Andy Burnham cannot dodge Britain’s spending crisis forever

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According to the latest Office for National Statistics (ONS) Public Sector Finances data for August, the government borrowed £18.3bn, almost a fifth more than in the same month last year, and the highest August figure since 2020. Worse still, this was £3.5bn above the Office for Budget Responsibility’s (OBR) forecasts, and since April borrowing has reached over £77bn, which is over £8bn more than the OBR expected at this point in the year.

The most alarming number is the cost of servicing our national debt, which is closing in on £3 trillion. Interest payments on Britain’s debt reached £8.8bn in August, which is the highest August figure since monthly records began in 1997. While inflation-linked gilts were partly responsible, it highlights how debt interest continues to eat up even larger chunks of public spending.

Money spent on debt interest is money that cannot be spent on hospitals, defence or, more crucially, returned to taxpayers in the form of tax cuts. And with long-term borrowing costs at their highest since 1998, this debt interest bill will only become more expensive.

The obvious danger is that, despite John Healey and Andy Burnham promising things will be different, this disappointing set of numbers will simply become the justification for more tax hikes, whether in the form of capital gains hikes or the touted mansion tax. But focusing on revenue alone avoids the much bigger question: why is the state spending so much in the first place?

Welfare is a major part of that answer. Total welfare spending is forecast to reach almost £353bn this year and, on current trends, will hit over £400bn by the end of this decade. And yet the government remains reluctant to confront this.

But the scale should make reform impossible to ignore. New TaxPayers’ Alliance research found 7.3 million working-age adults in England and Wales were receiving Universal Credit in May, equivalent to one in five, including 3.3 million people under 40. In 54 council areas, at least a quarter of the working-age population was claiming. Now some of these will be in work or have long-term health conditions, but the fact that 3.3 million people under 40 are claiming should send alarm bells through a political class which talks about the importance of work and growth.

Yet serious reform is politically uncomfortable. As revealed this week, more than half of Labour MPs in England and Wales represent constituencies where the number of PIP claimants exceeds their electoral majority. That does not mean those claimants would vote as a bloc, but it illustrates the political pressure ministers face when contemplating welfare reform. Difficulty, however, cannot become an excuse for paralysis.

Taxpayers cannot afford political cowardice from politicians who know that the numbers do not add up but are too frightened of difficult decisions to act. Britain cannot keep borrowing too much, spending too much, and then demanding that taxpayers make up the difference. At some point, politicians have to say no, and taxpayers cannot afford for that decision to be kicked into the long grass yet again.

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William Yarwood is campaigns director at the TaxPayers' Alliance.

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