This "Real Debt" fringe took place at the TUC Congress last month. It was sponsored by Unison.
Clare Williams, the Northern Region convener chaired and speakers were Damon Gibbons from Centre for Responsible Debt, Sarah-Jayne Clifton, from Jubilee Debt campaign and Ewa Karwowski, who is a lecturer in Economics at Kingston University.m
Sarah spoke first about how debt has increased by 30% in the last 4 years. The level of debt did drop during the onset of the recession in 2008 but we still have a very high level of individual debt. At a time of very low interest rates, we also see investors and institutions chasing dodgy debt in order to get a higher interest rate.
Tax dodging by multi national companies is just huge. They dodge 3 times more than developing countries get in aid. The UK alone loses £40 billion a year in corporate tax avoidance.
Does the UK have a debt problem? The UK private sector has but not the public sector. Only 4% of government revenue goes on paying off our debt. Usually experts say it is a problem if you have to pay 18-20%. The main risk from debt is when the debt is not held in your own currency. 25% of our debt is owed by the UK Government, 50% by UK investors and only 25% by foreign owners. Private debt in the UK from household and private companies is however a massive 4 times our GNP.
Ewa also agreed that our UK problem was not public debt at 90% of GNP. It is not that much higher than Germany at 80% and far less than Greece at 180% but we need to grow our way out of debt. Also if we add up all our true U.K Government, corporate, household and most important our financial services debt then we are actually ahead of Greece in terms of GDP. Which is not good.
The reason for this $57 trillion in global debt? The richest 20% have seen their wealth rise by 64% since 2005. While most workers have seen wage stagnation. Workers have been forced (and encouraged) to rely on debt to survive.
Do not forget that the 1930s recession was a double dip and our next recession could strike anytime soon caused by austerity and the resulting inability of households to be able to pay off their private loans.
Damon agreed that "Britain is in the red" and that it should be noted that the Government stopped publishing details of household debt 2013. We can guess the reason why...?
I know that the economic advisers to the Newham Pension fund are also very concerned with the level of household debt in the UK and fear that unless something is done it will end in tears.
My question to the panel about the chances of a one off international wealth tax being levied to pay off this debt (which will actually benefit the rich in the long run) was supported but it would have to be only for the really wealthy and their short term selfishness made this unlikely to come about. Instead the ending of austerity, growth, more effective regulation of financial services, a real increase in wages and fair taxation as well as a clampdown on avoidance was the way forward.
Rather like many of Jeremy Corbyn's ideas