The news is out: Britain’s economic credibility, that fragile phantom we’ve been chasing for a decade, has been ‘restored’. How? By handing the next Chancellor a £9bn council tax debt crisis. Yes, you heard that right. We have apparently achieved fiscal credibility by kicking a monstrous can down the road, a can so large it could house a Victorian workhouse. One must admire the sheer audacity of it all. The Treasury, that august body of number-crunchers, now announces that local councils are sitting on a £9bn hole of unpaid council tax. And this, we are told, is a sign that the economy is on a sound footing. If this is sound, I shudder to think what unsound looks like. Perhaps a state where every citizen pays their taxes on time, and the government has surplus to spend on something other than servicing debt. That, surely, would be the true mark of decadence.
But let us not be too hasty in our condemnation. There is a certain historical irony here. In the late Roman Empire, the state’s fiscal credibility was maintained by debasing the currency and shifting burdens onto the municipal elites. Sound familiar? Local councils are now the new municipal elites, forced to absorb the shock of unpaid bills while Westminster pats itself on the back for maintaining ‘fiscal discipline’. The comparison is almost too perfect. The beauty of the British system is that we can announce our ‘credibility’ while simultaneously creating a debt crisis that will have to be resolved by someone else, preferably a Chancellor not yet appointed. It is a game of musical chairs, and the music has stopped. But who is left standing? The taxpayer, of course, as always.
Meanwhile, the intellectual decadence of our age is on full display. We have columnists and economists who solemnly intone that this debt is manageable, that it is a one-off, that it is in the past. This is the language of a civilisation that has lost the will to confront reality. They speak of ‘legacy debt’ as if it were a quaint inheritance, like a Victorian mansion with dry rot. But dry rot, if left untreated, brings the whole house down. And when it does, we shall be told that it was inevitable, that the signs were there, that we should have repaired the roof when the sun was shining. Indeed, we should have done so. But we did not, because we were too busy celebrating our ‘credibility’.
Now, the next Chancellor: what a poisoned chalice. He or she will be forced to either raise taxes, slash spending, or do a bit of both. And whichever choice is made, the headlines will scream of austerity or betrayal. The Right will denounce tax rises as a betrayal of the Conservative creed. The Left will denounce spending cuts as a betrayal of the working class. And the centre? The centre will mutter about pragmatism while the building burns. It is the perfect trap, and we have walked into it with our eyes wide open, declaring our own wisdom as we fall.
What, then, is to be done? If I were a contrarian of the sort that likes to annoy people, I would suggest that we need a return to Victorian virtues: thrift, duty, and a stiff upper lip in the face of financial crisis. But that, I fear, is too simple. The Victorians also had a vast empire to plunder, which rather helped with the finances. We, in our post-imperial twilight, have only ourselves. And ourselves are not, to be honest, in the best of shape. We have become a nation of debt-fuelled consumption, obsessed with property prices and the latest gadgets, while our infrastructure crumbles and our social fabric frays. The council tax debt is a symptom, not the cause. The cause is a national identity that has lost its way, that no longer believes in anything beyond the next quarterly GDP figure.
So let us not delude ourselves. The restoration of economic credibility is a myth, a convenient fiction to get through the next election. The reality is that we are a country living on borrowed time and borrowed money, and the bill is coming due. The next Chancellor will have to pay it, and the one after that, and the one after that. Until, at last, we are forced to confront the question we have been avoiding for decades: what kind of country do we want to be? And are we willing to pay for it? I suspect the answer is no. But that is a column for another day.
