From the former Prime Minister:
But this is a worldwide problem. Because of ever-rising debt burdens and spiralling expenditures on defence and energy subsidies, governments are trapped in such a fiscal straitjacket that they will struggle to find the resources to meet young people’s aspirations. A large portion of public spending is captured by older generations, with schools and universities losing out as a result. Across the OECD, about half of health and social security spending goes to elderly people – those over 65 – despite them making up only 18.5% of the total population. In this tally, pensions are the biggest item, accounting for 38% of all social spending – but an understandably high portion of all health spending goes to older people, too. And with young people now taking home a far smaller share of income than earlier generations, income and wealth gaps between young and old have widened.
It’s time to join the dots.
Yes, let us join the dots. As we’ve noted before the reason there’s no money to spend on lovely new things now is because we’ve already promised ourselves lovelies. Those significant pensions, lifetime health care, an all encompassing welfare state. We promised outselves - or were forced to promise ourselves - those things without putting the money by to pay for them. The bills are coming due and so we do now have to pay for those past promises. Which is why there is no money - despite taxation and or government spending rising by as much as 10 percentage points of GDP - to pay for new lovely promises.
Even when we did have systems of saving up they were gutted - like when the pensions tax credit was revoked in order to pay for some trivia of past spending rather than saved to be used now.
There’s no money because it’s all already been spent - or at least promised.
If only whoever became Chancellor 29 years ago had grasped that problem, eh?
Tim Worstall