Why does the state keep costing more while delivering so little?

Damian Pudner has a useful CAPX reminder of the UK government's intransigent unwillingness to manage the economy and its own activities in a sustainable manner.


Reeves is closer to an IMF bailout than she thinks

• The IMF's former chief economist is worried about the UK
• Britain's debt interest bill has nearly tripled since 2019
• The gilt market has no patience for political cowardice

Britain’s national debt is on course for £3 trillion this year. Servicing it costs £30 billion a year at 1% interest and £150 billion at 5%, near where long-dated gilts have recently been trading. That’s a number so big it almost becomes meaningless. So, let’s try another way: it’s about the yearly gross pay of nearly four million median full-time workers.

That’s the background to Kenneth Rogoff’s warning that Britain has a better than 50:50 chance of a major debt crisis before 2030. Rogoff is not an excitable commentator. He is a former chief economist of the IMF, a Harvard professor and co-author of one of the gravest studies of sovereign debt crises ever written.


Familiar but well worth reading because of the question it raises - what is the state for?


Welfare alone is forecast to cost £333bn in 2025-26. The triple lock keeps adding pressure to the pensions bill, year after year, regardless of the state of the public finances. Meanwhile the public-sector workforce, payroll and pension promises have all grown through supposedly austere times, without anything like the productivity gains needed to justify the expense.

This is the conversation Westminster avoids because it leads straight to the real question: what is the state for, what can it afford and why does it keep costing more while delivering so little?