Leaders: Election winner can not put trust in debt

George Osborne missed his own debt reduction forecasts in three successive years. Picture: PA
George Osborne missed his own debt reduction forecasts in three successive years. Picture: PA
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A CARDINAL issue in the general election will be public finance and in particular respective party policies on the speed and scale of debt and deficit reduction.

In a speech last month, First Minister Nicola Sturgeon said reduction should proceed more slowly than either of the largest UK parties proposes. This, she argued, would permit a further £180 billion of “investment” over the next four years while still bringing down debt.

Today, Liberal Democrat Chief Secretary to the Treasury Danny Alexander argues that the debt pile would not fall, but rise. He cites a Treasury analysis showing debt as a share of GDP would climb from 81.9 per cent currently to 82.2 per cent in 2017-18, and by the end of the next parliament would be higher than at the start.

However, much depends, for example, on achieving a rate of growth that would boost GDP relative to that debt pile. On current Autumn Statement projections debt is continuing to rise, from £1.48 trillion currently to £1.65 trillion in 2018-19. Thus, ten years after the financial crisis struck, our debt pile will be higher than ever.

Where all this hits home is the real terms of annual debt interest payments. This financial year, government spending is being squeezed by having to meet £48bn in gross debt interest. By 2018-19 this figure will have risen to £63.4bn. What a formidable number of new schools and hospitals we could build – but for the debt cost of previous government largesse.

The reason our total debt pile has continued to climb is that chancellor George Osborne took his foot off the austerity pedal in 2012. For three years he consistently missed his own forecasts for the reduction in annual borrowing.

Now argument rages over whether growth would be stronger if a future government eased up on debt and deficit reduction, allowing more money to be spent in the economy. But we cannot know for sure what the counter-factual would be – overseas investors might not care to fund more debt, interest rates may be forced up and business confidence would suffer on doubts over the sustainability of government policy.

In any event, while politicians decry austerity, it is by no means clear that the public would have an appetite for taking the same risks on the public finances that engulfed the Labour government in 2008-09. Out of the blue events counsel prudence: we cannot put our trust in debt.

There is a powerful case for a radical uplift in spending on our rail, road and energy infrastructure, to create new jobs and enhance our long-term competitiveness. But such a programme must be sustained over more than one electoral cycle. That sustainability dictates continuing firm commitment to debt and deficit reduction. And that means tough choices whatever government emerges in May.

Way to go on road to equality

Great strides have been made towards greater equality for women in the workplace and at senior levels in our national life. Scotland can be proud that we have a female First Minister, a female leader of the Scottish Conservatives and a woman leader of Scottish Labour in Holyrood.

We also have a woman Presiding Officer, Lord Advocate and Poet Laureate.

To these posts they have brought talent, skill and professionalism. In political life we have come a long way. But today only 30 per cent of all Scottish parliamentarians – MPs, MSPs and MEPs – are female: 59 out of 193. And in candidates selected so far for the UK general election in Scotland, women are still heavily under-represented. Fewer than three in ten standing for the five largest parties are female.

Today we report on the top ten “Outstanding Women of Scotland” named by the Saltire Society to mark International Women’s Day. This is a positive way to promote greater equality. Role models provide vital inspiration – encouraging others to reach for positions that in a previous era would have been not just out of reach, but unthinkable. But there are issues about female representation in boardrooms as well as in politics, with challenges faced by women in balancing career commitments with the needs of their families and children.

The dilemmas are all the more acute given the role that stable and secure family life plays in helping the life chances of children and in tackling inequality.

The work of International Women’s Day serves to remind us both of the gains that have been achieved – and the formidable work in attitude-changing that still lies ahead.


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