Britain is spending more servicing its national debt than it spends on the Home Office, defence and justice put together, John Healey told the Labour Party conference.
The Chancellor of the Exchequer used the comparison to attack the previous government’s record, telling delegates that Conservative decisions had left “a legacy of sky-high debt costs, for families and for government.” Turning to the opposition front bench, he said: “Your reckless actions are still causing pain for people today. You left crumbling public services. And you left Britain spending more on debt than the Home Office, Defence and Justice put together. And people won’t forget, people won’t forgive.”
He set out what that means for departmental budgets in terms defence readers will recognise. “The cost of the nation’s debt is not just a number in a Chancellor’s Budget,” he said. “It’s the money that we can’t spend on the NHS, on schools, on housing, on social care. On policing our streets, on controlling our borders, on defending our country. And I tell you these levels of debt are an assault on our common sense, they are an affront to our values.”
Healey attributed the position to three episodes, naming austerity under David Cameron, the effect of Brexit on exports under Boris Johnson, and the mini Budget of Liz Truss, which he said crashed the economy and collapsed confidence in Britain’s fiscal strength. He noted that the shadow chancellor appointed by Kemi Badenoch had helped write that mini Budget and still maintains there were good things in it.
The comparison carries weight because debt interest has grown into one of the largest single items in public spending, competing directly with the departments the Chancellor listed. Defence spending is committed to rise to 3.5 per cent of GDP on core defence by 2035 under the promise made to NATO allies, which Wes Streeting restated from the same platform as a cast iron guarantee, and the Defence Investment Plan has committed an additional £15 billion between 2026-27 and 2029-30, taking planned investment to around £298 billion across the four years.
Against that, the Chancellor made fiscal discipline the condition for everything else. “On day one as Chancellor, I said my first duty is fiscal discipline,” he said. “And I’ll tell you why. It underwrites every promise this Government makes. On growth, on jobs, on national security, and on public services. We can’t succeed without it.” He committed to balancing the books with a buffer against uncertainty, controlling borrowing to bring down inflation and reducing long-term pressures on the public finances.
His Budget is a month away, and he told delegates that fiscal discipline would run through the core of it. The tension that argument sets up for defence is a familiar one, since the department’s own investment plan runs over the same period in which the Chancellor has undertaken to bring borrowing under control, and Streeting acknowledged from the same stage that more spending on defence comes with choices and trade-offs.
Healey quoted his own predecessor as Defence Secretary on where those trade-offs lead, reaching back to Denis Healey’s warning from 1969 that cutting defence expenditure to the extent that security is imperilled leaves a country with no houses, no hospitals and no schools, only a heap of cinders.
They always miss out the massive amount of money spent/borrowed tackling the covid-19 global pandemic.
Massive amount of money pissed up the wall takling COVID 19
Whilst fair, a large part of said debt linked to covid went to fraud and corruption the last goverment refused to go after reclaiming and the national debt was increasing rapidly way before COVID.
Saying that, the UK isn’t alone among major economies that have sky high national debt
Debt to gdp in 1997: 45% Deficit: 2%
Debt to gdp in 2010: 70.3% Deficit: 9%
Debt to gdp in 2019: 80.8% Deficit: 2%
Debt to gdp in 2024: 97.2% (covid) Deficit: 6%
The massive amount of debt was accrued during the last Labour government. Covid then added more.
No that’s not actually true..
1990-96 conservative moved from 28% to 42% of GDP causes by Black Wednesday ERM exit pressures and post recession peak
1997- 2007 Labour 42% down to 36% general a very good record with a low of 29%
2008-2009 labour 41.4% to 51.5% global financial crash and bank bailouts
2010- 2015 conservatives 63% to 80% caused by structural austerity
2016-2019 conservatives 80% to 80% new pre pandemic economic baseline
2020-2021 conservative 94.8 – 95.4% covid response
2022-2024 conservative 95% – 94.7% new post covid norm
2024-226 Labour 94.1 -93.3%
As you can see the biggest issue was the 2008 financial crass and very specificity the 2010 conservative response.
