Honesty in public finances is essential. We cannot continue as we are. The United Kingdom’s public debt and unfunded liabilities are unsustainable, preventing good government, economic development, and future prosperity. Without action, public sector debt is on a trajectory to rise from 100% of GDP to nearly 300% in the coming decades. 

Put simply, the Government is spending far more than it “earns”. In the last 15 years borrowing has ballooned, massively increasing public debts and interest payments. Irresponsible government, poor and often sloppy accounting, and weak fiscal control and management just compound the problem. Expecting our children to pay for our failure to grasp the nettle is no way to run a country. Countless plans and optimistic statements over the years are no substitute for taking responsibility and stopping the debt spiral.

Current UK government liabilities, including public sector pensions and debt, are over £5 trillion or around £80,000 each for every man, woman and child. Realisable assets are virtually zero. It is our duty to deal with the problem once and for all. 

Public sector deficits and borrowing go hand in hand with bad government, poor value for money and the scourge of inflation. People should pay for what they get, judge the quality of the services and vote accordingly.

Economic growth, rather than extra taxes or borrowing, should finance increases in public spending. A key aspect of our proposals is that they do not involve any public sector borrowing or interest payments on existing debt.

The solution needs to be managed to avoid the consequences of default. Despite protestations to the contrary, we are already in a situation where we are issuing debt to cover interest payments and then some. We must consider the best options, which may include formally recognising the Ponzi nature of the current arrangements and establishing an arm’s-length debt office to manage the toxic debt and issue new debt to cover interest payments.  We must not support “unfunded” public sector pension schemes. The fantastically generous, unrealistic pension promises are not underwritten with any actual pension fund and cannot be afforded by current and future generations.

In recognition that governments have betrayed public employees, we must introduce hardship arrangements to ensure that every public sector pensioner whose scheme is unfunded receives a pension equivalent to the average private sector pension. We must also stop routine early retirements. In the future, we must ensure that public sector employees’ pension contributions are invested to create proper pension funds with real investments.