Campaign for UK Fiscal Responsibility

12/04/2026

Something very strange is happening.

Rachel Reeves appears to be acting more responsibly than even her predecessors in relation to our public sector finances.

She has vowed that her economic approach in response to the Middle East crisis will be both responsive to a changing world and responsible in the national interest. She is indicating that she (the government) is taking action to keep costs down for families and those who need it most. She appears to be determined to learn the hard lessons from previous shocks, pointing to previous government's lack of preparation (we constantly urge all governments to properly consider the national risks) and referring to the £70 billion spent on the energy price guarantee following the Russian invasion of Ukraine. She points out that much of that money was borrowed, benefited some of the wealthiest and that we are still paying the interest on that debt - which we are.

Quite rightly she recognises the need for resilience so that the next price spike hurts less and sees the dangers of the government borrowing into a potential inflation shock. She recognises that the UK's manufacturing sector has faced uncompetitive energy prices for too long.

Whilst talking a good job is one thing delivering is another. She has however started off well.

Why and why now? At a time when positive news can be in short supply it may be best just to say that having seen the realities of being in office she is taking a more pragmatic and responsible approach - given that if she messes this up the costs we incur in debt interest by unsettling the markets and increasing the national debt will be difficult to deal with. If you were to be more cynical (and we aren't) the local elections are coming up, labour are expecting a hiding and to at least be seen to be talking a good job could ease some of their considerable pain.

21/03/2026

What has happened this week following our post urging the UK government to provide only minimal but targeted financial support in response to the war in the Middle East?

The good news is that the chancellor has so far been quite careful by providing only limited support in relation to the cost of heating oil. £50 million will help those in need if the local authorities distributing it can pass it all on without any deductions for 'administration'.
She is not jumping in and generally offering to spend money now but is biding her time to see how the situation develops.
There are reports that Culture Secretary Lisa Nandy is suggesting that borrowing rules may need to be relaxed to fund handouts.
No Lisa, let's not do that. Which takes us to the next point.

The interest rates we are paying on our national debt have increased. Typically 10 year gilt yields currently stand at 5.0%, up from around 4.7% a week ago and at the highest level since the 2008 financial crisis. By comparison US yields are 4.4%, Japan 2.26%, Germany 3.04%, France 3.75%.
The reasons for the high UK rates include investors being concerned about the prospect of higher energy related inflation and the government and Bank of England's potential reaction to this, including interest rate increases. Investors are concerned about our already stretched public sector finances and poor levels of growth. The increased February public sector borrowing recently announced has also caused concerns.

Hopefully the government will continue to be measured in their financial response and recognise that the flip side of offering too much support will be further increasing debt payment costs and potentially more tax increases.

The government (and in fact ourselves) is being warned that our public sector finances are going to come under increasing pressure and that they must be seen to take action to cut the 'nice to do' and inefficient items of expenditure in preparation for providing support to those genuinely in need.

15/03/2026

It will be interesting to see how much financial support the government gives us in the coming weeks and months as a result of the war in the Middle East.
Our hope is that it is absolutely minimal and targeted only at those who really would struggle without it.

Why?

First of all whichever way you look at it we do not have the money in the public sector finances to provide the support. We reject the argument that we can just print money as needed - nothing comes without consequences.

Second, during the pandemic the financial support provided was excessive and little was done to recover that support when the crisis passed. We have developed an expectation from the pandemic that the government will intervene if things are becoming financially difficult. We need to break this and for individuals, businesses and the public sector to take responsibility for ensuring that they can deal with the results of this type of adverse event. If we think the government should carry the risk then we need to provide them with the finances. This potentially means more tax, higher productivity or not expecting public sector expenditure in some other areas. We appear not to want to do that - so the risk has to remain with us.

Third, with reference to our post last week the oil supply/price issue is only one of 63 potential national risk events the government has identified. Where would the money come from should more of these events become reality?

Fourth, the bond markets may react badly to support spending which is out of proportion, making the cost of servicing our national debt even higher. If inflation does increase in the coming months the cost of inflation linked interest payments will rise anyway.

