The national debt is scarcely mentioned in the news but has now soared past £2 trillion. That's a 2 followed by twelve zeros or to put it another way, approximately £60,000 of debt per UK taxpayer. When the TPA campaigned on this issue in 2010 the debt was "only" just approaching £800 billion.
Maintaining a high level of debt creates huge problems for the country, particularly when it comes to rising interest payments. Furthermore, if public spending is financed by debt in normal times, this reduces the fiscal headroom for responding to genuine national emergencies like we are currently experiencing.
Thanks to figures available from the Bank of England, our policy analyst Jeremy Hutton has carried out an in-depth analysis of the history of our national debt and discovered some eye-raising facts. To compliment his research he has produced a detailed series of interactive charts to better understand our debt crisis.
- In the 18th century, a cycle of warfare saw British debt grow to unprecedented levels at 128.5 per cent of GDP.
- A peaceful 19th century saw public debt consistently reduced, hitting a low of 33.7 per cent of GDP.
- Two world wars and two depressions would see public debt rise to its highest ever levels in the 20th century to 259 per cent of GDP in 1946.
- Now, the coronavirus crisis is seeing debt grow at its swiftest level since 2007-08. Based on the government's March budget the debt is unlikely to fall anytime soon.
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Echoing Jeremy's findings, our chief executive John O'Connell wrote a hard-hitting comment piece for The Daily Telegraph for their Rebooting Britain series. John argues that "rapid reduction" of the national debt "must be at the heart of British policy."
He highlights findings by the Office for Budget Responsibility that public sector borrowing will top £218 billion this year. The interest payments on this alone could be £5.9 billion.
He concludes, "Debt levels will need to be brought back down rapidly through growth-enhancing measures and spending restraint. We will need to be ready in case some other crisis happens. If the UK is to reduce it at the post-war pace, it would need to fall by 5.3 per cent annually for eight years. Whether the Government can do that will decide the next chapter of our history."
We will be doing everything possible in the corridors of power to ensure that the government gets a grip on the national debt.
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Policy victory! Coronavirus small business loans
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Following reports that chancellor Rishi Sunak had concerns about the coronavirus business interruption loan scheme (CBILS), we published a briefing note with our recommendations. Our research showed that Britain is falling behind other European countries with similar schemes.
As of April 22nd, the UK's CBILS had delivered 16,624 loans to businesses with a total value of £2.8 billion, with 46 per cent of applications approved. The total value of approved loans is substantially less than that of both Germany and Switzerland as the table below shows.
We called on the government to streamline the scheme citing that red tape seems to be delaying the loans, and potentially putting the economy at risk by setting the bar too high for approvals. We also recommend harsher sentences for those that attempt to cheat the system.
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| Country |
Companies in receipt of loans |
Loan application success rate (%) |
Value of loans (£bn) |
| UK |
16,624 |
46 |
2.8 |
| Switzerland |
100,000+ |
Unknown |
13.3 |
| Germany |
13,000 |
98 |
7.4 |
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Within hours and after conversations with the Treasury, the chancellor announced in the commons the launch of Bounce Back Loans. Businesses will be able to borrow interest-free between £2,000 to £50,000 and access the cash quickly. He has heeded our advice for simplifying the loan application which can be made online via a "short and simple form".
This is a fantastic policy victory and a vital first step in opening up emergency cash to the small firms who need it.
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TaxPayers' Alliance in the news
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Un-brew-lievable!
We learned this week that the Ministry of Defence (MoD) spent £263,000 of taxpayers' cash on mugs as part of a recruitment drive. According to The Sun, "The MoD bought 115,513 cups with slogans such as 'This Is Belonging' and 'Your Army Needs You'."
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Our chief exec John O'Connell expressed his views to reporter Michael Hamilton on this nonsensical spending, "Taxpayers need the Government to save on unnecessary spending. Waste does not belong and budgets need to be efficient. So the MoD should not waste thousands splashing on drink holders.”
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1945 or 1979?
In an opinion piece for CapX our political director James Roberts has outlined why Mrs Thatcher rather than Clement Attlee, should be the inspiration for economic revival post pandemic. Many have compared the current crisis to that of the Second World War and called for even more state intervention.
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However, as James explains many want smaller government, "...especially since they’ve seen what life is like when businesses close their doors and the value of savings plummets. As the former Labour leader himself suggested, this crisis has been a taste of Corbynism, and it’s fair to say the public haven’t enjoyed it."
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Once you've finished Jeremy's long read on the national debt we've got two more excellent blogs for you.
As part of our Axe the Tax campaign,TPA researcher Darwin Friend has been busy scrutinising wasteful spending by the BBC. He makes the case that "Auntie" needs to be more accountable to taxpayers. In recent years the Beeb has wasted "£200,000 on unused taxis, trains and hotels" and a further "£6 million on threatening TV licence letters".
But this is just the tip of the iceberg as numerous exemptions in the Freedom of Information Act prevent further scrutiny. Darwin writes, "... 68 per cent of working class voters back abolition of the licence fee. Transparency needs to be the first step if the BBC is ever to recover its reputation with the public."
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Scott Simmonds, also of the research team, has written an excellent piece about Public Health England (PHE) and their lack of preparedness for the current crisis. It appears the quango has prioritised lecturing the public about their dietary habits over preparing for a pandemic. As Scott explains:
"PHE have been busy dictating to the population about how they should live their lives, rather than ensuring an appropriate response to a genuine and imminent public health emergency. These priorities become very clear in their recent work..." Click here to read more.
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The cost of justice
Since 2015, Edinburgh council has spent almost £12 million of taxpayers' money on legal settlements. To add insult to injury, the council are refusing to release a breakdown of exactly how the cash has been spent.
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We know that around a quarter of the money was spent on a legal battle concerning building regulations. However, that still leaves £9 million unaccounted for and the council has cited ‘legal privilege’ as their reason for not disclosing further information.
The TPA has previously revealed the sky-high settlement agreements which local authorities payout every year. Transparency in all levels of government is vitally important where public funds are concerned. Edinburgh's ratepayers deserve to know why the council's legal costs are so high.
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Harry Fone
Grassroots Campaign Manager
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