#RethinkMoney — Part 2: Shining a torch on the National Debt

Since writing Part One, the UK has increased what we owe to £2 trillion pounds as a nation. We call this the ‘National Debt’.

But who do we owe this money to? Is it really debt, or is it something else?

The Government sets its budget every year — £803 billion for 2017–18. Every Government department has its own budget. For a break down , scroll down to ‘2.17 Departmental Expenditure Limits’ The Government can only ever estimate how much tax revenue it will receive. £744 billion for 2017–18 but there are no guarantees. Treasury and economic predictions are often wrong. Tax receipts do not come in equal amounts, as predicted every month. Obviously, there are highs and lows. The Financial End of Year being an obvious spike in revenue. So if the Government doesn’t know, month by month, what its revenue will be against its budgeted spending, it has two logical choices:

1. Don’t pay any bills until there is enough money in the The Consolidated Fund, to do so.
2. Borrow or create the money, to smooth out cash-flow, enabling it to pay its bills and let tax revenues catch up when they can.