Friday, 13 September: Alasdair Smith, formerly VC at Sussex University, on the National Debt

About the speaker:

Alasdair Smith is an economist, specialising in international trade and public finance. He has written extensively on the economics of the European single market, both at its inception and during the Brexit process. He has been a Professor of Economics at the University of Sussex since 1981 (emeritus since 2015) and was Vice-Chancellor of the University from 1998 to 2007. He has served on several public sector pay review bodies (and was chair of the Armed Forces Pay Review Body for three years. He was a member of the Scottish Fiscal Commission, a panel member at the Pensions Regulator, deputy chair of the Competition Commission (then the Competition and Markets Authority), and a senior adviser to the Payment Systems Regulator, and he is now a member of the Competition Appeal Tribunal.

About the talk:

Public debt – what’s the problem?

The global financial crisis of 2008 had a big bad effect of the UK’s public finances. More recently, the Covid pandemic had a further big negative effect and the Starmer-Reeves government says it is committed to prudent management of the public finances. Successive governments have adopted fiscal rules that are intended to keep public debt under control and the Office of Budget Responsibility (OBR) was set up to give independent oversight of government tax and spend.

Public debt is not like household debt, and analogies with family budgeting (‘maxing out the nation’s credit card’) have led to bad policy, notably the Cameron-Osborne austerity programme of 2010-16. It is sensible for governments to borrow within limits, and there’s no evidence that the UK government has been at risk of losing the confidence of financial markets (except during the brief Truss-Kwarteng episode).

[There’s too much focus on misleading measures of the public debt. PFI (the private finance initiative) was more expensive than public finance, but hid the burden being passed on to future taxpayers. There’s no recognition of the fact that public expenditure on long-term assets like schools and hospitals generates income for future generations. Unfunded public pensions (both state pensions and the pensions of public sector employees) are public debt but are left out of most discussion.]

The important issue is how to balance the interests of current and future generations. Government spending financed by borrowing may be good for current generations but it passes the bill on to our children and grandchildren. If we want more public expenditure but don’t want to pass the bill on, we have to pay higher taxes. Demographic change is driving up the costs of public provision of health and social care and society needs to face up to the real choices which face us.

The venue:
The Elephant And Castle
White Hill
Lewes
BN7 2DJ

Tickets:
They are £5 and you can purchase them on the door or about a week before at the venue. Please note that the capacity of the venue is limited, we recommend buying the ticket in advance to avoid disappointment.