Stephen Metcalfe: Labour’s two trillion pound debt
 
Recent official figures have revealed that the national debt has risen above £2 trillion for the first time in our history.
 
According to the Office for National Statistics the national debt, including the cost of bailing out the banks, now stands at £2,323,000,000,000. That works out at over £37,600 for every man, woman and child in the country.
 
This terrible debt is Labour’s legacy. They thought that they had abolished boom and bust and so ran large deficits even before the financial crisis.
 
Because of this, we are currently paying £43 billion per year, over £120 million per day, in debt interest. This is money that could otherwise be spent on frontline services like schools and hospitals. The average earner in South Basildon & East Thurrock has to work for 155 days just to pay the interest on Labour’s debts.
 
Commenting, Stephen said:
 
‘These are shocking figures. Labour maxed out the nation’s credit card with over £1 trillion of government debt. The longer it is left the worse it will get. If we don’t take steps now to live within our means we’ll end up paying higher taxes and face deeper cuts just to pay off our debt’
 
FURTHER NOTES
 
Debt has reached more than £2 trillion
 
National debt has reached £2.3 trillion. According to new figures published by the ONS, net debt including financial sector interventions has reached £2,322.7 billion (ONS, Public Sector Finances, 25 January 2011, link).

It works out at £37,600 per person. The national debt per person now stands at £37,589, based on a population of 61.8 million (ONS, Mid-Year Population Estimates, link).
 
The new measure of debt includes Lloyds and RBS for the first time. As the ONS say: ‘For the first time data for Royal Bank of Scotland and Lloyds Banking Group have been fully incorporated into the public sector finances. This has impacted considerably on the measure of public sector net debt that includes the effects of the financial interventions’ (ONS, Public Sector Finances, 25 January 2011, link).
 
Debt interest is costing us £120 million per day. In 2010-11, debt interest payments will be £42.7 billion or £120 million per day (OBR Economic and Fiscal Outlook, November 2010, Table 4.14).
 
This debt is Labour’s fault
 
Labour ran a structural deficit for seven years before the recession began. The recession began on 1 April 2008 (ONS, Times Series IHYQ). Cyclically-adjusted public sector net borrowing – the structural budget balance – was in deficit in each of the seven years before that between 2001-2 and 2007-8 (OBR, Budget Forecast, Table C15).
 
Labour entered the financial crisis with the largest structural deficit in the G7. According to the OECD, the UK’s structural fiscal position was one of the best in the G7 in 2000, but by 2007, just before the crisis, had deteriorated to be the worst in the G7 (OECD, Economic Outlook 88, November 2010).
 
Institute for Fiscal Studies: before the crisis Labour had one of the largest structural deficits in the developed world. ‘By the eve of the financial crisis, [fiscal drift under Labour] had left the UK with one of the largest structural budget deficits in the developed world... the vast majority of other OECD countries did more to strengthen their public finances during Labour’s first eleven years in office than Labour did in the UK’ (IFS, The Public Finances: 1997-2000, 19 April 2010, p. 2 and p. 10).
 
Tony Blair: Labour did not do enough to eliminate the structural deficit after 2005. ‘We should also accept that from 2005 onwards Labour was insufficiently vigorous in limiting or eliminating the potential structural deficit. The failure to embrace the Fundamental Savings Review of 2005-6 was, in retrospect, a much bigger error than I ever thought at the time’ (Tony Blair, A Journey, pp 681-2).
 
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