The former Prime Minister was right – those that oppose austerity are being selfish. But given that public debt is higher than when he entered Downing Street, why didn’t he take his own advice?
David Cameron re-entered the debate on public spending this week by saying:
“The opponents of so-called austerity couch their arguments in a way that make them sound generous and compassionate.
“They seek to paint the supporters of sound finances as selfish, or uncaring. The exact reverse is true.”
“Giving up on sound finances isn’t being generous, it’s being selfish: spending money today that you may need tomorrow.”
The thing is, he’s right: opponents of ‘so-called austerity’ do couch their arguments in a way that makes them sound generous and compassionate, but those who support sound finances are, in fact, the generous ones. Also, those that knock austerity, I might add, promise the world knowing that they will never be able to deliver, whilst those that support sound finances live in the real world where debts have to be paid and there isn’t an endless money tree.
However, Cameron was also right to call it ‘so-called austerity’ – and he should know why.
This is because, when Prime Minister, first his coalition government and then his majority Conservative government spent more than it could raise in tax – all the while talking about “austerity”. Admittedly, deficits were reduced but his government still missed the targets that they set themselves with regards to balancing the books.
First the public purse was to have a surplus by 20015, then by 2017, then it was 2020. Despite reducing the deficit as a percentage of the UK’s overall GDP, the numbers were still staggering.
Indeed, despite lofty promises to balance the budget by 2015 from the then Chancellor of the Exchequer, George Osborne, according to the ONS the UK public sector deficit remained at over £100bn in 2014 and £81bn in 2015.
This accumulated spending has meant that the debt burden stood at over 1,650,000,000,000 – £1.65 trillion – when Cameron left Number 10. This, compared with what the debt stood at when he entered, means that his government added nearly £600,000,000,000 – £600 billion – to the national debt.
Of course, Cameron would be entitled to point to the reductions in the yearly deficit. He would be right to say that the deficit was halved in percentage and cash terms from 2009/2010 to 2015/16. However, this ‘so-called austerity’ means that in both cash and percentage terms, our debt has grown – and continues to grow. In 2009/10 it stood at 70.3 per cent of GDP. It now stands at over 87 per cent.
This has three immediate real world effects:
Public sector pay caps, put in place due to the financial crisis, are still in place;
The UK is increasingly vulnerable if / when there’s a financial shock and it needs to pay off its debts;
The government can do less in way of public sector investment. This, of course, didn’t stop Cameron from spending £billions on HS2. Nonetheless, as a result of our indebtedness, future governments are unable to even think of making sensible spending plans.
It should though be noted that the sustained deficit and the growing debt has had another effect: intergenerational debt. Now, because of the spending policies of New Labour, the Coalition and the previous Conservative government, the total UK debt according to the Taxpayers’ Alliance is the equivalent to £65,699 per household and, worryingly, £129,704 for every child. In 2009, David Cameron claimed that new babies were born with £17,000. Now it is far, far larger.
This isn’t just worrying for the obvious financial reason, it is obvious for the blatant immorality that this debt burden represents for future generations. Of course, it seems that David Cameron out of office realises this. It’s a shame that he didn’t recognise it when he and his team were in power.