If I Can Have a Go at Balancing Britain’s Books, Why Can’t the Government?
StandbyScotland | 9 November 2026
Britain borrowed £134.2 billion in 2025–26. We examined 13 areas of public expenditure and identified more than £115 billion in hypothetical savings and additional revenue. The decisions taken are not easy, the figures not guaranteed savings, but surely the Government must begin the serious conversation about where potential savings can be made?
As individuals, we know we need to live within our means. We have mortgages, rent, council tax, utility bills and everyday living expenses to meet. If we use credit cards or take out loans, we must meet the repayments. And if we overstretch ourselves, the consequences can be devastating.
So why, when Britain is more than £3 trillion in debt, are we not having a much more serious conversation about the state of our public finances?
We hear constant demands for greater government spending. More for the NHS, defence, education, welfare and infrastructure. Many of these demands are understandable. But where is the equally serious discussion about how we are going to pay for them?
Britain continues to spend more than it receives in revenue. To cover the difference, the Government borrows, continually adding to an already substantial national debt and the billions of pounds we pay each year in interest.
If we cannot get to grips with our annual deficit, how can we begin to address the much larger problem of the £3 trillion we already owe?
There is a considerable emphasis on environmental sustainability, and rightly so. But surely the financial sustainability of our country deserves at least as much attention, if not more?
After all, if we cannot afford to meet our existing financial commitments, how can we continue to fund the substantial investment required to meet our environmental ambitions?
Britain has faced serious financial difficulties before. In 1976, the Government sought assistance from the International Monetary Fund (IMF). I am not suggesting we are at that point today, but surely, we should be doing everything possible to avoid finding ourselves in such a position again.
We cannot ignore the problem and expect future generations to deal with the consequences.
Balancing Britain’s books is not the final objective. It is the starting point.
Half a Trillion Pounds Borrowed in Just Three and a Half Years
Consider the scale of Britain’s borrowing. The following are the figures used in our working analysis.
| Financial year | Net borrowing |
| 2023–24 | £135.2 billion |
| 2024–25 | £149.8 billion |
| 2025–26 | £134.2 billion |
| Total | £419.2 billion |
Britain borrowed approximately £419 billion in just three financial years.
That works out at around £140 billion a year, £383 million every day and £16 million every hour. And this year the borrowing continues.
Between April and September 2026, the Government borrowed a further £97.8 billion, bringing the total over the three and a half years to approximately £517 billion.
Take that in – more than half a trillion pounds borrowed in three and a half years to cover the difference between what the public sector spends and what it receives.
But borrowing is only part of the picture.
The Growing Cost of Debt Interest
Using the same period, our working figures indicate approximately £327 billion of the £517 billion was debt interest expenditure. That is equivalent to almost two-thirds of the £517 billion borrowed.
The comparison demonstrates the enormous cost of servicing debt accumulated over many years.
This is money that does not directly provide another hospital bed, employ another teacher or purchase additional defence equipment. It is the cost of financing money borrowed in the past.
And the more we spend servicing debt, the less flexibility we have elsewhere unless we increase revenue, reduce expenditure or borrow even more.
How much more difficult will it become to balance Britain’s books when debt interest itself represents such a substantial financial commitment?
Borrowing to Repay Existing Debt
There is another aspect of government borrowing that deserves greater attention.
When government bonds, known as gilts, reach maturity, the Treasury will often issue new bonds to repay the original borrowing. This is known as refinancing. It is a normal part of managing national debt, but it does not reduce the amount owed. It simply replaces one debt with another.
And if the new borrowing carries a higher interest rate, the cost of servicing that debt can increase. We therefore have two issues running alongside each other.
The Government continues to borrow because annual expenditure exceeds revenue, while also refinancing existing debt as it becomes due for repayment.
If we continue borrowing to cover our annual deficit while refinancing what we already owe, when do we actually begin reducing the national debt?
There are also financial commitments associated with the Bank of England’s earlier purchases of government bonds.
As those bonds mature or are sold, losses can arise which the Treasury may have to cover. These arrangements are accounted for differently from ordinary government spending, but they can still create additional demands for cash.
Why Are Commercial Banks Receiving Billions in Interest?
Another financial commitment I believe deserves closer examination.
Commercial banks hold substantial reserves at the Bank of England, which pays interest on those balances.
According to figures examined by the House of Commons Treasury Committee, four major banks, Barclays, Lloyds, NatWest and Santander received approximately £9.23 billion in interest on reserves during 2023 alone.
The payment of interest on these reserves forms part of how the Bank of England manages interest rates and monetary policy.
