Interesting option for UK debt

[Welshbeef]

Had a dinner party last night and over some scotch the discussion turned to the UK and how to deal with the debt.

One option we came up with is the following.
Expected UK debt by 2018/19 is £1.5trillion
Current UK population is c63m
Current UK working population is c27m
Current UK debt is c£1trillion.


The debt in the future would equate to about £22k for every man woman and child
The debt in the future for the working population would be c£55k
Now lets say of the 27m 15m are "middle class" debt would be £100k.

So if thee 15m could be convinced to take out c£100k loan over say 25 years (or do it pro rata based on income or another option) that they would then firstly have a totally different tax code for this helping out of the govt forever more (until they are dead) and the reason behind this is they are paying their income taxes or self assessment taxes in advance as such a discount is required for such an offer.
Ot wouldn't be compulsory but an opportunity to help out the state but also a shrewd move for an individual with the means to benefit.

This would require the govt to stick to the defecit reduction plan and once the defecit is cleared in 2918/19 for it never to happen again if it did spend would have to be cut or revenue raised in that year no questions. Or a referendum would be required for this to happen.



So views?
Personally provided there is a benefit for me as an individual I would be interested in such a situation and would participate. The benefits would be the govt would not lose AAA rating due to low debt and interest rates would fall further thus win win.

[Welshbeef]

chrisispringles said:

It wouldn't deal with the structural deficit, so we'd have to keep borrowing, and I bet the markets would not be too happy about lending to a country so fked that its citizens had to bail it out.

But I stated that the assumption is that by 2018/19 the debt will be £1.5trillion at which point the defecit is eliminated.

Govt wouldn't have to borrow anything as if it happened they would receive £1.5trillion yet only have a debt as at today of £1trillion so over the next 5 years the remaining 500billion would be spent on the defecit for those years - also they will be earning interest on £500billon reducing balance which is an upside.

[Welshbeef]

Bandit said:

The next labour government would just rack up the debt all over again.

I'd say the solution is once we have the situation (with the assumptions above) that in 2019 the budget is held outside of the hands of govt ie they cannot change any goal posts to make you think they are achieving the targets. Instead it would be fully run by a third party.

As such very long term decisions would had to be made this getting rid of te stupid 5 year horizon. So pensions tax simplification etc would all be done outside of govt.

All govt would be doing is deciding how x% of the budget is spent which really should be pretty easy.

[Welshbeef]

It's interesting when you look at say a £70k salary you pay £23-24 k a year in income tax and NI so 4 years you have paid £100k to the govt.

By taking out a £100k ad then having a special low tax rate forever more that's a great incentive and frankly to you as an individual a 4 year payback.

I doubt the govt would opt for that zero tax forever but a low rate I'd say would be on the cards