Why rally against debt?

Tuesday April 26, 2011

The Rally Against Debt on May 14, argues Harry Aldridge, is an opportunity to support fiscal responsibility and highlight the profligacy of Big Government

The Rally Against Debt started with a tweet, proposing a pro-cuts rally in response to the anti-cuts March for the Alternative – an alternative that consists of more debt and crossed fingers. It hit a nerve instantly among the centre-right grass roots on Twitter and Facebook, giving a voice to those who believe government spending cuts are necessary.

Why do we believe cuts are necessary? Let’s establish some facts.
Debt: over this parliament the national debt will rise by over £500bn, or £19,000 for every household in the country, taking total national debt to 71 per cent of GDP, double the 2003 level, before beginning to fall. Interest on this debt will more than double to almost £67bn, surpassing spending on defence, transport, home office, and justice departments combined.

Deficit: the last Labour government borrowed 2-3 per cent of GDP in every single year since 2002 when the economy was booming, meaning we were already overstretched heading into the downturn. We have one of the largest deficits in the developed world, will borrow 7.9 per cent of GDP this year but will still be borrowing 2.5 per cent of GDP in 2014/15! The structural deficit – that bit that would still exist after the economy recovers – is 5.3 per cent this year and is projected to fall to 0.5 per cent in 2014/15 but not disappear.

Horror

These figures should engender horror in everyone reading this. Not only is it beyond unethical to willingly live high on the hog today at the expense of our children who we will knowingly burden with the bill, but our ability to borrow in such massive amounts at low interest rates is precarious. The Office for Budgetary Responsibility report accompanying the budget 2011 forecasts a rise in Gilt rates from 3.7 per cent to 5.1 per cent. Each one per cent rise adds £6bn pa to the debt interest bill. Without a credible plan to get the public finances in order these rates could rise further, meaning deeper spending cuts in the future.

But another reason to support deficit reduction and spending cuts as a means to achieve this is the broader issue of freedom. Debt consumes current tax receipts to pay the interest bill. It places individuals, ordinary citizens, in hock to the nation’s creditors not for our individual choices but for the choices of our politicians and, of course, deficits give cover for tax rises that are hard to reverse and sometimes permanently increase the tax burden. Debt simultaneously diminishes the freedom of individuals and enhances the size and scope of government.

Profligacy

We are the taxpayers, the paymasters of government, and it behoves us to ensure that politicians cannot take the easy fix to their profligacy and dip further into our pockets. Instead they should rectify overspending by bringing it in to line with the revenue they confiscate from the private endeavour of the people.

The evidence to date refutes the accusations that the cuts will kneecap economic growth. The first quarter of 2011 saw the private sector create 144,000 new jobs, and consumer spending is up 0.2 per cent in March 2011. The private sector is picking up the slack, primarily, I believe, because of the confidence and stability brought by a credible deficit reduction plan.

The Rally Against Debt in London on May 14 is an opportunity to speak out for fiscal responsibility and demand spending cuts now to safeguard our economic future and public services.

For further information about the Rally Against Debt in London on Saturday May 14, click here

See also: Why I’m supporting Rally Against Debt