LETTER: How the UK’s expenditure cuts have come about

May I, through your column, add my opinion on the expenditure cuts which are being discussed very thoroughly at the moment.

The first observation I would like to make is that if one looks around our local area we can see so many changes, namely vast new schools, new health centres, all of which one must question whether they will improve the lot of the population.

An example of this must be to look at the super schools in Burnley and question whether these new buildings will create better standards of behaviour among pupils.

A second example would be to look at the brand new health centres in Burnley and Rawtenstall. I had an appointment there in the last few weeks and was astounded at the level of staffing in both these establishments. It’s quite plain to see the vast amount of money that has had to be borrowed for these infrastructures.

And now I would like to look at the local authority expenditure and would question how these vast unaccountable bodies can continue to increase council tax almost ad infinitum. We see a never ending plethora of council executives telling us cuts in staffing will have to be made. These of course will fall on the most vulnerable members of the public; old people’s homes, children’s services, libraries will be severely curtailed while administration expenses such as the level of executive salaries paid to council officials are never disclosed. Most public companies which are accountable to their shareholders have to publish details of executive salaries and compile these showing the previous year’s expenditure and show how much these salaries have been increased.

Another major concern must be addressed as to how pension schemes are funded. In other words, if there are deficits in the public sector pensions, does that increased expenditure fall on “Joe Muggins”, that is, council taxpayers? It seems astonishing that when most private sector pensions are being curtailed, the cost of public sector pensions is falling again on individuals. So in effect the council tax payer is not only paying into their own scheme but also paying for the pensions of public sector workers. It is all too obvious these areas are responsible for a substantial level of borrowing which is needed by the country as a whole.

Finally, let me lay to rest two fallacies that are brought out when public expenditure is discussed. The first is the witchhunt of banker bashing by looking at the payment of bonuses in isolation to the overall position in the UK. Over the last 20 years the finance industry has earned a massive amount of income for this country and the banks have contributed many millions of pounds by way of corporation tax. The second fallacy to be exposed is that the UK is paying £120,000,000 a day in government borrowing and that this level of debt is being paid into the coffers of hedge funds etc. The truth of the matter is that the level of government borrowing on which the above sum is payable has built up since the end of the Second World War and has not suddenly appeared by magic. The main participants in lending to the Government have been through pension funds and life insurance companies based in the UK. In other words, much of the interest finds its way to future payments of pensions.

The UK also borrows substantial amounts from international money markets. The headlines in the press have distorted the true picture in that the UK has a stable government system and since borrowing began over the course of the last 60 years all interest payments have been made on time.

This letter is intended to explain why the substantial borrowing requirements have arisen.