Corrected for inflation , it seems we now spend more on interest payments than ever.
According to figures from ukpublicspending.co.uk, taxpayers should expect to pay 37.07bn in 2011, up from 28.1bn in 2009.
In the 19th century, only once did interest payments breach 4bn 
In the 20th century, interest payments peaked not in the aftermath of WWI or WWII, but in the period after 1970
Interest payments breached 34bn in 1986, then again in 1998 
After 1998, interest payments fell steadily to 22.16bn in 2003, but even this level was higher than in any year prior to 1968 .
The Office for Budget Responsibility predicts that debt interest payments will rise every year to £66.5bn in 2015-16  — 48% more than 2010-11. If the 2015-16 figure is in 2010£, it's equivalent to 58.3bn 2005£ . If it's in 2015-16£, then the 2005£ equivalent depends on the government's inflation expectations, which are surprisingly difficult to extract from the OBR report. If we assume yearly inflation of 4%, £66.5bn in 2015-16 is the equivalent of 54.7bn in 2010-11 (47.9bn 2005£). Here are some possibilities:
|Yearly inflation||2010-11 equivalent||2005£ equivalent|
On any likely scenario, we're looking at unprecedented levels of taxpayers' money spent servicing the national debt. Inflation would have to run at a horrific 15.7% a year for the 2015-16 payments to be equivalent to the already-high 2009 payments of 28.1bn 2005£. Even if inflation is 'only' 10%/year, we're looking at interest payments of 36.2bn 2005£ — higher than at any point in our history.
I sincerely hope I've made a mistake somewhere, but I fear things really are this bad.
The same OBR report that shows debt interest payments of £66.5bn in 2015-16 anticipates £54.4bn in Corporation Tax receipts and £11.5bn from Stamp Duty Land Tax. Without a national debt to service, we could scrap both of these taxes. Alternatively, we could scrap Fuel Duties (£35bn expected) and Council Tax (£31.2bn). Or we could scrap a wide range of little taxes: £55.4bn from Wine Duties, Beer and Cider Duties, Spirits Duties, Tobacco Duties, Vehicle Excise Duties, Stamp Taxes on shares, Capital Gains Tax, Air Passenger Duty, Inheritance Tax, Environmental Levies, Landfill Tax, Climate Change Levy, Aggregates Levy, Betting and Gaming Duties, and Customs Duties and Levies, and a further 8.3bn from unnamed "other taxes".
Personally, I think I'd vote for killing off the little taxes. Imagine how much simpler life would be for thousands of businessmen, and how much freer you'd feel. Free to invest in worthwhile companies without the government taking a cut. Free to smoke or drink or gamble, without a scornful slap from nanny. Free to drive your car (perhaps putting some money aside for when Peak Oil does eventually arrive). Free to keep your house until you die, safe in the knowledge that the whole estate will go to your heirs.
How can we rid ourselves of our expensive debt? I see no moral obligation to honour the debts run up by previous governments, so I'm attracted to the idea of outright repudiation, followed by a prohibition on government debt. The danger here is the moral hazard of giving socialists an easy way out. How long before they call for the restrictions on government borrowing to be relaxed?
The more difficult route is to reduce government spending to the point where we run a surplus rather than a deficit. The reduction would be a good idea in any case, so this approach has its merits. Once we have accustomed the nation to living within its means, perhaps for a couple of decades, we may reconsider the option of repudiating the remaining balance.
What we must not do, and what the government will be strongly tempted to do, is inflate our way out of debt. It amounts to a stealth tax, which unduly punishes those who have behaved responsibly.
NB: Socialists prefer to express our debt, deficit, and interest burden as a percentage of GDP. I have deliberately avoided this, as I see no reason why government spending (and its attendant costs) should grow with GDP. Our noble public servants can do everything they do today if we hold government spending constant in real terms. Any increase in national wealth rightly belongs in the pockets of the people.
 All ukpublicspending figures are in 2005£
 4.09bn 2005£ in 1882, falling to 3.84bn in 1883.
 34.87bn 2005£ in 1986; 35.18bn in 1998.
 22.77bn 2005£ in 1968, increasing to 23.03bn in 1969 before falling to the next local minimum of 20.37 in 1972
 Economic and fiscal outlook – November 2010 (PDF 3.9MB)
 30.96bn 2010£ = 27.04bn 2005£ according to the ukpublicspending reckoning, so £1.14 2010£ = 1 2005£, and 66.5bn 2010£ = 58.3 2005£