At this stage we don't know how the war will develop and what its financial impact will be. We hope the government adopts a stance of prudence over populism.

09/03/2026

The war in the Middle East is of course going to have significant ramifications in terms of our individual, business and public sector finances. Trying to work out the extent is quite pointless at this stage due to the massive uncertainties. However we would initially comment on fiscal risks and the oil supply issue.

The government's 2025 edition of the UK National Risk Register does identify a risk associated with 'disruption to global oil trade routes'. It was assessed as potentially having a moderate impact and the likelihood was graded 3 on a scale of 1 - 5 where 5 is the most likely. The 2025 edition had increased this likelihood from grade 2 on the previous version.
The response states: 'If a physical disruption to global oil markets did occur, the UK holds emergency oil stocks that can be released to the market as part of a collective action by member countries of the International Energy Agency. If the issue was severe, prolonged and having national impacts, there are emergency powers within the Energy Act 1976 to exert more power over the production and supply of fuels, managing demand during a genuine supply shortage'.
Also in 2010 the Office for Budget Responsibility wrote a document entitled 'Assessment of the Effect of Oil Price Fluctuations on the Public Finances'. It considered the potential impact of a 20% increase in the cost of a barrel of oil.

Why do we mention this?
First, it is positive that such a scenario as that we are currently facing has been very broadly considered. Obviously the OBR work is out of date and didn't match our current scenario but at least an attempt was made.
Second, one of our greatest concerns regarding the UK public sector finances relates to how risks to them are identified and managed. Typically, without taking account of the large number of risks we and our economy are exposed to it is easy to be lulled into a false sense of financial security or believe that we (our government) can control everything, we cannot. Equally we are concerned that not enough headroom is created in the public sector finances to accommodate a reasonable view on what risks might manifest themselves. For instance we were close to thinking inflation was coming under control and that interest rates could fall only to see that these are probably not now going to happen. Some of the fiscal headroom created at the last budget may well now disappear, particularly if the government considers we need some short term financial support.
Some will argue that whatever happens the Bank of England can just create the money to deal with it. This is not our position. Interest rates are currently above target, are now expected to rise further above target and creating additional money in an environment where a key resource is potentially lacking would potentially add to the inflation problem.

It should be noted that the Risk Register currently contains 63 of these identified risks, what happens if more of them occur at the same time?

03/03/2026

An issue arose last week in relation to the Green Party's by-election win. It is a tricky subject and we would ask you to keep reading.
One of the videos we are preparing regarding our National Debt is entitled 'Why do some people think that having a sizeable National Debt is ok'. It primarily relates to aspects of what is referred to as "Modern Monetary Theory' or MMT.
In the context of this post it promotes the idea that countries who issue their own sovereign currency (typically UK) cannot run out of it and subject to certain constraints can create money to fund public spending. As such it challenges the notion that our government is as constrained in its spending as it is and promotes the idea that constrained public sector spending is a political choice. It considers that running a National Debt is a non-issue and nothing to be concerned about. It does recognise that to reduce the risk of high inflation the resources have to be available to effectively soak up this cash. Any book or lecture about it is usually 'copious' so please take this as a very brief overview.
Very few people who hold positions of power and influence agree with the MMT component of allowing this minimally constrained money creation, but there is a small vocal lobby in favour. Often (but not exclusively) those in favour are left leaning.
So what does this have to do with the Gorton by-election win?
The Green Party's leader, Zack Polanski sometimes refers to the Green Party adopting economic policy which aligns to a degree with MMT. Commentators sometimes suggest that he doesn't know what he is talking about - don't believe that, he probably does and is relying on the rest of us not understanding.
We cannot find anything on the Party website specifically about MMT but there is a line stating 'Allowing ourselves to be trapped in a self-imposed fiscal straitjacket is a false economy'.
Our Campaign is non partisan so we are not having a dig at the Green Party but we are concerned about the prospect of any party who could hold power in the UK aligning themselves with what could at the very least be described as a promise to the electorate to create the money to fund whatever policy they wish to promote. This aspect of MMT is untried in the UK and is very high risk particularly in relation to inflation. We refer you to our recent post about inflation since 2020 when we created money, stoked inflation and are still carrying the inflated prices.
Our position is that we oppose this aspect of MMT. In an increasingly uncertain world where political dissatisfaction can lead to populists being voted into power there is a need for checks and balances to be in place to offer some restraint and to help to manage risks.

