UK government interest payments since 1750

How much does government debt cost us?

Corrected for inflation [1], 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 [2]


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 [3]


After 1998, interest payments fell steadily to 22.16bn in 2003, but even this level was higher than in any year prior to 1968 [4].


The Office for Budget Responsibility predicts that debt interest payments will rise every year to £66.5bn in 2015-16 [5] — 48% more than 2010-11. If the 2015-16 figure is in 2010£, it's equivalent to 58.3bn 2005£ [6]. 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
2%	60.2	52.8
3%	57.4	50.3
4%	54.7	47.9
5%	52.1	45.7
10%	41.3	36.2
15%	33.1	29.0

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.

[1] All ukpublicspending figures are in 2005£
[2] 4.09bn 2005£ in 1882, falling to 3.84bn in 1883.
[3] 34.87bn 2005£ in 1986; 35.18bn in 1998.
[4] 22.77bn 2005£ in 1968, increasing to 23.03bn in 1969 before falling to the next local minimum of 20.37 in 1972
[5] Economic and fiscal outlook – November 2010 (PDF 3.9MB)
[6] 30.96bn 2010£ = 27.04bn 2005£ according to the ukpublicspending reckoning, so £1.14 2010£ = 1 2005£, and 66.5bn 2010£ = 58.3 2005£

EU bans herbal remedies: another victory for corporate interests

An excellent article today from Daniel Hannan:

When the EU does something truly unpopular, it usually builds in a delay. Eurocrats know that national ministers are likelier to agree to measures which will blow up on the laps of their successors. Thus the restrictions on natural and alternative medicines, which were passed in 2004, will hit herbalists’ shelves in April.

The Independent reports that hundreds of traditional plant remedies are under threat, including Meadowsweet, Cascara Bark and Pau D’Arco. Some products will be proscribed outright; others subjected to a prohibitively expensive licensing regime.

Why is the EU criminalising a harmless activity pursued by 20 million Europeans?
...

Three factors are in play. First, Eurocrats love regulating things. The argument that you should leave well alone – that herbalists have no interest in poisoning their customers, that the presumption of innocence should apply in this as in any other case, that the trade has flourished for centuries without state oversight – is anathema to them. To the EU official, “unlicensed” is synonymous with “illegal”.

Second, the EU has fallen for that modern idiocy known as “the precautionary principle”. As I wrote when this ban was first mooted, you can’t prove a negative. At the beginning of the nineteenth century, it was widely believed that the noise of a passing train would cause a pregnant woman to miscarry. Had we applied “the precautionary principle”, we would never have laid a single inch of track. After all, the rail operators of the day couldn’t prove that they wouldn’t cause miscarriages, any more than today’s health stores can prove that their wares are not toxic.

Third, and most important, the ban suits the big pharmaceutical corporations, who lobbied openly and enthusiastically for its adoption. The large chains will be able to afford the compliance costs. Smaller herbalists will not, and many will go out of business, leaving the mega-firms with something close to a monopoly.

Discouraged from attending university?

I've been catching up with some articles on Critical Reaction. The one by Graham Stewart on 14 December is worth reading:

Remarkably, much of the electorate remains under the impression that increased student fees will put off applicants from deprived backgrounds. If this claim is made often enough then there is a danger it becomes self-fulfilling. Yet, how could it be true? The amount a graduate repays annually is dependent on how much he or she earns after graduation. No part of the burden of repaying fees falls upon the student’s parents. To repeat, it is how much a graduate earns that is the consideration, not how few savings there were in the house in which he or she grew up. So how is a deprived background relevant? If there is any perverse logic in the student loans scheme it is that because graduates earning low incomes do not have to repay any of their loan there is actually an incentive for them to remain in low paid employment.

Indeed. The scheme does little to discourage people from pursuing useless degrees.

Ambassador Miliband?

Downing Street is considering offering David Miliband the post of British ambassador in Washington, the Guardian has learned.

The former foreign secretary, still recovering from being beaten to the Labour leadership by his brother Ed, has the skills, contacts and abilities to make a success of the post, it is believed.

Incredible.

Before the general election Miliband was in line to become the EU's chief foreign policy representative, but he rejected the posting to concentrate on making Labour electable.

The post instead went to Lady Ashton, the former leader of the Lords.

Thankfully, brother Ed is busy ensuring that Labour are totally unelectable.

