I am working on some data at present in anticipation of the spending review. In the course of doing so I have been looking at annual government interest costs. I offered a graph of these the other day. It looks like this:
Actual interest costs in 2015/16 are estimated to be as follows (form the July 2015 budget):
Now as my restatement in constant prices in the first chart shows, the debt paid of £36 billion is forecast to be low because the government is making a profit from the quantitative easing programme at present, but then notice a comment George Osborne made in a speech in anticipation of the spending review this week. He said then:
Where's the opportunity in spending the same on debt interest as we do on our schools?
It is a little surprising that anyone who wishes to be taken seriously can equate £36 billion of interest cost (much of which is paid back into the UK economy and so taxed) with £99 billion of education spending, much of it (of course) on schools, but that is apparently what he wishes to do.
I'd love to know how he think interest costs are going to get so high that anything like equality between it and schools spending might happen. Or is he really just making this stuff up, because that is what it looks like?
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He probably means Capital spending directly on Schools rather than the day to day running…….which you also probably knew………and just ignored so you could score a cheap political point!…….depressing….
No I do not know that
And there is no way on earth that is capital spending on schools as total capital spending in 2015/16 is forecast to be gross £67 billion across the whole gov’t.
So you are wrong , yet again
He may well be making it up….but I’m not sure to what end.
Perhaps as an excuse to justify even deeper cuts?
Of course…
This is straightforward scare mongering – and the Tories are masters of it. I mean , they are THE best.
This is tried and tested stuff – even supposedly bright commentators fall for this or just don’t know enough to truly counter it – look at some of your recent posts concerning sectorial balances for example.
Fear tends to feed off ignorance – and I’m not talking of wilful ignorance but that born of a weak education concerning the political economy of this country.
I suspect Osborne himself is economically illiterate-but his advisory know how to convey simplistic and misleading impression-similar to Duncan Smith saying the benefits paid to the disabled were a transfer of taxpayers’ money.
We still don’t have an opposition who can articulately dismantle this stuff!
Your suspicions are correct.
Not, I suspect, only economically.
It is a pity, while safeguarding the taxpayers hard-earned money, that he fails to look at the massive financing of a failed and corrupt industry by government: The banking and finance industry.
But since that industry is financing the present government, what can I/we/you expect?
He said schools budget, rather than education. I have seen a figure of £50bn for the schools budget. And interest payments going forward of 50-68bn. So perhaps it does make sense.
Why is interest going to cost so much?
Just found some OBR statistics that project the interest payments to increase to 58bn by 2020. Why? Well, I would imagine the fact that the national debt continues to significantly increase each year, would result in this increase.
It does not double….not in any scenario
And rate increases will be modest
Maybe school spending is going to drop to the same as interest, as a comment it’s certainly vague enough which was most probably the point.
George probably has noticed that while Obama’s Keynesian intervention has resulted in the US Govt deficit, over time, falling, his Monetarist restriction has resulted in the UK Govt deficit, over time, rising.
Given enough austerity our debt should hit record levels by, say, 2018, by which time interest rates will be starting to rise. I suspect quite sharply.
The obvious question then is, if Govt intervention so obviously works, why won’t George consider it?
Its like asking a Jehovah’s witness why they won’t consider a blood transfusion that would save a life, George & his supporters are very clear. Nothing good ever has, or ever can, come from Govt, only waste & stupidity.