The Conservatives and Liberal Democrats knew that there was very little money in the government kitty when the election was on. However there are reports that Treasury ministers are shocked by the virtual bankruptcy that the incoming government is faced with.
When David Laws came into his office as Treasury minister in charge of monitoring departmental spending there was a note from the outgoing minister Liam Byrnes saying "Sorry, the money has gone. Good Luck."
This was meant as a joke, but there was a deeper truth. The previous government had spent beyond its means to a staggering degree. It is quite hard to express how indebted the country is in terms of the billions of national debt, so there are a couple of figures that may help people put this in context. Of every pound that the government spends, twenty five pence is borrowed on the money markets. Another statistic is that the national debt is currently £34,000 for every man, woman and child in the country. If someone were in this much debt on their credit card then they would be seen as being out of control. Now imagine if this person were a student or pensioner - who would certainly come under the category of "every man, woman and child".
This shortage of money means two things. Firstly there are grave risks that the increased taxes and the cuts in expenditure will make the government dreadfully unpopular, or as Eddie George the governor of the Bank of England said, "Unelectable for a generation". However it does give an enormous amount of political cover for taking brave decisions on the economy by looking for innovative responses to public service provision as well as to be able to bring in measures that will encourage enterprise.
About this Author
Stephen Canning is the editor of The Tory Boy (www.thetoryboy.com) one of the fastest growing online political news blogs. He is also the Chairman of the Braintree Conservative Future and is actively involved in local, regional and national politics. Join him on Twitter (@StephenCanning) for regular political news and information.
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