Guardianistas and Democracy

Thanks to Daniel Hannan, I discovered a revealing Guardian article:

The government is to follow the lead of The X Factor television programme and allow the public to decide on legislation to be put before MPs.

In an attempt to reduce what is seen as a disconnection between the public and parliament, ministers will ensure that the most popular petition on the government website Direct.gov.uk will be drafted as a bill. It is also planning to guarantee that petitions which reach a fixed level of support – most likely 100,000 signatures – will be guaranteed a Commons debate.

Ministerial sources acknowledge that the proposals have the potential to cause headaches for the coalition because populist causes célèbres – such as a return of capital punishment or withdrawal from the European Union – could come top of the list.

The leader of the Commons, Sir George Young, has signalled he wants to press ahead with government by petition in the new year.

Hannan posted a selection of Guardianista comments:

Populist tripe of the worst kind.

Govt by petition oh dear, soon the Daily mail Tax payers allience and Talk sport nutjobs will get to say who eats has a home and care and who doesnt. pandering to the mob and Pontius Pilate springs to mind. they are evil beyond belief

Next up, lynch mobs.

Now for clamourocracy. Unbelievable.

What a bunch of tossers.

In a word: pathetic.

So, hanging back in by next christmas then....

Oh my god!!!!! I don't believe what I am reading. If this government think this is the way forward, so help us all.

Govt by petition? Gods teeth a Nation run by Mr & Mrs semi detached chip on shoulder DailyMail cardigan kendal mintcake hang em and flog em let em starve send em back. oh my were so foooked

Confirmation, if it were ever needed, of the educational gulf between militant lefty Guardian readers and the champagne socialist, technocratic 'elite' on their editorial staff.

Here are some more of my favourites (uncensored):

DanielFrisbee 27 December 2010 9:07PM

My god, please let the revolution come soon! This foul bunch raping the country need to be strung up pronto.

Acephalic 27 December 2010 9:21PM

If they really mean this, it's time to petition to nationalise the utilities and the banks.

mrStringvest 27 December 2010 9:24PM

expect DailyMail types to set up numerous e mail addresses and wear their little fingers out untill they get 100,000 hits
Im sorry Dave but you just havent got afoooking clue what your doing

shatnersbassoon1

27 December 2010 9:27PM

FFS...expect hanging to be back in the UK in 2011.
Mob-rule has just been legislated.

Cuse 27 December 2010 9:29PM

Is this the same as their website for deranged socio-paths? You know, the one that asked for public ideas that got turned off after a few days because it was so stupid?

This Coalition can't decide whether it wants to take us back to Thatcher's '80s or into the weird La-La land that Cameron resides in his head.

You know, the one where you can take billions out of the NHS and call it a cash increase and then claim they are the party of the NHS?

Christ this Country is going to be a shit place to live, be educated in, work, look for work in, be poor, invest in or be ill in within a few short years. Its depressing.

MERidley 27 December 2010 9:31PM

So soon public flogging and hanging, what are these people good for.. 'absolutely nothing'

ADeadSeagullInABin 27 December 2010 9:36PM

dreaming of guillotines.

easternstrix 27 December 2010 9:37PM

Is this some kind of a nightmare coming true?

What would you rather have, one lion ruling over 100 oxes or the other way round? This is the most irresponsible idea I have ever seen!

1tsirhcitna 27 December 2010 9:39PM

red/ blue/ green/ pink /black /yellow /etc .....you are all fucked if you follow the idiots that think they know how to lead a populus...BE subversive right now .. the collective subversive can make a difference.. its called war.. change the future for your children

KenBarlow 27 December 2010 9:47PM

"So if the majority of the people want to withdraw from the EU, politicians should... ignore them?? "

What I would have is tests to weed out the nations morons. Only after passing tests does your vote count.

So, for example, when my parents say: "We need to withdraw from the EU and kick out all the blacks" in an X Factor ad break, they should be made to sit some kind of test so they can actually prove they know why it is we must withdraw from the EU - prove it's not just cos they're a bit racist, Daily Mail readers and people who don't really know that much about the EU, the alternatives and the consequences (if any) of withdrawal.

The danger is in a democarcy you'd end up with people like my parents setting policy - my parents are lovely but they ain't 'alf as smart as they think they are. Tey are not experts o naything - they just have their tabloid fuelled opinions - the wisdom of the cab driver, the "common sense" of those who know the easy way to deal with peadophiles, benefit fraud and students...

