There are worse things than public borrowing

By Bernadette Meaden
October 21, 2015

George Osborne's determination to reduce the deficit increasingly seems like a form of extremism, in which the end seems to justify any means. Handing over  parts of our essential infrastructure to a Communist regime with a terrible human rights record is perhaps the most stark example of this. In the Chancellor's mind it seems nothing is worse than the idea of the British government borrowing money to invest in Britain.

The Chancellor justifies his prioritisation of the deficit by saying he is ensuring that our children and grandchildren are not saddled with debt. But many of our children will be saddled with debt. It will be expensive personal debt, instead of comparatively cheap public debt.  A report from PwC earlier this year  'Precious Plastic: How Britons fell back in love with borrowing' said that unsecured household debt grew by nine per cent in 2014.  

Worryingly, it reported that 'The total household debt (including secured debt) to income ratio is projected to reach around 172% by 2020 – exceeding its previous peak in the run up to the financial crisis.' It also found that, 'dependence on credit for essential items increases significantly among 35 to 44 year-olds, with close to 20 per cent borrowing simply to make ends meet.'

As welfare reform rolls relentlessly on, cuts to tax credits will no doubt leave even more people forced to borrow at high interest rates to make ends meet. Whilst public debt can be managed and the burden shared out fairly, private debt can ruin individual lives.

Meanwhile, spending cuts are steadily eroding the public services on which people on low or middle incomes must rely. In schools, spending per pupil is set to fall by eight per cent over the next five years, whilst The King's Fund has reported that 'the decade to 2020 would see the longest reduction in the share of the economy devoted to health spending since the middle of the last century.'

The Chief Executive of an NHS Trust has raised the prospect of  levying extra charges for healthcare, saying, "If people aren't prepared to pay through their taxes they will end up having to pay through some kind of co-payment system or personal insurance, so they have a choice to make and I think they better pay attention to the debate that's going on."

If we want a modern society which provides a decent standard of living and decent public services for all, then we have to pay for it by devoting a greater share of our GDP to public spending. As a nation, we will get the kind of society we collectively pay for, with the wealthy paying their fair share. Using sensible borrowing at low rates, combined with fair taxation, will enable us to invest and build a better future for all our children.

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© Bernadette Meaden has written about political, religious and social issues for some years, and is strongly influenced by Christian Socialism, liberation theology and the Catholic Worker movement. She is an Ekklesia associate and regular contributor. You can follow her on Twitter: @BernaMeaden

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