The figures are from the ONS, they are accurate and exclude the temporary bank bail out. When Labour left office in 2010, debt was 70%+. You are correct in saying the 2008 crisis created alot of that debt. It had very little to do with the coalition government, though. Labour was spending circa 3.2% of gdp, which was only sustainable while it was fuelled by the large credit boom at the time. When that merry go round came to a stop the deficit ballooned massively. £150bn by 2010. That is what happens when you treat credit and asset-price-sensitive revenues as permanent revenue. In short Brown **** up, 2008 arrived and revenue collapsed. That is how we got too today.
Everyones Brains in govt became fried after the creation of Quantarive easing by Gordon Brown. What should have been a temporary structure to wind down in the short term. Success govt got detached from reality and though borrowing 10s of billions every month was hust normal. We are finding out today it is not normal and never has been .Debt must be repaid. Not sure how Camerons austerity lead to increase debt at least he tdied to ontain it . Again the Nation was brainwashed by the buzzword of Austerity and all of a sudden fiscal discipline became evil and nasty . Under Austerity the last time i looked govt spending increased every year , granted just below inflation i believe but still increased . Listening to BBC and experts in press you would think the uk were massively slashing udgets but not quite the case , except Defence of course as no one complains about that during election
The problem with austerity is it’s like trying to save money on running your car by not replacing the oil. Short term savings with massive long-term costs that snowball.
That’s the point, they went through the banking crisis and still just under 70% and has gone nuts every since. There is a lot of research on what impacted the economy more between the banking crisis and COVID, but as COVID was mixed with Brexit, it’s impossible to isolate, and economists put the impact of Brexit as higher than either of them it’s hard to know.
I guess conclusion is if less lies about Brexit and more honest discussion, maybe the economy would have been on a healther position. Something that is realistically not going to be reversed in our life times.
Comes back to why bring this up in the first place, I don’t understand the political driver. Debt isn’t going to come down significantly in this or next parliament and so effectively opening up an avenue of attack.
May I suggest that in bringing it up now John Healey is firing a shot across the bows of his own back benchers. They are enjoying a bit of a second honeymoon with the electorate at the moment and a lack of discipline will likely kill that off so Healey is saying back me and I’ll deliver. Of course, the last part of that deal will be the hard part.
However, it seems likely that Burnham is going to do away with the triple lock. It the question is, when?
Should be an interesting afternoon.
Cheers CR
It was not a banking crisis it was a growth crisis that governments and central banks fought by putting borrowing rates so low that created a giant credit bubble.
Most of it was caused by the sub prime market in the US crashing the worlds credit assumptions. UK govermental approach had very little to do with the crash happening other than letting the banks take insane levels of debt.
Sub prime is by definition credit with high risk of default. It was the end of the rope with securities being created trying to mask the problem of that huge credit bubble that was not giving the returns to pay for it.
That amount of credit was only possible by Federal Reserve ultra low rates and similar behavior by Euro central bank. In my country a giant bubble of property development started.
Suddenly the tax returns of that housing bubble collapse, government budget deficit 4% of gdp in super hot economy shot to 12% of gdp roughly 24% of whole budget and international intervention of ECB arrived with so called “austerity” .
Strangely today… the journalists are not calling the superavites we are getting “austerity”.
In 2008 3% deficit was called by them “austerity”…
Hi folks hope all is well
Doesn’t Healey realise he and his political colleagues are very much responsible for the current condition of economy, and conveniently left out the cost of welfare which is one of the largest expenditure of the UK. Which tops most government departments put together.
As a side issue have many of you being watching the War Game on Sky? Quiet interesting when there’s reference to the lack of various defence components to defend the UK. There’s a clip of Nicola Sturgeon saying more should be spent on defence. The irony coming from her. Still hope the programme helps persuade the general public of the need to increase defence expenditure ASAP.
Cheers,
George
How so? National debt as a percentage of gdp was falling under the last labour goverment and then sky rockted under the last conservative one.
Although not sure why his bringing it up, as it’s not exactly unique to the UK.
