Imagine the following visit to a restaurant. The maître d’hôtel escorts you past the pot plants and assembled diners to your table, seats you with consummate elegance and presents you with the bill.
"But what is this?" you splutter.
"This, monsieur," come the reply "is the bill. As you will remark, it is a little high, but there were eight people and there was the matter of the lobster thermidor, and we must not forget the two bottles of Chateau Yquem."
"But we haven't even ordered yet, and there are only two of us."
"Non, monsieur does not seem to understand. This is the bill for the customers who were at this table here before monsieur."
Absurd? Perhaps, but that is the way that we run our public finances. With a budget deficit running at 15% of GDP we are living way beyond our means. Put another way the government which accounts for 50% of the spending in the UK is only raising 70% of the cost through taxes.
The rest is funded by borrowing. Instead of bribing the electorate with money provided by the richer half, this government bribes the electorate with money to be paid for by their children.
But this is all investment say the government. Not true. The investment such as it is, comes mostly through the PFI, which in theory has nothing to do with government borrowing.
Some spending might validly be called investment and thus might properly be funded by borrowing and paid for over many years. This would include large on balance sheet projects such as Crossrail, West Coast Main Line, sea defences, non-PFI road building or large items of defence expenditure. The rest of expenditure outside the PFI is largely current spending on benefits, education, healthcare, defence, regulation, administration or other services, the cost of which should all be borne by the generation who are supposed to benefit from it and not passed on to the next.
If the government doesn't have the guts to raise taxes to pay for current services, it should cut the services that it can't afford. And that means paying the full cost, including full provision for the pensions, of current public sector workers.
"Ah, monsieur, this is a little, 'ow shall shall we say, delicate, but the people who were at the table before thought that you might care to tip their waiter."