Some political points have a short shelf life and David Cameron’s lament on debt interest is one of them. The trouble is that if he keeps on complaining about the terrible £70bn burden facing the country, people may actually think he can do something about it.
Take this typical comment at prime minister’s questions, which is being trotted out as standard Coalition creed:
Every single person in this country is now carrying £22,000 of debt because of the mess that the last Labour Government left us. The fact is this: if we do not do something about it, by the end of this Parliament, we will be paying £70 billion in debt interest. That is more than we spend on schools and more than we spend on defence. It would be a tragic waste of money. That is why, however painful it is, we have to get to grips with the deficit that we were left by the last Labour Government.
No one doubts that debt interest is a pretty wasteful way to spend taxpayers money. The questionable part his promise to “do something about it”. Even if Cameron managed to eliminate the structural deficit by 2014/15 – a tall order – it would barely make a dent in the debt interest bill.
There are two main reasons: 1) there will still be a deficit in 2014/15 after structural part of it is eliminated and 2) most of the £70bn debt interest covers the stock of debt, which Cameron has no hope of paying off.
So in a best case scenario, with a favourable response from the markets, Cameron could reduce the £70bn bill by £5bn, or £10bn at a real stretch. That is all to the good. But it will still mean Britain is paying more than £60bn to service its debts — more than we spend on schools and on defence, as Cameron would say.