HassledinHastings 27 December 2010 9:53PM

Cannot believe I am reading this. What more is their to say? A bunch of fecking corrupt clowns. We need more people on the streets. Perhaps when the Houses of Parliament go up in flames and the bastards get chased out of the country they might start to get the message.

ThermidorRequiredNow 27 December 2010 9:56PM

There is no answer to this nonsense that does not start and end with mass killings of the privately educated.

And more encouragingly,

1tsirhcitna 27 December 2010 9:20PM

we are all fucked ... please go to your nearest suicide booth ..

WillSum 27 December 2010 9:21PM

Can anyone suggest good places to emigrate to please? (Seriously)

To be fair, I have my own doubts about democracy. But it's amusing to see how keen the socialists are to quash debate on issues they find unpalatable, how easily their thoughts turn to bloody revolution, and how quickly they expose their utter contempt for the 'common people' they claim to represent.

Thankfully, there were a few 'Tory trolls' around to inject some rational contributions:

MrBendy 27 December 2010 10:09PM

Laid bare on this page is the deeply ambivalent attitude of Socialists towards the appropriate relationship between what the electorate wants and what politicians should do.

Where the public seem reliably left-wing in their instincts, giving the majority of the people what they ask for is apparently not only desirable but essential. Hence on bankers' bonuses, on fat cats, on the NHS, where the left are entirely comfortable with the opinions expressed, the demands of the clamouring masses are deemed to be based on considered values and sincerely-held moral convictions and so should obviously be assuaged by responsible politicians.

But when the public is infuriatingly right wing, Hell should, of course, freeze over before politicians respond accordingly. On immigration, crime or the EU, the public's views, disliked by the left, need to be dismissed as the superficial product of manipulation by Murdoch's media outlets and any responsible politician ought to do everything possible to ignore them. Doing what the majority of voters want in such cases is, to use the ritual insult, merely "kneejerk populism".

As Kolakowski, who knew more about the modern intellectual history of leftism than most, correctly said, democratic socialism is ultimately "as contradictory as a fried snowball".

Far right?

On the 19th, Daniel Hannan highlighted a shocking exchange on BBC radio:

On Radio 5 live yesterday, David Baddiel described the Freedom Association, a libertarian campaign which, in the 1970s and 1980s, led the battle against the trade union closed shop, as being “a very, very right-wing, kind of sub-BNP, slightly posher version of the BNP organisation”.

Alan Davies, who was interviewing Baddiel about his new film, The Norris McWhirter Chronicles, went on to ask whether Norris McWhirter, who ran the Freedom Association as well as the Guinness Book of Records, might have been “a brownshirt [sic] with Mosley”. (Thomas Cranmer has the full story, with a link to the programme, here.)
...
For what it’s worth – and this really shouldn’t need saying but, since Mr Davies has decided to bring up brownshirts and Mosleyites, it’s worth straightening the record – he played his part in the war against Hitler, serving in the Royal Navy. He was, above all, a lover of freedom: he could see that the corporatist Heath-Wilson state was deleterious to personal liberty as well as to economic prosperity. His was a lonely voice in the 1970s, although almost everyone now accepts that he had a point. Indeed, one of the few political movements which still hankers after the subsidies, protectionism and nationalisation of that era is the BNP, whose ideology is, in many ways, the polar opposite of the Freedom Association’s (see here).

On Thursday, Hannan blogged about the BBC's response to his official complaint.

A fundamentally decent man, a man who had served his country in the war against Nazism and had been awarded the CBE, was traduced on air, linked to Mosley and compared to the BNP. No one challenged the remarks: on the contrary, Alan Davies, the presenter, amplified them. But it’s OK, apparently, because it’s lighthearted.

Sadly, this is par for the course with the BBC. I was shocked, however, to see such careless (or cynical) use of the term "far right" over at The Register.

On the 20th, Chris Williams wrote

The personal details of English Defence League supporters have been stolen in a hacking attack on its website, it was reported today.

The far-right group's leadership emailed members in recent days to warn them of the breach, the Daily Telegraph reports.

The Telegraph article itself was just as sloppy:

Police are believed to be investigating the security breach, which also included the far-Right groups’s payment system being illegally accessed
...
The weekend’s incident is similar to a security breach involving the far-right BNP in 2008, where the names, addresses and contact details of some 10,000 of its members were published online.

