Monday 24 November 2008, and MPs are gripped by one of the most consequential parliamentary debates of the past 30 years. As Chancellor, the late Alistair Darling had just told the House that his pre-Budget statement was being “made against a background of economic uncertainty not seen for generations” and that they had gathered in “extraordinary, challenging times for the global economy.”
Seven weeks before this statement, the government undertook an unprecedented £500bn bank bailout package. With the financial world still reeling, Darling announced to MPs that a collapse in tax revenue would necessitate a combination of fiscal stimulus and government borrowing, which “will rise to £78bn this year and £118bn next year, or 8 per cent of GDP.” Some MPs gasped. Others, as George Osborne would later point out, “do not understand what the Chancellor has just announced.”
The shadow chancellor’s response was devastating: “The Chancellor has just announced the largest amount of borrowing ever undertaken by a British Government in the entire history of this country…what he did not admit is that he is going to double the national debt, to £1 trillion, and that a national debt that has accumulated over centuries is going to double in just five years.”
I listened to this as a recent graduate, working at a Westminster think-tank. My friend, Harry Cole, remixed the speech with a Tiesto track. You can find it on YouTube. As Osborne moved into the Treasury in 2010 we were still playing it at house parties.
We have done this to ourselves
It’s fair to say we didn’t quite grasp the significance of it all, but now – as our national debt breaches the £3tn barrier – it’s all coming back to me. The Keynesian debates. Coalition. Austerity. Deficit reduction. And through it all, the national debt creeping ever higher, like the imperceptible leak of a deadly gas.
Osborne was effective in reducing the deficit but given his failure to eliminate it the national debt just kept accumulating. By the time Osborne left office he’d overseen another £500bn on top of Darling’s £1tn. Up and up it went, hitting £1.8tn on the eve of Covid, at which point its trajectory shot up. Another £1tn has been added in the last six years alone.
We’ve put John Healey on the front page to accompany this story because it’s fallen on his watch, but it’s not his fault. We’ve done this to ourselves over nearly 20 years, simply choosing not to notice.
At least we got a good dance track out of it.