But given the pressure on Britain’s public finances, surely, it is reasonable to question whether paying the full Bank Rate on all reserves remains the most appropriate arrangement?
During the financial crisis, taxpayers provided extraordinary support to the banking system. Without that support, some banks might not have survived in their existing form.
I am not suggesting that reserve interest can simply be removed without consequences. But with billions of pounds involved, surely alternative arrangements deserve serious consideration?
Balancing the Books Is Only the Beginning
Britain faces two related but different challenges. The first is bringing annual government expenditure into line with revenue. The second is beginning to reduce the enormous debt already accumulated.
Reducing the annual deficit would slow the need for additional borrowing. Eliminating that deficit would be an important step towards stabilising the public finances.
But balancing the books alone does not repay £3 trillion of existing debt.
To begin reducing the outstanding debt in cash terms, we would generally need to move beyond balance and generate surpluses. Economic growth would also help by reducing the debt as a proportion of the country’s overall economic output.
Neither will happen overnight. But the sooner we begin reducing our dependence on borrowing, the sooner we can begin limiting the interest costs that come with it.
For example, Balancing Britain’s books would not only eliminate the £134.2 billion annual deficit but could also avoid approximately £6.7 billion in additional annual interest payments, assuming an interest rate of 5%.
That is potentially £6.7 billion a year that would not have to be spent servicing new debt, freeing up money for other priorities. This highlights why reducing borrowing matters.
Britain needs investment and economic growth. But it also needs to recognise that spending more than we raise cannot remain the answer indefinitely.
Can It Be Done?
It is easy to argue that government expenditure should be reduced. It is much harder to identify where reductions could be made and what the consequences might be. But unless we are prepared to challenge existing commitments, review how public money is spent and consider different priorities, how can we expect anything to change?
StandbyScotland has therefore prepared an illustrative financial exercise examining how Britain might begin reducing its annual borrowing requirement.
Our starting point is £134.2 billion, using the working borrowing figure for the 2025–26 financial year.
We have considered possible reductions in government expenditure, improvements in efficiency, more focus on the collection of taxes due but zero increase in taxes and changes to the timing of major investment projects.
Some proposals would be difficult. Others would require substantial policy changes or take several years to implement. Although the figures are hypothetical the purpose is to examine what might be possible if Britain were prepared to make financial sustainability a national priority.
Where Could the Savings Come From?
1. Civil Service Employment — £8.43 Billion
In March 2019, before COVID, Britain employed approximately 445,480 civil servants. By March 2026, that figure had increased to 557,825, an additional 112,345 employees, representing an increase of more than 25%.
It is understandable that additional staff may have been required during the pandemic to deal with the extraordinary circumstances facing the country. But COVID is behind us. Why, then, have Civil Service staffing levels not returned closer to their pre-pandemic levels? Are all these additional positions still necessary?
If additional staff were recruited to meet the demands of the pandemic, and those demands no longer exist, why are we continuing to fund those positions?
There is also the question of so-called unnecessary or redundant staff positions that remain on the payroll despite no longer serving a necessary purpose. Are government departments regularly reviewing their staffing requirements, identifying redundant or duplicated roles and ensuring that everyone being paid is carrying out work that is still required?
We are not suggesting that ghost employees are widespread, but surely there should be proper checks to ensure that public money is not being spent on positions that are no longer needed?
Using a reported annual employment bill of £28.1 billion for 2023–24, we have calculated that a 30% reduction in employment costs would represent potential savings of £8.43 billion.
Our proposal is to review staffing against pre-COVID levels, examine management structures and duplication between departments, and consider where services could be delivered more efficiently.
Essential government functions must be protected, but surely every department should be required to justify its staffing levels and demonstrate that taxpayers are receiving value for money?
With more than 112,000 additional civil servants compared with 2019, isn’t it time we asked whether the current size and cost of the Civil Service remain justified?
2. Welfare Expenditure — £56.31 Billion
In 2025–26, Britain’s total welfare expenditure, including pensions, was approximately £333 billion, slightly more than the £329 billion collected in income tax.
That alone should raise questions about the affordability and sustainability of our welfare system? For this exercise, we have deliberately excluded the State Pension from our proposed reductions although we recognise this has cost has increased.
Using a welfare expenditure figure of approximately £187.7 billion, we have calculated that a 30% reduction would represent potential annual savings of £56.31 billion.
This is the largest proposed saving in our exercise and would require a fundamental review of the benefits system, including eligibility, affordability, effectiveness and opportunities to support more people into employment.
If certain benefit caseloads have increased by nearly 50% since before Covid, shouldn’t we understand why, examine the effectiveness of the system and establish what level of expenditure is sustainable?