The Truss/Kwarteng budget and Brexit were unique to the UK, as was many years of ideological austerity under the Tories. As was the 2010 SDSR
Fcuk the legacy parties their members and supporters – they are all parasites.
They have decimated the U.K on virtually every level.
No the huge national debt is essentially a function of 2 events.. the 2008 banking crash and following worldwide economic shitshow and Covid
Up until these two events we were essentially doing fine.
There was no “banking crisis” , it was a growth crisis that governments in the west fought by making credit super cheap, effectively printing huge amounts of money by credit. When the results of that credit deluge could not pay themselves it collapsed.
In my area several properties are now finally being finished.
1990-96 conservative moved from 28% to 42% of GDP causes by Black Wednesday ERM exit pressures and post recession peak
1997- 2007 Labour 42% down to 36% general a very good record with a low of 29%
2008-2009 labour 41.4% to 51.5% global financial crash and bank bailouts
2010- 2015 conservatives 63% to 80% caused by structural austerity
2016-2019 conservatives 80% to 80% new pre pandemic economic baseline
2020-2021 conservative 94.8 – 95.4% covid response
2022-2024 conservative 95% – 94.7% new post covid norm
2024-226 Labour 94.1 -93.3%
As you can see the biggest issue was the 2008 financial crash and Covid.. both events our government could do fuck all about.
Remove the 2008 financial crash and 7 years of financial collapse and then Covid and we would be sitting on 30-40% of GDP
‘We should also accept that from 2005 onwards Labour was insufficiently vigorous in limiting or eliminating the potential structural deficit…’
Blair 2010
Other nonsenses 1997-2010
Selling 40% of Britain’s gold reserves. The policy was announced in May 1999 with the gold price at $282 an ounce and completed in March 2002. The average price achieved was $275, compared with a current price of $4,800. The opportunity cost of the 12.7 million ounces sold was $57.5billion.
Windfall tax. Labour’s first Budget included a £5billion “windfall” tax on the businesses privatised under the Conservative government. This tax on the businesses drove most of the utilities into the hands of unaccountable, often overseas, private equity.
Labour’s first budget raised £5billion a year by abolishing advance corporation tax (ACT). Abolition discouraged pension funds from investing in UK equities, severely undermined final-salary schemes in the private sector and significantly increased pension costs to businesses. The result was the relentless decline in the London Stock Exchange as a source of capital for British businesses.
Bankrupting British Energy. The government made a concerted effort to close down nuclear-power generation in the UK, largely because of the industry’s role in undermining the effectiveness of the coal miners’ strike in 1984.
And so on and so forth. Blair’s Britain…
Who is to blame and when is not really an issue, more importantly how are we going to deal with the problem and the answer is clear, we are not. Just look at the howling storm Burn Ham has set off even hinting at the possibility of potential consideration of a review of the triple lock! On anything but defence spend spend spend all you like. Difficult decisions of potentially redirecting, not even cutting spending and the howls become screams become fury so everyone just settles down and on we go, out with the national credit card.
UK has run a deficit every year since 2001 when Brown stopped adhering to Tory spending plans. The banking crisis hit Britain hardest because of the size of financial services, whose apparent profits and large payrolls had helped fund Browns big expansion of welfare. The deficit became in effect structural although in 2019 it was reduced to @£5b.
The Tory reaction to Covid ( all other parties were urging more stringent lockdowns and bigger spending) blew away everything gained from years of so called austerity. It seems to have permanently increased the number of people opting for a life on benefits, a trajectory that is unsustainable. So what to do?
* The welfare bill has to be reduced- the forecast trajectory is unaffordable.
* Public expenditure must be better managed. Too many infrastructure and defence projects are poor value
* Reduce the cost of energy to manufacturing industry. This must mean abandoning all net zero commitments.
Any of that likely? Not a chance
So Healey’s response to record debt is ??? That’s right, keep borrowing more. What an effing genius.
“Turning to the opposition front bench, he said: ….”
Huh?
What’s wrong?
Seeing that the front bench were not in attendance, I think you meant his attention turned to …
‘I think you all know that I’ve always felt the nine most terrifying words in the English language are: I’m from the Government, and I’m here to help.’