It's not burdening our children with debt that should worry us

Leaving our children without assets is a far greater problem than "saddling" them with debt.

It is irresponsible to saddle our children with debt.

One of the most compelling, at least superficially, arguments for austerity. It is used globally; it resonates powerfully. After all, it appeals to the very best facets of human nature – the instinct to nurture; the wish to leave things better for future generations – and is, therefore, almost irresistible. But there are few things more dangerous than rhetoric designed to entangle the heart, while bypassing the brain.

Let us suppose that I knew, tomorrow I would be no more. The appointment has been made; the plane tickets to Geneva have been booked. If I were leaving behind my house to my child, encumbered as it is with a mortgage, would I worry? It is a huge amount of debt, but the house is worth almost double its mortgage. The interest is low. To look at that scenario and arrive at the conclusion I am “saddling my child with debt” would be highly irrational. I would have left them with positive equity.

It is illogical to assess the legacy we bequeath to the next generation, solely in terms of debt. Assets should form part of the equation.

This was precisely what our parents’ generation decided to do. And their parents’ before them. National debt, as a percentage of GDP, was much higher from the 20s to the 70s than it is now. But they made the positive choice of bequeathing it to us, as well as a world-class National Health Service, free education, thriving industry, bright prospects and a system of welfare which provided a safety net for the less fortunate.

Had they looked at debt in isolation, they would never have achieved any of these things. Luckily, they did not. They left us with positive equity.

The proposition put forward by the coalition government in support of their programme of cuts, is the bequest of a clean slate. In the current economic climate, however, a clean slate means clean of assets, not clear of debt.

With the economy stagnant or shrinking, the reality is that this government will fail to make a dent in the deficit and actually increase debt. According to the OBR our annual deficit is falling at exactly the same rate it was projected to do before any of these cuts. The national debt is projected to rise by a staggering half a trillion pounds, even by the most lenient of estimates. The OBR now admits that austerity is hurting the economy. The IMF now admits that austerity is hurting the economy.

On the other hand, there is another, even gloomier forecast. By squeezing ordinary people, by forcing them to remortgage, to use credit cards, to run to the nearest payday lender, private household debt is predicted to balloon by an additional half a trillion pounds.

So, forget this insidious idea that we might leave our children with a clean slate. It is fantasy. In fact, under this government, we will leave our children with at least one trillion more debt than we had in 2010. The only intelligent conversation to be had, is whether we leave our children with the assets, skills, environment and tools to manage that debt or not.

Not all asset stripping is fiscally responsible in the long term. Not every expense incurred results in debt. Off-the-cuff, misconceived policies to try and regulate a rampant energy industry are ample demonstration of that truth; a conservative government flailing in a futile attempt to control the profiteering which resulted from another conservative government’s privatisation programme.

We are paying through the nose, both in terms of tickets, subsidies and maintenance, for a rail network franchise system which is manifestly failing. Meanwhile, the part of the network which has been state-run for the last few years (as a result of the last botched franchise), is better and cheaper than it was in private hands and turning a profit.

We pay to bail out private banks, then complain that they are not lending to SMEs, when we actually part-own two of the biggest. Nationalisation is both a rational solution and a dirty word.

Meanwhile, we are allowing these failed experiments to go on, to expand even; the self-interested privatisation of the NHS, the cut-price sale of local council assets and social housing, the dismantling of the welfare state, the farming out of police and prison services, the poisonous influence of profit on our schools. Within five years, the UK will be spending less on public services than any developed nation.

Make no mistake. What is actually being proposed, is leaving our children with negative equity. The debt will still be there, but the assets will be gone. Important assets at that, the absence of which will translate into higher living costs, in perpetuity. The sale of state housing inflates rents. Lack of a welfare system deflates wages. Tuition fees enslave the next generation to financial institutions which we know to be corrupt. Healthcare bills are the single biggest cause of bankruptcy in the US.

Maybe this is the future that we genuinely want. But let us consider all the arguments, instead of wielding an axe at any expense with no thought of whether it is necessary or cost-effective. Let us look at debt in conjunction with the assets and values that would also form part of our bequest.

Our current predicament is precarious. Even more critical, then, to make rational, informed and brave choices - rather than terrified, ill-thought ones. For our sake and that of our children.

Demonstrators call for an end to the national debt outside Parliament last year. Photograph: Getty Images.

Greek-born, Alex Andreou has a background in law and economics. He runs the Sturdy Beggars Theatre Company and blogs here You can find him on twitter @sturdyalex

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It's Gary Lineker 1, the Sun 0

The football hero has found himself at the heart of a Twitter storm over the refugee children debate.

The Mole wonders what sort of topsy-turvy universe we now live in where Gary Lineker is suddenly being called a “political activist” by a Conservative MP? Our favourite big-eared football pundit has found himself in a war of words with the Sun newspaper after wading into the controversy over the age of the refugee children granted entry into Britain from Calais.

Pictures published earlier this week in the right-wing press prompted speculation over the migrants' “true age”, and a Tory MP even went as far as suggesting that these children should have their age verified by dental X-rays. All of which leaves your poor Mole with a deeply furrowed brow. But luckily the British Dental Association was on hand to condemn the idea as unethical, inaccurate and inappropriate. Phew. Thank God for dentists.

Back to old Big Ears, sorry, Saint Gary, who on Wednesday tweeted his outrage over the Murdoch-owned newspaper’s scaremongering coverage of the story. He smacked down the ex-English Defence League leader, Tommy Robinson, in a single tweet, calling him a “racist idiot”, and went on to defend his right to express his opinions freely on his feed.

The Sun hit back in traditional form, calling for Lineker to be ousted from his job as host of the BBC’s Match of the Day. The headline they chose? “Out on his ears”, of course, referring to the sporting hero’s most notable assets. In the article, the tabloid lays into Lineker, branding him a “leftie luvvie” and “jug-eared”. The article attacked him for describing those querying the age of the young migrants as “hideously racist” and suggested he had breached BBC guidelines on impartiality.

All of which has prompted calls for a boycott of the Sun and an outpouring of support for Lineker on Twitter. His fellow football hero Stan Collymore waded in, tweeting that he was on “Team Lineker”. Leading the charge against the Murdoch-owned title was the close ally of Labour leader Jeremy Corbyn and former Channel 4 News economics editor, Paul Mason, who tweeted:

Lineker, who is not accustomed to finding himself at the centre of such highly politicised arguments on social media, responded with typical good humour, saying he had received a bit of a “spanking”.

All of which leaves the Mole with renewed respect for Lineker and an uncharacteristic desire to watch this weekend’s Match of the Day to see if any trace of his new activist persona might surface.


I'm a mole, innit.