There is also a question of fairness. Surely, it cannot be right for someone who is capable of working to be financially better off remaining on benefits than someone who gets up every morning and goes out to work? The system should provide support where it is genuinely needed, but it should also ensure that employment is encouraged and financially worthwhile.
New research from the Adam Smith Institute suggests that in three-quarters of English constituencies, more is spent on welfare benefits, including pensions, than workers contribute through income tax and National Insurance.
Although almost half of that expenditure relates to pensions, surely these figures should raise serious questions about the long-term affordability of our welfare system? We cannot continue increasing expenditure without asking how we intend to pay for it.
Of course, there are many people who genuinely depend on benefits, and their needs must be recognised and protected. Reductions of this size would involve difficult decisions and could have significant consequences.
But when welfare expenditure has reached a level that exceeds the amount collected in income tax, we must be prepared to question whether the system is operating as effectively as it should, whether spending is properly controlled and, above all, whether it remains affordable?
3. Asylum Support — £1 Billion
In 2024–25, the Home Office spent approximately £4 billion supporting asylum seekers, including £2.1 billion on hotel accommodation alone. In 2019–20, the annual asylum support bill was just £739 million.
How has expenditure increased so substantially in just five years, and why has the cost of providing accommodation become so high? Our proposal is to reduce annual asylum support expenditure by £1 billion through a fundamental review of accommodation contracts, processing times and the management of claims.
With more than £2 billion being spent on hotel accommodation alone, surely there must be opportunities to deliver substantial savings while continuing to meet our legal obligations?
We recognise that some expenditure will remain and that achieving these reductions will require changes to how the asylum system operates.
Nevertheless, when the country is borrowing billions of pounds every year, surely expenditure on this scale deserves much closer examination?
Following Remembrance Sunday, it was particularly poignant to hear that some of those who served our country are now facing homelessness. We come together every November to remember their service and sacrifice. We have a responsibility to look after those who served and are now struggling?
How can we justify a situation where former servicemen and women may be sleeping on our streets while we continue borrowing billions of pounds every year?
This is not about turning our backs on those who genuinely need our help. It is about asking whether we have our priorities right and whether we are doing enough to look after our own people.
4. Foreign Aid — £10.64 Billion
In 2025, Britain spent approximately £13 billion on overseas development assistance, including £2.4 billion attributed to refugee and asylum-related costs within the UK.
Excluding those domestic costs leaves approximately £10.64 billion in expenditure.
Britain has international responsibilities, and foreign aid can provide essential humanitarian assistance to those in need. But we also have responsibilities here at home.
When we are borrowing billions of pounds to meet our own commitments, can we really afford to continue spending at this level overseas? Balancing Britain’s books will require difficult choices, and this is undoubtedly one of them.
Our proposal is to suspend this expenditure for one year, subject to unavoidable legal and contractual commitments, and redirect the financial priority towards getting Britain’s own finances under control.
This is not a proposal to end foreign aid permanently. It is a recognition that, for now, we may need to put our own financial house in order before deciding what we can reasonably afford to spend elsewhere.
Reducing our borrowing today could help reduce the cost of servicing our national debt in the years ahead. And surely, the less we spend servicing debt, the more we may eventually have available to support those who need our help, both at home and overseas?
5. Bank Reserve Interest — £4.62 Billion
During the 2008 financial crisis, extraordinary measures were taken to support Britain’s banking system, with taxpayers bearing substantial financial risks.
Today, commercial banks receive billions of pounds in interest on reserves held at the Bank of England.
In 2023, four of Britain’s major banks received approximately £9.23 billion in such payments. A hypothetical 50% reduction would represent £4.62 billion.
This is a historical comparison rather than a verified saving for 2025–26, and any reform would need to consider monetary policy and financial stability. But at a time when Britain is borrowing billions to fund public expenditure, is it now time to ask whether present arrangements remain appropriate?
Having stepped in to support the banking system when it was in difficulty, is it unreasonable to ask whether changes to these arrangements, for a period, could now help ease the burden on the public finances?
6. AI and Digital Transformation — £4.5 Billion
Technology offers significant opportunities to improve how government operates.
In January 2025, the Government’s own State of Digital Government Review identified approximately £45 billion in potential annual benefits from digital transformation.
For our exercise, we have taken just 10% of that figure, representing a proposed annual saving of £4.5 billion.
Automating repetitive tasks, reducing paperwork, improving processing times and replacing outdated systems could help departments deliver services more efficiently and at a lower cost.
Not all productivity improvements translate directly into cash savings, and care would need to be taken to avoid double counting savings already included in our proposed staffing and fraud reductions.
