It is now more than a decade since then-US Secretary of Defence Donald Rumsfeld offered one of the more bizarre press conferences in political history. Discussing the Iraq War, he listed the different kinds of knowledge – the known knowns, the unknown knowns, the known unknowns and, most mind-bending of all, the unknown unknowns; that is, the things we don’t know we don’t know.
Without wishing to delve too far into the mind of Mr Rumsfeld, it’s time to introduce one more into the mix. It’s the “please, I know all about it, but I really, really don’t want to think about.”
The debt that students will leave university with certainly fits in that category. The average graduate leaves university with 44,000 GBP worth of debt. Regardless of the rights and wrongs of tuition fees, that’s a hefty sum for somebody to lug around before they’ve even started working.
But lesser known is the debt that, through no fault of your own, you’ve already taken on. In what was a depressingly negative election campaign, it’s easy to forget among the pledges and the promises that Britain’s biggest challenge is a 1.4 trillion GBP debt time-bomb. That’s just over 22,000 GBP per person, 52,000 GBP per household – and 100,000 GBP per young person.
If we continue on our current path, we won’t so much defuse the bomb as throw it into the fire. With an ageing population, the pension and healthcare bill will only go up. The debt we’ve already piled up is costing Britain some 50 billion GBP a year in interest payments, more than we spend on defence and nearly as much as schools.
Voters regularly tell pollsters that they want politicians with backbone, putting the long-term interests of the country ahead of their own careers.
Maybe they do. But politicians didn’t necessarily agree during the election campaign – running around the country on something of a promotional giveaway tour, promising to keep unaffordable but popular trinkets like free bus passes and triple-locked pensions that are rising above inflation.
Now, to be fair to him, the Chancellor has made a welcome start in this second term when it comes to getting Britain’s finances in order. However, with a growing economy, his spending target for the end of the Parliament has slipped from 35.2 per cent of GDP to 36.3 per cent – hoping to close the deficit via tax revenues, rather than through spending reductions. That’s not sustainable. While the economic sun is shining, the Chancellor must fix the roof.
A report published last year by the Centre for Policy Studies suggested that the fund the Government uses to pay for the state pension will run out 20 years earlier than we expected. The upshot? Respected experts don’t expect a graduate today to receive a penny of their state pension.
Balancing the books isn’t just sound fiscal policy, but a moral imperative. An old boss of mine once told me that nobody over the age of eight should use the word fair, and he may have a point. But I’ll make an exception. It’s simply not fair for today’s politicians to pile debt upon debt onto the next generation, safe in the knowledge that it might win them a few votes and that they won’t have to deal with the consequences.
Those consequences will be severe. Young graduates on average salaries are already paying ludicrously high tax rates of around 48% when compulsory Employer’s and Employee’s National Insurance are included alongside loans. That’ll look like a low-tax nirvana compared to what future generations might have to deal with. That’s before we discuss the scandalously high cost of housing in Britain, inflated by politicians at national and local level who have put the interests of NIMBYs and BANANAs (Build Absolutely Nothing Anywhere Near Anything) ahead of young people who have seen the bottom rungs of the housing ladder disappear into a haze of restrictive planning laws.
It will be up to that next generation to hold them to account. That means, frankly, calling politicians out on these unaffordable promises. It means asking our politicians why they think people who are pessimistic about ever affording a house, are saddled with thousands of pounds of tuition fee debt, entering a job market artificially depressed by high taxes on employers and with little hope of a pension should pick up the bill for their spending spree.
Perhaps, like student debt, nobody wants to think about it. But, to borrow a phrase from Mr Rumsfeld, this bill is increasingly a known known. After the Golden Generation, the Baby Boomers and Generation X, perhaps it’s time for Generation Screwed to stand up and be counted.