When Labour announced their Manifesto’s £48 Billion tax ‘n’ spend motherhood ‘n’ apple pie bonanza, the Conservatives were predictably quick to say that here was absolute proof that a coalition of their former bed-fellows, the Liberal Democrats, Corbyn’s Labour, the SNP, Plaid and the Greens would be a coalition of chaos.
But the reality is that the Conservatives, Liberal Democrats and Labour already have a coalition of financial chaos, twice the size: HS2 – costing £100+ Billion.
In my last article on HS2 “It’s not too late to SCRAP HS2” – endorsed by James Price, Campaign Manager, TaxPayers’ Alliance: “I couldn’t agree with you more.” – my central argument was that although many consider that the February 2017 HS2 enabling legislation passed by 90% of Parliament was the end of trying to stop HS2, it is not technically too late to scrap it, given not an inch of HS2 track has been laid, and won’t be laid until at least July 2018. Especially keep in mind that the Chunnel was halted in 1975 in spite of both a treaty with another country – France – and 300m of tunnel having been already bored on the UK side.
In this article, I shall put the proposal of the Legacy Parties’ Coalition to waste £100 Billion on HS2 into the current financial context, with some pointers as to how we can best communicate this insanity to voters – by relating sums so vast as to make them almost meaningless, to people’s day to day personal finances.
In the lead-up to the 2015 General Election, PM Cameron and his fellow toffs were clearly trying to mislead us mere plebs, and treat us as if we’re fools, in saying that his Coalition was eliminating the budget deficit. By failing to say the annual budget deficit, many, as I believe Cameron et al intended, erroneously believed that that meant the UK’s total debt was gradually being eliminated, whereas the reality was that, au contraire, the UK’s cumulative debt pile was still increasing; albeit at a slightly slower rate than under Labour. By 2015 the UK’s cumulative debt was £1.4 Trillion. Now, only two years on, it has increased by nearly a third, to £1.8 Trillion.
The problem is that, even at today’s low interest rates, just the interest on that debt is costing £46 Billion each year – dwarfing the £37 Billion Transport budget (no wonder we have so many potholes!) and only £2 Billion less than the entire Defence budget – 5.7% of the total projected total £802 Billion UK spend for 2017-18. Put another way, given Council Tax annually raises £30 Billion, servicing the £1.8 Trillion of cumulative UK debt is currently costing each of us the equivalent of roughly 1½ times our council tax bill.
In the context of the Liberal Democrats’ claim that their penny on the basic rate of income tax policy would raise £30 Billion extra NHS funding over a 5-year Parliament, the cost of HS2 is the equivalent of 3p on the basic rate of income tax over the same period, a 15% increase in the basic rate of tax, but because it is unfunded and so adds to the debt pile, HS2 will add another £2.5 Billion to the UK’s annual interest bill just at the time when we should be reducing the cumulative debt pile to avoid the proportion of interest payments rocketing when world interest rates at some unknown point in the future inevitably rise. Because each 0.25% interest rate rise is such a high proportion of the current low interest rate, it wouldn’t take many ¼-point rises to double the £46 Billion interest rate expenditure towards matching the projected £102 Billion Education 2017-18 budget.
So, given the precarious state of the UK’s finances, spending upwards of £100 Billion on HS2, with a return of less than 50p per £1 spent, is financial recklessness of the first order – and for little on the ground gain. Given speculation that HS2 mightn’t be able to start at Euston, this train could end up as the line that both starts and goes nowhere.
That the Conservatives continue to have a reputation among many of their supporters of being trustworthy on the economy is testament to the widespread ignorance of these facts – perhaps proof of the old adage that stated untruths will always beat unstated truths.
The Conservatives dogged determination to continue with HS2 is baffling in the context of their recent chaotic attempts to raise money. First, they were humiliated into climbing down following the 2017 Budget from their attempt to break their four times stated pledge within their 2015 General Election Manifesto of no tax or National Insurance increases. Second, more recently, within days of launching their 2017 Manifesto their no cap on end of life Social care charges policy has become a shambles as they try to “squeeze” pensioners requiring such care and their children, in the late Dennis Healey’s infamous words, “until the pips squeak.” Although like a dodgy second hand car salesman on the one hand PM May says there will be a cap, on the other, very conveniently, the precise amount will be put out to consultation – which of course could result in a zero cap.
The fact that there is no stated cap at the present time means that we must read the plain English Manifesto statement that there will be no cap to mean just what it says. This Dementia tax would likely hit those with estates valued below the current £325K 40% Inheritance Tax threshold hardest by introducing effective IH rates of 55% – 70%. So much for ex-Chancellor of the Exchequer George Osborne’s no Inheritance Tax on estates of under £1 million!
There are currently only two options to vote against HS2: the Greens and UKIP. Given most selection is by a process of elimination, making a rational decision should be very easy for apart from proposing the legalisation of brothels, the Green’s economics are even more ludicrous than Labour’s. For example, the Green’s proposed introduction of a four day working week would immediately reduce teachers and health workers service provision by 20%, which would then require a 25% increase in personnel if even available, just to stand still. Even if only half the NHS and Education budgets are salary costs, just this additional £126 Billion would increase the UK budget by 16% – never mind their further un-costed increase required for the Greens’ totally impractical simultaneous increasing the provision of these services.
Thus the only credible vote against HS2 is to vote UKIP – just in the nick of time.