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 |
Peter Aldous MP 