Labour and the Tories are both desperate for a taxpayer-funded spending spree – I don’t trust either of them

Living beyond our means is the modern way of life, a vice that’s afflicting every level of society. Trying to win our votes, both Labour and the Conservatives have proposed massive spending sprees that require record levels of borrowing – somehow billions of government debt is being shrugged off as “essential” to build a better future while the rest of us are being told to live within our means.

The election campaign kicked off in earnest with both main parties proposing spending increases to finance major projects they claim will reinvigorate the construction industry and provide thousands of jobs. According to Labour, we are in a “social and climate change emergency”, which justifies their extraordinary spending spree of £100bn. The Tories want to borrow around £20bn, still a huge sum, for spending on roads, hospitals, schools and railways.

We cannot compare personal spending and household expenditure with public works, but these proposals smack of desperation and the desire to come up with eye-catching plans to woo disgruntled and cynical voters. Can we trust any government to deliver on these grandiose aspirations? Recent history would indicate otherwise.

This week we learned that the number of “affordable homes” built under David Cameron’s bold proposals to help first time buyers was pitifully small. We’ve just found out that the Tories knew a couple of years ago that the new high-speed train would inevitably go billions of pounds over budget. After several inquiries, we still don’t know which version of the line will be built and whether it will go to Leeds at all. This week, it emerged that Crossrail, the new line across London to Heathrow, will not open until 2021 and cost over £18bn, when it was meant to open almost a year ago and cost £1.4bn less.

I’m in favour of big bold thinking, but our politicians aren’t good at bringing projects to fruition (certainly not within budget, anyway). Take the horrible waste of money developing the garden bridge (a Boris Johnson vanity project) for London. This was abandoned at a cost of £53m, £43m of which was public funds. Under Margaret Thatcher, Michael Heseltine’s bold plan for an enterprise zone in London’s derelict Docklands was one project that actually did work (albeit within a very extended time scale) and regenerated a huge swathe of the city in the process. But what followed?

In 2011, George Osborne reinvented enterprise zones in 24 locations, but a study in 2017 showed they had generated a quarter of the jobs the Treasury forecast, of which one third came from existing businesses moving into the area, not new startups.

Before voters fall for the latest extravagant proposals from Labour and Conservatives, remember the disaster of PFI contracts, used by New Labour to bring much-needed finance into public services. PFI turned out to be a costly disaster, saddling the NHS with debts many hospitals are still struggling to recover from. Under the scheme, private companies designed, built and operated public services and infrastructure, and the government paid to use them until the debt was repaid.

PFI ended up using money that cost 8.5 per cent to borrow, where the government could borrow at 3.5 per cent. Much of the financing came from companies using tax avoidance schemes, costly consultants and lawyers. Users ended up locked into agreements to pay ludicrous maintenance charges, sometimes over many decades.

With the demise of the UK’s second-biggest construction company Carillion in January last year, PFI went out of favour. That October, Phillip Hammond said he would no longer use them, but said he would still consider similar schemes “if they delivered value”. If that is still Conservative thinking, voters should be worried. Experts reckon that outstanding PFI payments would pay for all the nurses, GPs and consultants the NHS needs for the next ten years. The PFI debt is estimated to be over £300bn on projects valued at just £54.7bn.

Brexit and parliamentary chaos, and now a December election, all make me wonder who is actually monitoring the books? Who is in charge of the economy? The autumn Budget got cancelled, the Office for Budget Responsibility were supposed to provide an assessment of our current position this week, but that has been cancelled. Hammond spend his time in office trying to reduce the national debt. Now he’s leaving politics and his philosophy is equally redundant. It might seem a good idea for the next government to borrow billions while interest rates are low, but what happens if that changes?

The Tories used to stand for spending within your means, but what’s their new branding now? For years, they’ve been telling us we need to live within our means, that we must save for our retirement and use credit cards carefully. That message has fallen on deaf ears, as young people see no reason to save as they will never be able to afford a home. Older people are spending their nest eggs because they don’t want it consumed in tax when they die. There’s been a big increase in second mortgages, using our homes as collateral for more loans. If that debt can’t be repaid, then your biggest asset will be taken and you could end up homeless.

Is it any surprise that we’re a nation of debtors, when our leaders – with their macho aspirations – are no better at managing money.