Bankrupt State : the conspiracy to hide Britain’s debts
Angus Hanton

Britain is bankrupt and its debts have been deliberately hidden from view. The country has far more obligations than it admits to and insolvency now looks inevitable.

There is a complacency around this, exactly as was seen in Greece before its ignominious financial collapse in 2010 which led to widespread suffering and social upheaval: hospitals were closed, pensions were slashed and a generation of young people were scarred or simply left the country.

The UK’s official debt is huge and has been swollen further by Covid, by poor demographics and by a series of governments that were determined to give older people everything they wanted. Official borrowing was expanded at a time of exceptionally low interest rates and new, higher rates are now biting hard with interest payments of £2 billion each week.  However, this debt is only the tip of the iceberg because there are many other commitments beyond the national debt: government pensions, state pensions, nuclear clear-ups, NHS & Social Care promises, committed infrastructure projects, contingent liabilities, and firm undertakings on military spending.

A series of techniques have been used to mask the scale of the obligations: understating government pension promises, failure to quantify commitments, underestimating of future costs, building up off-balance sheet liabilities, and a fraudulent miscategorisation of the huge state pension burden.

Getting out of this mess has become virtually impossible because of the way the politicians have led the electorate to believe that the country is prosperous and solvent. The only ways out are either cutting spending or raising taxes. Both are effectively blocked. Cuts are impossible for a government which has a 150-seat majority of MPs who are ideologically wedded to the idea of “no more austerity” and who swear that they “didn’t come into government to cut services”. The other way out - raising taxes - also can’t work because taxes are at an all-time high and any significant increases will be both counterproductive and politically unworkable.

Whilst the official UK debt represents about £150,000 for every working household the additional commitments are about three times as much on top. The building up of these liabilities has been a conspiracy between politicians and senior civil servants to hide what was happening. Worse, they had their fingers in the till, in the sense that they themselves were major beneficiaries of the writing of unaffordable promises.

The hidden debts are everywhere - bankrupt local authorities, universities teetering towards insolvency, urgent nuclear and environmental clear-ups needed, and crumbling infrastructure. UK politics has been turned into a game of pretending everything is okay whilst pushing liabilities down the road. The Labour government believes that a larger economy could generate enough taxes to escape the coming crash which is why it has been so desperate to generate economic growth.

Yet there is hope. The financial crisis - which may well lead to official default - will provide an opportunity to create reform that has been politically impossible for decades. The injustices of society will be addressable and entitlements can be revisited.