22/02/2026

Last week the BBC reported that the UK inflation rate had fallen to 3%. More correctly the Office for National Statistics reported that it had risen by an annual rate of 3%. The ONS also reported that the annual RPI rate was 3.8%. With acknowledgement given to the Bank of England for the graph below what we shouldn't lose sight of is the fact that our current 'low' inflation rate is on top of the significant recent rises in inflation that were never reversed, particularly after the pandemic.
If there is anything to celebrate it is the fact that the rate of inflation isn't as bad as it was in the very recent past - but that is it. If you had money invested over recent years that was making little or no interest its buying power has been significantly diminished.
Inflation can be a hideous stealth tax (but can be very good for some).

22/02/2026

A transcript of our first in a series of videos regarding our UK National Debt can be accessed via our website https://www.cukfr.org/latest-news/ It may be easier to follow than watching the video.

We post the latest news regarding the campaign and other relevant events here.

22/02/2026

This is the first of a number of videos we are producing relating to the UK National Debt.

15/02/2026

It is interesting that the government is arranging for a Best Value Inspection to be carried out at Bedford Borough Council. Basically this looks into whether the council is spending its (taxpayer's) money wisely and can demonstrate good governance.

The background is that the Borough Council has reportedly had to ask the government for a £55 million loan. Contrary to their legal obligation they are struggling to agree a balanced budget.

The government appointed Inspectors will spend 3 months looking at the following aspects of the council:
Continuous Improvement
Leadership
Governance
Culture
Use of Resources
Service Delivery
Partnerships and Community Engagement

It is the Minister of State for Local Government and Homelessness who exercised their powers under section 10 of the Local Government Act 1999 to require the review to be carried out.

These inspections have been carried out on other councils and is not entirely unusual. However they are a reflection of the fact that the government has serious and persistent concerns - the need for a significant loan being an obvious trigger.

There are lots of issues surrounding this - few of which are positive. However in the context of being fiscally responsible it is good that the system exists whereby government can seek answers on our behalf regarding the way that a Local Authority conducts itself and is not afraid to instigate the process. The Inspection report should be available by the summer and it will be interesting to see what the findings are and most importantly how those findings are acted upon.

08/02/2026

We outline our upcoming videos regarding the UK National Debt and explain how we present information and opinions.

03/02/2026

The National Audit Office has recently published a report in which the Ministry of Defence suggests that its potential exposure to fraud can reach up to £1.5 billion a year, mostly from procurement.
The report states 'although the MoD receives hundreds of allegations of suspected fraud or economic crime each year, relatively few result in detection, disruption and recovery.'

The NAO has identified several key challenges preventing the MoD from strengthening its response to fraud and economic crime. These include not having a department-wide objective to minimise fraud losses and protect defence capability; a fragmented structure that makes it hard for the MoD’s counter-fraud and police teams to acquire the specialist resources to investigate cases effectively; and a historic lack of trust between counter-fraud and police teams, with unclear lines of reporting, duplication and missed investigative opportunities.

'Government expects that public bodies should save £3 for every £1 spent on counter-fraud work, yet between 2021-22 and 2024-25, the MoD reported a return of just 48p for every £1 spent. In 2024-25, however, it saved £1.34 for every £1 spent'.

It is hard to believe that the MoD appears to care so little about wasting our money. They appear to be poorly coordinated in terms of investigating potential fraud and even though whistleblowers are stepping forward they don't seem to be very effective in their responses..

With increasing defence budgets and the potential for defence procurement to be more urgent in future they must get on top of this as a matter of urgency.