Tuesday, May 04, 2010

Friday's on my mind

It’s the elephant in the room. The huge monstrous object in the corner everyone knows about and no-one wants to discuss.

It’s the Government’s massive debt. On May 7, no matter who wins the election, the elephant will lumber onto centre stage.

It’s a terrifying prospect because – despite endless manifestos, never-ending discussions and four and a half hours of leaders’ debates on TV – we still don’t know how it’s going to be dealt with.

We borrowed £163.4 billion in the last 12 months. We owe £890 billion in total. By the end of this year, it’ll be a trillion pounds.

A trillion is the sort of sum few of us can really get our heads round. It’s a very big elephant in a very small room.

Actually, if you include the money the Government has spent on building new schools and hospitals and managed to hide, thanks to the Private Finance Initiative, we already owe £1.34 trillion.

The next Government, whether it’s red, blue, yellow or a combination of these, has no option. It will have to start paying off the debt.

At the moment, the interest on our loans comes to £35 billion a year – that’s more than we spend on defence, transport or law and order.

We can’t go on like this. As every bankrupt knows, there’s a price to pay for a mindless spending spree.

Just ask the Greeks – their day of reckoning has arrived and the country is in turmoil. Their debt has been downgraded to junk making the home of democracy Europe’s first sub-prime borrower.

Public sector workers are taking big pay cuts – 30 per cent in some cases – taxes are rising and jobs are disappearing. Protesters are taking to the streets.

We’re not as badly off as Greece mainly because we aren’t in the euro (one of the decisions Gordon Brown got right was to resist Tony Blair’s desperate desire to sign up to the straightjacket currency).

But our debts have to be tackled and, when we go to the polls next Thursday, we really won’t have a clue what our politicians will do.

Worse than that, it doesn’t really make much difference who we elect. The crisis will be the same and the cuts will be similar.

The Institute for Fiscal Studies reckons there are massive black holes in each party’s plans.

The Conservatives, according to the IFS, can’t account for £59.4 billion of cuts and tax increases. Labour can’t account for £47 billion. The Lib-Dems are £42.7 billion short.

Whoever wins, according to the experts, we face the biggest public spending cuts for decades. That’s on top of tax increases which will come to £15.8 billion under Labour, £10.1 billion under the Tories and £19.7 billion under the Lib-Dems.

Call me a bigot but I’d say the truly bizarre aspect of this election campaign has been the refusal of the parties to address these issues openly and honestly.

Cast your mind back to the days before Cleggmania swept everything before it and you will find Labour and the Tories arguing earnestly over a £6 billion increase in National Insurance.

“A tax on jobs,” they said, claiming to have identified ways of saving enough money to reverse the increase.

But it’s a sideshow. They’re squabbling about £6 billion. They should be debating how to fill a gaping hole worth maybe ten times that much.

It’s partly our fault the parties have carefully skirted round the subject. When the Tories warned we were facing “an age of austerity” their poll ratings fell and they’ve never really recovered.

We are as bad as our political leaders. We don’t want to know. We can’t really face the consequences and we’re likely to vote against anyone who puts it to us straight.

You can’t put all the blame on the parties. They’re fighting an election. They all want to win.

Like the Marxist-style cover to the Labour manifesto, with its happy family looking over the green countryside to the new dawn, they want us to believe things can only get better.

It won’t be like that. Cuts will be drastic. A hit-list from the Taxpayers’ Alliance gives us some idea of what we’re facing.

They say child benefit and free bus passes for pensioners should be abolished. Some public-sector workers should have a 15 per cent pay cut, the rest should have a pay freeze and their pension contributions should rise 30 per cent.

The Taxpayers’ Alliance wants state pensions frozen, ten per cent of public sector jobs to go and the interest subsidy on student loans abolished.

Taxes will rise – everyone thinks VAT will hit 20 per cent yet no politician is prepared to admit it – and we may well dip back into recession.

I am absolutely convinced the next Government faces widespread civil unrest – strikes, protests, riots – as reality bites.

This is not an elephant in the room, it’s a stampeding herd of elephants charging towards us while our leaders point in the opposite direction and pretend everything’s OK.

We won’t know what hit us when, after the election, we all get trampled under foot.

• It probably took about three minutes to read this article. In that time, the national debt increased by £930,636.

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