'Fiscal failure' after Britain's debt bill overtakes education spending for the first time

Britain is set to fork out more on servicing its ballooning national debt than on education for the first time, The Mail on Sunday can reveal.

The milestone means interest payments will outstrip spending at every other Government department except health and welfare in what is being called ‘a graphic illustration of fiscal failure’.

Taxpayers face a debt interest bill of £155billion on the £3trillion debt pile in 2027-28, more than the education budget of £153billion, according to documents released with last week’s Budget. 

The figure is more than half as much again as the £98 billion earmarked for defence.

It comes as Britain is forced to pay more than every other major developed G7 nation to borrow on the international bond markets.

Shadow Chancellor Andrew Griffith said: ‘Under this Government of spending addicts, interest on the Government debt is spiralling out of control.

‘A country that pays more to its lenders than it does on education is one with a bleak future.’

Dire: Britain is set to fork out more on servicing its ballooning national debt than on education for the first time

John O’Connell, head of the TaxPayers’ Alliance, said: ‘Seeing debt interest eclipse the entire education budget is a graphic illustration of fiscal failure.

‘Instead of investing in our children’s futures, taxpayers are being forced to cough up tens of billions of pounds just to service the interest on Whitehall’s mountain of debt. Ministers must stop maxing out the nation’s credit card, rein in bloated state spending and get debt under control.’

Global borrowing costs have risen sharply since the start of the US-Iran war as investors bet interest rates will have to go up to tame rampant inflation fuelled by the rise in oil and gas prices. 

The Bank of England is expected to raise rates to 4 per cent on Thursday.

UK bonds have been hard hit on concern that Labour is unwilling to make tough choices on spending – and will instead borrow yet more to fund public spending plans.

The yield on ten-year gilts – a key measure of how much it costs the UK Government to borrow – is just below last month’s 19-year high at 5.5 per cent, while the yield on 30-year gilts is at its highest since 1998. 

The surge in interest payments leaves the Chancellor short of cash to fund other areas such as defence and health.

With cuts to welfare ruled out for now, Healey turned to yet more tax increases in the Budget, including on banks and bookies, as well as savers and landlords. 

He also outlined plans to borrow nearly £70billion more than was expected in March – pushing the national debt ever higher.

Just five years ago, in the March 2021 Budget, £124billion was pencilled in for education, against debt interest of just £45billion.

And while it took Britain over 300 years to accumulate debt of £1trillion – a level reached in 2010 – it took a decade more for it to reach £2trillion in 2020 and six more years to hit £3trillion in 2026.

Under Office for Budget Responsibility forecasts, debt will climb to £3.7trillion by 2031-32, putting it well on the way to £4trillion.

Reform UK Treasury spokesman Robert Jenrick said: ‘We’ve identified £40billion of emergency cuts so we can cut debt interest and put taxpayers’ money in schools, hospitals and cutting people’s bills.’

Julian Jessop at the Institute of Economic Affairs said: ‘The Government needs to free the economy to grow faster.’ 

The Treasury was contacted for comment.

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