25-05-2025
The UK is going bust: Starmer and Farage have now guaranteed it
Will nothing save Britain from this collective madness? No data set, however grim, ever seems to shake politicians from their high-tax high-spend complacency. No public-sector performance indicator ever guides them to the rightful conclusion that the state is spending far too much on things we don't need whilst chronically under-investing in those we do.
The country is going bust. Our national debt has soared past £2.7 trillion – over 97 per cent of GDP. Servicing the debt is costing £100 billion every year. Our 2025 growth forecast is a paltry 1.4 per cent. We waste precious taxpayer cash on subsidising the arts, renationalising the railways and paying people who could work not to. All the while our prisons descend into squalor, our borders are inadequately policed, our streets increasingly unsafe.
Like the gambler hunched over a roulette table, eyes bloodshot and murmuring 'next time I'll win it all back', successive governments have stubbornly refused to exit the casino and sober up. At least in the past there was some political pressure to rebalance or retrench. What's alarming now is that no party seems to be grounded in fiscal reality.
Over the course of just three days, Calamity Keir U-turned on the universal Winter Fuel Allowance (WFA) and two-child benefit cap – a policy he previously supported with such fervour that he suspended seven MPs who rebelled against it – and unveiled £7 billion inflation-busting pay rises for public sector workers. This week, Nigel Farage will reportedly attempt to outflank Labour on welfare. And the Tories are chalking up Starmer's decision to partially reinstate the WFA as a win for their party, reminding us that the Conservatives 'never touched the winter fuel payment' during their 14-year stint in government.
It's not just our elected representatives, mind you. Surveys have repeatedly shown Brits would prefer fiscal headroom was diverted towards public services than tax cuts, ignoring the 'Rahn Curve', which shows greater government largesse financed by taxes leads to weaker growth. It's the identifiable victim problem writ large: help groups we believe to be 'in need', often inflating our own sense of virtue, whilst giving no consideration to the wider economic picture nor who's footing the bill.
And once you start looking for examples of this mindset, they're everywhere. A sermon at my local church on Sunday featured Matthew 19:24: 'It is easier for a camel to go through the eye of a needle than for a rich man to enter the kingdom of God', and a lecture on how Jeff Bezos chooses to spend his money.
Amusingly, when the think tank Tax Policy Associates recently polled voters on the amount of additional tax they would personally be willing to hand the Exchequer, a third said less than £10 a year. The problem with socialism is that eventually you run out of other people's money. In the end, the taxman comes for us all.
The problem for Starmer is that his credibility is shot. Fears Labour's spending plans could dwarf even their historic tax increases triggered bond market turmoil in January. Now, the Government has handed the WFA back to many people who don't need it and given lots of money to people with large families with no conditions (such as: 'get a job'). In one swoop Labour have more or less raised expenditure by the amount they're going to save by cutting Personal Independence Payments (if they hold their nerve). It hardly signals a willingness to balance the books.
Instead, both Labour and Reform seem to believe they can fudge the numbers – the 'iron chancellor' with pretend wriggle room from growth forecasts, or by ditching, as rumoured, the fiscal rules, which have thus far acted as a welcome chokehold on Labour's worst spending instincts. And Farage with 'policies' likely to smash into pieces if they ever get into power. We should take migrants out of hotels. We should stop steaming towards net zero at breakneck speed. But why do Reform believe they will succeed where the Tories repeatedly failed?
It never ceases to amaze me that the people who gloated most loudly over the decline and fall of Liz Truss are the very same who pretend there's a magic money tree that can be shaken to meet their many spending demands. Don't reform the increasingly bloated, ineffectual state, they wail; just impose a wealth tax. Even though these have been reversed almost everywhere they have been tried because the cost of administration exceeds the revenues raised. Don't shrink the public sector, they say; just bring capital gains in line with income tax, even though it will disincentivise investment, damage our international competitiveness and create a lock-in effect.
To her credit, Kemi Badenoch has refused to make facile promises and is encouraging her party to work hard at some proper, measured proposals on cutting the state's commitments. Her great tragedy is that she inherited a parliamentary Conservative Party in a lamentable condition, packed with 'wets', and which is growing mutinous. On Friday I appeared on a panel with a pleasant, accomplished, well-meaning Tory MP. But he was completely unwilling to robustly challenge the pro-NHS, pro-welfare status quo.
Labour are as bad at maths as they are politics. Their approval rating is on the floor. There has never been a better time to strike, but will anyone land the blow?
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