Nevertheless, if the Government itself has identified £45 billion in potential annual benefits, we think it is reasonable to examine whether even a modest proportion could be converted into genuine savings for the taxpayer?
7. Recovery of Uncollected Tax — £5.92 Billion
In June 2026, HMRC estimated that £59.2 billion in tax had gone uncollected during 2024–25, representing 6.4% of the total tax theoretically due.
For our exercise, we have assumed that just 10% of this amount could be recovered through improved compliance, enforcement and collection, representing approximately £5.92 billion in additional annual revenue.
The Government has already introduced measures aimed at improving tax collection, and any additional recovery would need to be assessed against those existing commitments to avoid double counting.
Nevertheless, when HMRC itself estimates that almost £60 billion in tax goes uncollected, surely recovering a further proportion of that money should be a priority?
Before considering further tax increases, should we not make every effort to collect more of the tax already due?
8. Government Procurement — £9.88 Billion
This is an area where I believe stronger financial controls could make a substantial difference. According to official figures, public-sector procurement expenditure amounted to approximately £395 billion in 2024–25.
For our exercise, we have applied a modest 2.5% efficiency target to that expenditure, representing potential annual savings of approximately £9.88 billion. But rather than simply looking for savings after money has been spent, why not introduce stronger controls before expenditure is committed?
From the beginning of each financial year, departments would set out their planned expenditure and submit significant proposed commitments for scrutiny. Purchase orders would be challenged for necessity, affordability and value for money.
Is the expenditure essential? Is it affordable? Could the requirement be met more efficiently?
Although procurement controls already exist, a more consistent central expenditure approval and monitoring system, supported by departmental accountability, could help prevent unnecessary spending before it occurs.
The £9.88 billion remains an illustrative target, and savings would need to be demonstrated without compromising essential services or duplicating reductions elsewhere in our proposals.
Surely preventing waste is preferable to discovering it after the money has been spent?
Buying British — Supporting Jobs, Growth and Tax Revenues
The Government spends billions of pounds every year purchasing goods and services. But how much of that money is actually spent with British businesses?
Surely, wherever possible, we should be looking to buy British? Supporting British businesses would help protect and create jobs, encourage investment, strengthen our economy and generate additional tax revenues for the Treasury.
Rather than simply looking at the lowest purchase price, should we not also consider the wider economic benefits of keeping more of that spending within Britain?
After all, if government expenditure can help create employment, support British industry and increase tax receipts, isn’t that a better use of taxpayers’ money?
9. Shared Services and Collective Management — £2 Billion
Many government departments and public bodies maintain their own finance, payroll, human resources, IT and administrative functions.
The Government already has a Shared Services Strategy aimed at reducing duplication and improving efficiency. In July 2026, the Public Accounts Committee reported that the Cabinet Office expected £4.3 billion in benefits from the programme, although concerns remained about delays and delivery.
Where appropriate, greater sharing and collective management of these services could reduce administrative costs and improve value for money. For our exercise, we have included a provisional target of £2 billion in annual savings, subject to establishing what additional savings could realistically be achieved.
Care would need to be taken to avoid overlap with existing government plans and our proposed procurement, digital transformation and Civil Service reductions.
If government departments can share resources, systems and expertise rather than each maintaining separate arrangements, we should be making greater use of those opportunities?
10. Fraud and Error Reduction — £1.5 Billion
Fraud, incorrect payments, duplicated invoices and weak financial controls create unnecessary costs across the public sector.
In March 2026, the House of Commons Public Accounts Committee reported that fraud and error outside the tax and benefits systems were estimated to cost between £5 billion and £31 billion annually.
For our exercise, we have assumed that £1.5 billion could be saved each year through stronger financial controls, improved payment verification, supplier checks and better fraud prevention.
This remains a provisional target, and any savings would need to be additional to existing government measures and those already included in our procurement and digital transformation proposals.
But when billions of pounds of public money are potentially being lost through fraud and error, we should be doing everything possible to prevent those losses?
The objective should be to prevent public money being lost in the first place, rather than relying on recovering it afterwards.
11. Temporarily Mothball HS2 — £5 Billion
HS2 remains under construction, despite substantial cost increases, delays and the cancellation or postponement of sections of the original project.
The Government’s 2025–26 budget allocated approximately £7.1 billion to HS2 Phase 1.
For our exercise, we have considered temporarily pausing further construction, allowing £2.1 billion for unavoidable contractual commitments, maintenance and associated costs. This leaves a hypothetical £5 billion reduction in expenditure for one year.