Thankfully, objections were voiced in the Register comments section.

Andrew Martin observed:

Far-right" really doesn't mean anything. It's shorthand for "polite people don't share these views, and while we're at it why not smear the Tories, UKIP, and all for being on the right and therefore a bit like far-right-lite

While an Anonymous Coward opined:

People on the "far right" actually tend to be authoritarian left, as they believe in jobs for everyone of the correct colour (managed economy) they also tend to be strong believers in state control. State control is of course easier in a managed economy. The more GDP the state controls the more power they have over the population (as they employ more people, take a greater wedge of your earnings, possibly own your home/power supply/etc.)

The socialists were having none of it, so Andrew Martin weighed in again:

"Far right" is invoked to denote extreme libertarianism - small state, deregulation, open borders but no benefits etc.

"Far right" is also invoked to denote heavy regulation (generally based on some notion of 'race'), and all the very interventionist policies of the BNP.

The term means contradictory things, ergo, it means nothing.

For my own part, I dragged up some quotes from the BNP manifesto:

- The BNP will ensure that the National Health Service is used to serve British people and not used as an International Health Service.

- The BNP will reverse the budget cuts on education and prioritise this sector as vital to the rebuilding of our nation.

- The BNP will offer free university education to deserving students who have completed their period of Community Service.

- The BNP will make rail travel affordable once again by reversing the disastrous privatisation process which has grossly inflated ticket prices.

- The BNP would take some of these savings and invest them in rebuilding British industry and skills through an active protectionist policy as many other European nations already do.

- The BNP will therefore introduce legislation to ensure that a foreign acquisition of any significantly-sized British company is judged to be in the public and national interest before it can proceed.

- The BNP will oppose the privatisation of natural monopolies such as Royal Mail.

- The BNP will reinvigorate the IT sector in Britain with massive investments in technology universities.

- The BNP will institute a policy of protectionism for the local IT industry and jobs.

- The BNP will nationalise the telecoms infrastructure to enable the creation of a not-for-profit 100Mbps broadband service across the country.


To be honest, their manifesto is a bit of a handbag of unrealistic populist policies (including 200mph maglev trains). Not all of it is socialist, and some of it is sensible, but it's clear that they believe in a big, redistributive, interfering state. They favour protectionism, nationalisation, and welfare (for those who meet their definition of British), rather than free trade, privatisation, self reliance, and genuine charity.

To characterise the BNP as "far right", as if they are a little bit further along Lady Thatcher's road, is grossly misleading. They have a lot more in common with Old Labour.

If Chris Williams read these comments, he wasn't prepared to pay them any heed. He wrote a follow-up article on the 22nd about a caretaker who'd been duped into donating to the EDL:

The page had a button labelled "support the troops", and he donated one pound. It gave no indication the money was destined for the far-right EDL, he claimed, but the caretaker admitted he had been "stupid".

I couldn't resist a further comment:

I thought we'd done this one to death in the previous article.

I was prepared to accept that Chris Williams was just being careless, but his continued use of the term "far right" to refer to fascist groups suggests malice rather than incompetence.

You can hate fascist thugs, and you can hate Thatcherites, but don't suggest that their political philosophies are similar.

"far right" is a grossly misleading term. I expect it from the BBC and The Guardian, but not from El Reg.

I don't like repeating myself, but I fear that it is the only way to get the message across.

Ainsworth: ''The war on drugs is not working''

BBC News reports,

Bob Ainsworth, who oversaw the issue at the Home Office in Tony Blair's government, said the approach of successive administrations had failed.
...
Mr Ainsworth is the most senior politician so far to publicly call for all drugs, including heroin and cocaine, to be decriminalised.

He said he realised while he was a minister in the Home Office in charge of drugs policy that the so-called war on drugs could not be won.

The big question, unasked by the BBC, is why Mr Ainsworth didn't do anything about this when he was in a position of power. This smells of politics.

Still, if this puts pressure on Lib Dems to put pressure on the government in favour of decriminalisation, that can only be a good thing.

Prohibition is immoral as well as ineffective. Adults should be free to weigh the risks, and decide for themselves which substances they consume. The government has neither duty nor right to intervene.

UPDATE: DK has an excellent post on the same subject here.