Bill Carmichael: Tories fail to shake our addiction to debt

Philip Hammond and Theresa May's debt strategy has come under fire.
Philip Hammond and Theresa May's debt strategy has come under fire.
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AN inebriated sailor home on shore leave shows more financial responsibility than the current Conservative Government – because at least the drunk only spends money he has already earned.

In contrast an undoubtedly sober Chancellor, Philip Hammond, let rip with our nation’s delicate finances this week, promising to spend lots of cash we haven’t got and making up the shortfall by borrowing utterly terrifying amounts of money.

Hammond abandoned any pretence at financial rectitude in his Autumn Statement in the House of Commons on Wednesday. His predecessor George Osborne promised (and failed) to clear up the mess left by the last Labour government in five years; now Hammond says he can’t do it in 10.

Remarkably, John McDonnell, Labour’s IRA-supporting shadow Chancellor, is now pledging to bring the public finances back under control more quickly than a Conservative government!

Hammond dropped plans to balance the books by 2019 and instead announced plans to borrow an eye-watering £216bn over the next five years – £122bn more than planned by Osborne – and total debt will reach almost £2 trillion, or more than 90 per cent of national income, by 2018.

It is easy to be blinded by the figures here, but let just one fact sink in – in just 10 years our nation’s total debt has more than tripled. We have borrowed more in the last few years than in the previous centuries. As a result, our economy looks more like Greece’s than it does Germany’s.

This matters for two reasons – one economic and one moral. The economic argument is that we have missed a glorious opportunity to, in Osborne’s words, “fix the roof while the sun is shining”. Keynesian economists argue that governments should borrow to invest in times of recession in order to stimulate the economy – and then pay it back once the recovery takes hold.

Instead we borrowed during the recession – and then carried on borrowing even more when growth returned. The question is this – if we can’t control borrowing when the economy is booming, when will we?

The resulting debt mountain – more than £25,000 for every man, woman and child in the country – leaves us very vulnerable to any economic downturn.

For example, interest rates are currently at historic lows. Once they rise – as they inevitably will – the interest charges on our vast loans will cripple the economy for decades to come.

And don’t for a moment be fooled by talk of so-called ‘austerity’ – Government spending has continued to rise despite all the bleating over the “savage cuts”.

The moral case is even stronger. By borrowing so irresponsibly we are, in effect, stealing directly from our children and grandchildren.

Our generation stubbornly and selfishly refuses to live within our means, and we expect future generations – our own flesh and blood – to pick up the tab.

So our descendants will be forced to work not only to support themselves and their own children, but also to pay off some of the vast debts that we are accumulating because of our addiction to unsustainable and reckless levels of public spending.

How can that possibly be fair?

What a wind up

I AM afraid I laughed like a drain when I saw Donald Trump’s tweet suggesting that Nigel Farage would do a “great job” as the UK’s ambassador to the US.

Farage responded by posing with his characteristic grin and a tray full of Ferrero Rocher chocolates: “You spoil us Mr Ambassador.”

What a pair of wind up merchants!

You can just imagine the goggle-eyed reaction inside Number 10; and in the gentlemen’s clubs of St James’s members of the diplomatic corps probably had a blue fit.

According to several reporters this was no off-the-cuff comment from Trump, but was carefully calculated to blow a few gaskets among our establishment elite. Mission accomplished.

But no matter the response in London, I suspect it has nothing on the blind fury it will have generated in Brussels.

Here’s a man who more than any other individual has destroyed the grandiose federalist plans of the Euro-fanatics; who has persuaded the UK to march to the exit doors; and now he is apparently best mates with the most powerful man in the world. But if Trump really wants to send them bonkers he should appoint Farage as the US’s ambassador to the EU!