Brutal bean-counters break the news: we’re utterly broke
These are difficult times for a news organisation that likes to think of itself as being on the glass-half-full side of life. Optimism is in short supply, and whatever reserves remained after 12 months of this government were snatched away from us yesterday by those bean-counting assassins at the Office for Budget Responsibility.
Once a year, the OBR produces its Fiscal Risks and Sustainability Report, and once a year our political leaders promptly fling it in the “thanks, too difficult” cupboard. As the watchdog’s chief, Richard Hughes, said yesterday: “We produce these reports to draw attention to these issues, and our hope is that there is some attention paid to them.”
Richard, you have my attention.
The OBR’s report, described by Rob Colvile of the Centre for Policy Studies as “the most polite, spreadsheet-filled horror story you will ever read” effectively goes through all the rooms of UK public policy and smashes the fire alarms one by one.
The state pension triple lock is deemed utterly unaffordable, having trebled in cost to more than £15bn a year, far exceeding the annual cost assigned to it by the policy’s brainchild, George Osborne, in 2012. The state pension is on course to cost more than seven per cent of our entire GDP within 50 years.
The combination of spending on healthcare and welfare could push public debt above 270 per cent of GDP by 2070.
The full cost of climate change mitigation and the net zero transition is penciled in at a staggering £803bn between now and 2050, or £30bn a year. Long before we get to that point, we’ll have to confront the fact that “the UK government faces the third-highest borrowing costs of any advanced economy” and that, with demographics and structural conditions as they are, “the UK cannot afford the array of promises that it has made to the public.”
In other words, politicians (of all stripes) are either deluding themselves or lying to us.
I’ll end by recognising that the OBR’s full risk register (covering cyber attacks, trade wars, actual wars and market chaos) is not a forecast, any more than the scenarios used by the Bank of England in its stress-testing exercises constitute a prediction.
And it’s true that productivity might improve. Growth might accelerate. Politics might change, as might policy.
But the OBR’s sobering observations, regarding the state of the public finances and the cost of policy decisions, cannot be ignored and politicians from every party should be compelled to respond to them.