Despite all Chancellor George Osborne’s efforts to reduce spending, we are borrowing even more than last year — and because earnings are low, so too are tax revenues, making it harder to pay the interest on those debts without borrowing more.
It means that whoever wins the next election is going to have to make huge cuts in spending — some figures suggest an extra £48 billion over the next five years.
In the first six months of the 2013-14 financial year, the total new borrowing was £52.6 billion. This year it is £58 billion, testament to Mr Osborne’s apparent inability to control spending.
That’s an extra £5.4 billion on an already ballooning public sector debt: the total now stands at a mind-boggling £1.453 trillion, which is £100 billion more than last year.
And there’s virtually no inflation to lower the real value of that debt, either. To say we can’t go on like this is something of an understatement.
It would be utterly irresponsible of any party seeking power next May to pretend that the country does not need a further, and very radical, dose of austerity.
Hiding that reality could also be fatal to their chances, because the public knows we are living far beyond our means, and will not trust anyone who tells them otherwise.
The gravity of the deficit — the gap between economic incomings and outgoings — and the national debt makes it all the more outrageous that Ed Miliband did not mention either in his recent party conference speech.
But that only reinforces the point that he is not prepared to face reality on the subject, and has no coherent plan to manage this vital aspect of economic policy. Voters know that if their own finances were in such a mess they’d be bankrupt. They understand it can’t go on.
It is absolutely imperative we reverse this borrowing spree. And the reason is that the cost of paying interest on that debt — at around £52 billion a year, or £6 billion more than the whole defence budget — will rocket as soon as interest rates rise.
Mark Carney, the Governor of the Bank of England, says rates won’t rise for a year. I don’t believe it, not least because this is the third or fourth time he has changed his mind on this question.
So the choice the electorate should be presented with is this: would you rather taxes were spent on healthcare, education, pensions and defence, or went in interest payments to mainly foreign lenders?
To borrow less we must, of course, spend much, much less. In an election campaign, it should be clear that the Tories are at least willing to try to do that. Labour, with its addiction to splurging money it hasn’t got, will try to avoid any such commitments.
George Osborne’s great failing as Chancellor is that he did not cut more deeply at the very start of the Coalition. His friends say the Lib Dems prevented him, which is an argument I do not entirely believe.
The polls suggest we are heading again for a hung parliament, and I have yet to meet a Tory MP who wants another coalition. So the Tories need to unveil a strategy on how they would spend less of your money as a minority government, and dare other parties to expose themselves as reckless by refusing to support such cuts.
And, of course, the easiest way to save money is to reduce the State payroll. There are whole departments that are now unnecessary — the Scottish, Welsh and Northern Ireland offices, for example, whose functions are largely discharged by the devolved Assemblies. Anything Whitehall needs to do in these areas could be done by the Cabinet Office.