By David Cliff
Oh what a great gnashing of teeth there is. The country owes close on £1.5 trillion and some can’t countenance it.
Many can’t get their heads around the fact that, no matter what the bankers, or anyone else for that matter, including government, did, this is a seriously huge peacetime debt. Borrowing on top to add to this level of debt really is akin to the stereotypical situation where one is maxed out on a credit card, only to find the company extends the line of credit and so buries them deeper into the mire.
Of course, we are okay with this? Well, so many of us must be, because when one looks at the amount of personal debt so many people are in, being at the edge of one’s credit limit has become almost normalised behaviour. We have ourselves to blame, we grew up with easy credit for generations. Our young people now start their working lives with massive amounts of debt if they seek higher education. We have become desensitised to debt, it is the norm, it is endemic in our lives and few people understand the burden that we all subliminally carry from both our national and personal debt. It restricts life choices, hampers opportunities, delays families and life experiences for those who are more prudent and responsible and materially affects the mental health of the nation.
Oh give us some solace, great Oracle, I hear you say. Well, there isn’t much. Let’s get used to it, this government, majority or not, has the onerous task of getting the deficit down and all of those people who argue a hypothecated approach to growth by borrowing for investment are simply sabotaging the future for generations.
We have grown up with a level of state provision that has just been allowed to expand with public expectation. We seek to extend life in our health services. We seek levels of justice and redress that previous generations never enjoyed. We have regulation through quangos and other expensive instruments of government and commerce that would be the envy of previous generations, but they all have a cost and so many have been brought in based on two principles; public desire and a political desire for the public’s votes.
We are not now in an age of austerity. It is an age of realism, with every ideological decision brought about by a member of the public campaigning for change, every politician with an ideological bent for something expensive, or the impact of our associations with Europe and the rest of the world having a cost.
Since I studied for my Masters in business, one phrase has remained with me for 20-plus years. “There is no strategic decision that is not a financial one”. In boardrooms, people frown at financial directors and others who have this level of fiscal awareness, as though they are spoiling the party, raining on other people’s ideological parades. Not so, these people effectively hit brakes when the train is out of control and about to plough into the very people it serves.
Public service will change less by dint of Tory policy than because of the sheer amount of debt we carry. It is simply no good Labour, SNP or other opposition proposing we borrow our way out of this. It was these very tactics that rendered us unable to deal with the banking crisis and pitched us into the abyss in the first place.
In five years’ time, the landscape of the public sector will be very different to what it is now. Not all of it is desirable, but most is inevitable. We can blame the Right, when their ideologies are consistent with these approaches, but that is not the impetus. It is the sheer raw debt that we have that leaves us with aircraft carriers without aircraft. After illegal wars, we now have to count the cost of going into legitimate conflicts and one can only notice the current hesitancy in this.
Take welfare. Jesus’ famous quote “the poor you will always have”, is a modern truism, because, however we deal with absolute poverty there will always be relative poverty. Dealing with poverty by indefinitely administering paltry benefits without true incentives and high expectations is a recipe for dependency and a strategic mind-set that governments of any colour can no longer countenance. A life on welfare should be rare indeed and only for those who have absolutely no other choice.
With this in mind, we’ve got to incentivise the market sufficiently that business will start to seek to contribute to communities as a whole. So many do, however, yet so many of the larger ones simply don’t and hide behind corporate and social responsibility policies, whilst importing skills from all over the world, asset stripping elsewhere. The NHS, too, is guilty of this and as Ministers defend immigration on the basis that it keeps the NHS running, but what they obscure is a complete systems and planning failure when we failed to produce the skills within and seek them elsewhere, denuding healthcare systems across the rest of the world for our own needs.
Perhaps we can recover some values of personal responsibility, a balanced approach to autonomy in a society where we rely upon public services to protect us, rather than these things simply being an extension of lifestyle and an expectation born of entitlement and dependency.
It’s around one and a half trillion pounds. The interest costs close to half the annual expenditure on the NHS. It’s not going to go away quickly.
So those ideologues that think that a few investments here and there, borrowing some more, will make a difference had better get real very quickly. The country is effectively on a voluntary debt repayment plan, let’s not tip us into bankruptcy!
David Cliff is Managing Director of Gedanken and Chairman of the Institute of Directors’ Northern Sector Group.