Yesterday I was grateful to Shortlands supporters who turned out to stand at the station and then campaigned with me in the Cumberland Road area.
I thought I would write about government finances today. Other political parties do not seem to think this is a high priority and call for an end to so-called ‘austerity’ as though we Conservatives want it. We do not; it is a means to an end. The most important requirement of government is to get our national finances back in the black.
There sometimes seems to be confusion about our Government ‘debt’ and our ‘deficit’ - by politicians as much as anyone else. But they are two different matters. Our national ‘debt’ is what we owe creditors; we have to pay interest on that amount every year. Our national ‘deficit’ is the difference between what the Government gets in income and that it spends to keep the country running.
We have a huge national debt of £1.56 trillion which is about 82% of our total Gross Domestic Product (all we earn). It costs about £43 billion a year to pay the interest on this debt (much more than the Defence Budget). The Government income/revenue from taxes and the like is about £600 billion a year. So to pay off our national debt completely we would need to give our creditors just over two and a half times what the Government takes in revenue each year.
But we are still borrowing around £2 billion a week (£107 billion a year) for the day-to-day running of the country. Of course anything we borrow is added to the debt too. This requirement to borrow money – the deficit in colloquial parlance – is technically called the Public Sector Net Cash Requirement (PSNCR).
Our national PSNCR or deficit, has been halved by the Coalition Government but, as I have just written, the Government is still paying out more than it takes in revenue to the tune of £107 billion a year.
We Conservatives want to stop the need to borrow – to have no deficit - by 2017/18. Thereafter surpluses will be used to bring down the national debt which is still enormous. We cannot allow this accumulation of rapidly rising debt to continue as it will have dire consequences for future generations.