DEBT FACTS 2011

With councils accross the country including Suffolk County and Waveney District Councils being forced to make cuts to public services, the facts below provide some context about the huge levels of debt we face as a result of the incompetence of the previous Government.

Labour propose cutting more slowly but this would simply mean cutting deeper later and passing more debt on to our children.

Debt has reached more than £2 trillion 

• National debt has reached £2.3 trillion. According to figures published by the ONS, net debt including financial sector interventions has reached £2,322.7 billion (ONS, Public Sector Finances, 25 January 2011, link).
• It works out at £37,600 per person. The national debt per person now stands at £37,589, based on a population of 61.8 million (ONS, Mid-Year Population Estimates, link).
• The new measure of debt includes Lloyds and RBS for the first time. As the ONS say: ‘For the first time data for Royal Bank of Scotland and Lloyds Banking Group have been fully incorporated into the public sector finances. This has impacted considerably on the measure of public sector net debt that includes the effects of the financial interventions’ (ONS, Public Sector Finances, 25 January 2011, link).
• Debt interest is costing us £120 million per day. In 2010-11, debt interest payments will be £42.7 billion or £120 million per day (OBR Economic and Fiscal Outlook, November 2010, Table 4.14).

This is Labour’s debt

• Labour ran a structural deficit for seven years before the recession began. The recession began on 1 April 2008 (ONS, Times Series IHYQ). Cyclically-adjusted public sector net borrowing – the structural budget balance – was in deficit in each of the seven years before that between 2001-2 and 2007-8 (OBR, Budget Forecast, Table C15).
• Labour entered the financial crisis with the largest structural deficit in the G7. According to the OECD, the UK’s structural fiscal position was one of the best in the G7 in 2000, but by 2007, just before the crisis, had deteriorated to be the worst in the G7 (OECD, Economic Outlook 88, November 2010).
• Institute for Fiscal Studies: before the crisis Labour had one of the largest structural deficits in the developed world. ‘By the eve of the financial crisis, [fiscal drift under Labour] had left the UK with one of the largest structural budget deficits in the developed world… the vast majority of other OECD countries did more to strengthen their public finances during Labour’s first eleven years in office than Labour did in the UK’ (IFS, The Public Finances: 1997-2000, 19 April 2010, p. 2 and p. 10).
• Tony Blair: Labour did not do enough to eliminate the structural deficit after 2005. ‘We should also accept that from 2005 onwards Labour was insufficiently vigorous in limiting or eliminating the potential structural deficit. The failure to embrace the Fundamental Savings Review of 2005-6 was, in retrospect, a much bigger error than I ever thought at the time’ (Tony Blair, A Journey, pp 681-2).

Days of debt interest

The average taxpayer will pay £1,400 in debt interest this year. The independent Office for Budget Responsibility forecasts debt interest spending of £42.7 billion in 2010-11 (OBR, Economic and Fiscal Outlook, Table 4.14, link). There are 30.5 million taxpayers, so on average each taxpayer will pay £1,400 in debt interest (HMRC, Number of individual income taxpayers, link).

• Average earnings in Waveney are £23,035. Figures from the ONS show median full time earnings in Waveney are £23,035 (ONS, Annual Survey of Hours and Earnings, Table 9.7a, Tab ‘Full Time’, 8 December 2010, link)
• Someone on average earnings pay £3,312 in income tax. Based on a personal allowance of £6,475 and a tax rate of 20 per cent, someone earning £23,035 would pay £3,312 in income tax (HMRC, link).
• This means that the average taxpayer works for 154 days just to pay Labour’s debt interest bill. The average taxpayer will pay £1,400 in debt interest this year. That makes up 42 per cent of their total tax contribution of £3,312 (1400/3,312 = 42 per cent). So for 154 days of the year the average taxpayer is just paying for debt interest (42  per cent x 365 = 154)

Constituency	Average Earnings	Amount paid in tax	Percentage of tax bill	Days of debt interest
United Kingdom	25,879	3,880.8	36%	132
Great Britain	25,993	3,903.6	36%	131
England and Wales	26,052	3,915.4	36%	131
England	26,250	3,955.0	35%	129
Waveney	23,035	3,312.0	42%	154

BROADBAND – ESSENTIAL TO OUR ECONOMIC RECOVERY

On the morning of Wednesday 6 April I hosted a conference/seminar on broadband provision in Suffolk at the  Waveney House Hotel in Beccles, Suffolk. The program is still available at: http://www.peteraldous.com/broadband_conference 

The event was very well attended by people from communities accross Suffolk, including many parish councillors and I would like to thank all of you for your time as well as the speakers, some of who came from outside Suffolk to present to us.

The aim of the Conference was to explore how industry, government and local people can work together to bring broadband to the whole of Suffolk, including the Waveney Valley. Such partnership is central to the Government’s vision for a Superfast Broadband Future.

The introductory presentations from Dr Stuart Burgess and Adrian Wooster made very clear that parts of Suffolk and particularly Waveney suffer from poor communications of all kinds and may require an innovative mix of public and private investment and innovative technology solutions, utilising existing infrastructures, to have access to high performance broadband at affordable cost.

