
In terms of public services, we could fund the NHS for 12 years – which you might think is remarkably brief – and pay for all English state schools, universities and colleges for two generations.
If the entire £3trillion was spent in just one year, it could pay for the salaries of 60 million teachers, 67 million nurses or 33 million doctors.
As the economist Liam Halligan pointed out yesterday, between April and September this year, we spent £61billion on servicing our national debt. That is an unconscionable waste. That figure – frittered away in just six months – is equivalent to our annual defence budget, nearly all the education budget or the annual GDP of Slovenia.
We must get to a point where we are able to spend sensibly on defence, schooling and healthcare without further indebting ourselves.
But this is not a priority for the Government, apparently, which seems intent on making the cost of the British state even more expensive.
In his lachrymose ‘keynote address’ to the Labour Party’s annual conference last month, the Prime Minister announced a slew of policies that will cost a fortune.
If the entire £3trillion was spent in just one year, it could pay for the salaries of 60 million teachers, 67 million nurses or 33 million doctors
Joseph Dinnage, senior press officer at the Prosperity Institute, puts the mind-boggling sum of £3trillion into context
Take his flagship ‘National Care Service’. This is going to be modelled almost exactly on the ruinously expensive and inefficient National Health Service, which is projected to cost almost £300billion this financial year.
The Chancellor, John Healey, is expected to announce tax rises on banks and online retailers in next week’s Budget. But targeting our few remaining profitable industries with pernicious tax hikes is kryptonite for economic prosperity. It is naked short-termism that will harm future growth. Why is the Government implementing such damaging policies when our economy is on the brink of catastrophe? Of course, the answer is political.
As we saw with Keir Starmer’s ill-fated Welfare Bill – which failed to cut benefits spending by only £5billion due to rebellion from socialist backbenchers and ultimately torpedoed his premiership – the Labour Party is ideologically incapable of promoting economic growth. It exists to spend other people’s money.
But the time for playing politics with our economy is over. One more major economic shock could push us into defaulting on our debt.
Imagine, God forbid, another pandemic was to strike us next month. The virus hits, but the state has no money to pay workers to sit at home, let alone subsidise their lunches.
Businesses go under left, right and centre, causing an unemployment crisis. But there’s no money to spend on out-of-work benefits, and there is nothing for a slew of Nightingale hospitals, leaving people to die at home. Britain would be bust. Just as we did under another Labour Chancellor named Healey in 1976, we would have to go cap in hand to the International Monetary Fund for a loan.
Which is why Labour must face down its most toxic elements and start saving money. And, let’s be clear, this is easy. All that’s needed is political will.
A good place to start is the NHS. Right now, we have a healthcare system that is one of the worst performing among developed nations.
Life expectancy has flatlined and healthy life expectancy has fallen by two years in the past decade, yet NHS spending keeps rising.
With the right reforms we can keep healthcare ‘free at the point of use’, as socialists demand, and save money in the long run by freeing up the private healthcare sector and keeping Britons healthy.
The Chancellor, John Healey, is expected to announce tax rises on banks and online retailers in next week’s Budget
Specifically, we at the Prosperity Institute recommend the reintroduction of tax relief on private medical insurance – lowering the cost of private healthcare for individuals and employers.
This would ease the burden on the NHS while also boosting growth in the wider healthcare industry. Polling commissioned by the Prosperity Institute also found that the public, who have seen for themselves the chaos and filth of state-run hospitals, is on board. Almost 60 per cent of participants preferred systematic healthcare reform to continuing to throw billions at a broken system.
The soaring cost of the welfare state must also be addressed. In the current financial year, Britain is projected to spend almost £335billion on social security and welfare benefits – roughly 10.6 per cent of GDP.
As Mail readers will know, over four million adults in England and Wales claim personal independence payments (PIP), £37.3 billion is spent annually on social housing, and according to the Office for National Statistics over half the population of the UK (53.3 per cent) are net recipients of the state, rather than net contributors.
Fixing this requires root-and-branch reform. The Timms Review, launched last year to assess the system, found that PIP is unfit for purpose and requires reform.
As my colleague, economist Emmanuel Igwe, has argued, PIP does not need reform, it needs to be scrapped and replaced with a properly means-tested, robustly assessed alternative.
It is controversial, yes, but the state pension should also be re-examined. While Andy Burnham has announced that he will ‘reform’ the triple lock in 2030, he is only doing so to fund other extortionate schemes.
The Centre for Policy Studies think tank calculates that since its introduction in 2010, this shameless bribe to pensioners has cost £78billion and will continue to rise with inflation.
Similarly, unfunded, gold-plated public sector pensions in the NHS and education sector carry liabilities in the hundreds of billions.
The Government is making promises to public servants it will never be able to fulfil. A brave government would do well to switch the remaining public sector pensions to defined contribution schemes, like millions of working taxpayers in the private sector.
Of course, to get working-age people off benefits and into jobs, those jobs need to exist in the first place. Increased red tape, business taxes and a minimum wage soaring far ahead of other earnings have shuttered businesses and made it uneconomic to hire.
We have worked out that by freezing the National Living Wage for five years – it is already hugely generous by global standards – Britain could create up to 600,000 new jobs for young people and contribute £2.4billion to the Exchequer.
This must also be accompanied by giving businesses the freedom to hire talented staff by repealing Angela Rayner’s catastrophic Employment Rights Act.
Another great issue of our time is energy. Net Zero has cost us dearly, and though it has come far too late, it is welcome that Burnham has decided to amend some of the worst excesses of Ed Miliband’s green madness by approving production at the Jackdaw gas field.
He must go further. We have found that Net Zero will add the equivalent of £1,400 a year to every British household’s energy bills by 2030. By reversing this and making the most of the resources we have in the North Sea, Britain could generate an extra £13.4billion in investment. This is a no-brainer for any government serious about repairing the balance sheet.
The answers are staring Burnham and Healey in the face. If the Chancellor stands before the House on Wednesday and delivers yet more expensive tax rises and dodges tricky decisions, know this: he will be doing so out of political expediency – not because it’s the right thing.
Joseph Dinnage is senior press officer at the Prosperity Institute.