I was very pleased to welcome Minister for Culture, Communications and Creative Industries, responsible for broadband, Ed Vaizey who gave an excellent keynote speech, outlining the Government’s vision to provide funding specifically for areas not currently commercially viable for most internet service providers. The Minister answered a number of challenging questions and the session was, I think most will agree, informative and entertaining.

The conference then heard from Robert Ling from Broadband delivery UK (BDUK), the body responsible for delivering the Government’s vision, who outlined the criteria for bidding for Government funding.

Andy Wood and Peter Ingram then gave an excellent presentation outlining the Choose Suffolk bid to be submitted for BDUK funding. My role is as a critical friend to this bid, doing what I can to help, but primarily ensuring that the constituents I represent have a voice.

After a break the conference heard from representatives from BT and other services providers, followed by representatives of publicly owned infrastructure, all of whom gave an insight into the different solutions to providing good quality broadband to all parts of Suffolk

The presentations made at the conference will be available via this site in the next few days and the video recording will also be available as soon as possible for those who were unable to attend or who would like to revisit particular sessions. The site will be updated as necessary.

Please do subscribe to this blog above and feel very welcome to participate, particularly if you are a Suffolk constituent (I represent Waveney but the issues span Suffolk constituencies) and have views or points you would like heard.

A Budget for growth, jobs and families

Today in the House of Commons, George Osborne delivered the Coalition Government’s second Budget. It sets out how we will reform the nation’s economy so that we enjoy growth and jobs in the future. It is also about doing what we can to help families with the cost of living – including an immediate 1 pence cut in fuel duty.

In last year’s Emergency Budget the new Government had to bring the country back from the brink of bankruptcy. Labour had maxed out the country’s credit card, and left their bills for our children and grandchildren to pay. They doubled the national debt and as a result British taxpayers now spend £120 million a day paying off the interest on Labour’s debts. That is more than we spend on our schools or defence.

We must stick to the plan to tackle the deficit. But stability alone is not enough – Britain has to earn its way in the modern world. Under Labour, we lost ground in the world economy.  We slipped down the league tables for economic competitiveness, as taxes got higher and red tape ever more restrictive. Manufacturing halved, as they placed all our bets on the City of London with a model for growth based on unsustainable public spending, immigration, and financial services.

With the government now accounting for half of our economy, we have to reform. We need a new economic model, one which is underpinned by investment, manufacturing and exports, so that Britain makes things again.

This Budget kick-started that reform with a tax cut for business, rate relief for small firms, a doubling of Entrepreneurs Relief and more support for research and development. We will scrap burdensome regulations that cost businesses millions every year and introduce a moratorium on all new regulation for our smallest companies. There will be radical reforms to the planning system to encourage more sustainable development. To ensure growth is more evenly spread, we have announced 21 new Enterprise Zones across the country. Creating a £3 billion new Green Investment Bank will encourage in another £15 billion in private sector investment in green projects. Investing £100 million in new science facilities will help ensure Britain stays at the forefront of innovation. 

To reach our economic potential we have to support young people. Labour left Britain with a legacy of very high youth unemployment. This Budget will help them back into work with 100,000 work experience placements and 50,000 additional apprenticeship places, on top of the 200,000 already planned.

Charities will benefit too. A new scheme will allow Gift Aid to be claimed on small donations without the donor needing to fill in any forms at all. That means Gift Aid on the contents of the collecting tin and the street bucket. 100,000 charities gain about £240 million. There are radical plans to support the largest donations too. In future if you leave 10 per cent or more of your estate to charity, then the Government will take 10 per cent off your inheritance tax rate. Beneficiaries won’t be better off but charities will get £300 million more.

The Budget doesn’t choose between creating the conditions for future growth and helping families with the cost of living. Our plan for growth means doing both. At a time when money is tight for families up and down the country, people need to know that the Government is on their side.

That is why I am pleased that the Chancellor not only replaced Labour’s fuel duty escalator with a fair fuel stabiliser but also announced a 1 penny per litre cut in fuel duty – all paid for by a tax on oil companies. This won’t transform prices at the pump, but at a time when oil prices round the world are spiking, the Government is trying to ease the burden. Alongside the freeze in council tax, and the delay in the rise of Air Passenger Duty, it means the Government is doing what it can, even when money is tight.

The increase in the personal allowance will also make a difference to hard working low paid families. From April next year the personal tax allowance will increase by a further £630, to £8,105. That’s another real increase of £48 extra per year, or £126 in cash terms. Together with this year’s rise, that means a total of £326 extra each year for those working hard to support their families. And it means, just ten months into office, this coalition Government has taken 1.1 million low paid people out of tax altogether. First time buyers will also receive help with a new £250 million programme to help 10,000 people get on the housing ladder.

That’s why I am supporting this plan for growth. By helping families with the cost of living, and backing enterprise this Budget puts fuel into the tank of the British economy.