This is not a verified saving. Existing contracts, compensation liabilities and the potential cost of restarting construction would need careful examination. Nevertheless, at a time when Britain is borrowing heavily to meet its existing commitments, should major infrastructure projects not be subject to the same difficult affordability decisions as every other area of government expenditure?
Can we afford to continue committing billions of pounds to major projects without first establishing whether the country can afford them?
12. Other Major Infrastructure Expenditure — £6 Billion
The Government’s major-projects portfolio has been reported as containing 189 projects with a combined estimated lifetime cost of £924.2 billion.
That is expenditure spread over many years, not an annual spending figure. We have assumed that a further £6 billion of expenditure could be deferred or reduced for one year, separate from the HS2 proposal.
Britain needs infrastructure investment, but projects should be prioritised according to urgency, affordability and economic benefit.
Where expenditure is not immediately essential and cannot reasonably be afforded, postponement should at least be considered.
Of course, delaying projects can increase their eventual cost, so any decision would require careful examination.
13. Government Property Disposals — £5 Billion
Government owns substantial amounts of land and buildings. According to the Government’s official State of the Estate 2024–25 report £208.4 billion figure.
Some may be vacant, underused or no longer necessary for delivering public services.
Our exercise assumes £5 billion could be raised through the disposal of suitable surplus property. This would be a one-off receipt rather than a recurring annual saving.
Nevertheless, reviewing the public property estate could release funds and potentially reduce ongoing maintenance costs.
What Would These Measures Achieve?
| Proposed measure | Potential saving | Remaining gap |
| Starting annual borrowing | — | £134.20bn |
| Civil Service employment — 30% reduction | £8.43bn | £125.77bn |
| Welfare excluding State Pension — 30% reduction | £56.31bn | £69.46bn |
| Asylum support | £1.00bn | £68.46bn |
| Foreign aid excluding UK refugee costs | £10.64bn | £57.82bn |
| Bank reserve interest — 50% reduction | £4.62bn | £53.20bn |
| AI and digital efficiencies | £4.50bn | £48.70bn |
| Additional tax recovery — 10% | £5.92bn | £42.78bn |
| Procurement efficiencies — 2.5% | £9.88bn | £32.90bn |
| Shared services and management | £2.00bn | £30.90bn |
| Fraud and error reduction | £1.50bn | £29.40bn |
| Subtotal — recurring measures | £104.80bn | £29.40bn |
| Temporarily mothball HS2 | £5.00bn | £24.40bn |
| Defer other infrastructure expenditure | £6.00bn | £18.40bn |
| Subtotal — including temporary deferrals | £115.80bn | £18.40bn |
| Government property disposals | £5.00bn | £13.40bn |
ILLUSTRATIVE POSITION
Total measures including property sales
£120.80bn
Remaining illustrative funding gap
£13.40bn
Amounts are rounded. Our calculations are based on published government figures and reported expenditure, with proposed reductions applied to identify potential savings. These are not arbitrary figures, but an exercise in examining where savings could be potentially made. Some proposals would take time to implement, while others represent temporary or one-off savings.
What Does Our Exercise Demonstrate?
If every proposed measure were achieved in full, the illustrative financial position would be:
| Financial position | Amount |
| Starting annual borrowing | £134.20bn |
| Proposed savings and additional revenue | £104.80bn |
| Temporary infrastructure reductions | £11.00bn |
| Remaining gap before property disposals | £18.40bn |
| One-off property receipts | £5.00bn |
| Illustrative remaining financing gap | £13.40bn |
The exercise does not completely balance the books. We looked at ways in which we could reduce the in-year deficit. The scale of decisions that would need to be considered if we wished to bring annual expenditure in line with revenue. This does not suggest that every measure could be implemented immediately or be without consequences. It is designed to show there is potential there and we should not be sitting with huge deficits without making every effort to reduce.
Britain Needs Growth as Well as Financial Discipline
Reducing expenditure alone is not the answer. Britain also needs economic growth, business investment, employment and a stronger tax base.
A growing economy can generate additional tax revenue without necessarily increasing tax rates. In an earlier StandbyScotland article examining the Jackdaw gas field decision, I questioned whether Britain was making sufficient use of its domestic energy resources. That argument is relevant here.
Britain has valuable natural resources, engineering expertise and established industries. Responsible development of those resources could support employment, investment and tax revenue, while recognising our environmental responsibilities.
The same principle applies across the wider economy.
If we want stronger public finances, we must look not only at reducing expenditure but also at increasing the revenue available to fund our commitments.
Britain needs to grow its economy, manage expenditure more carefully and reduce its dependence on borrowing.
More than £3 trillion in debt. Approximately £517 billion borrowed in three and a half years. Hundreds of billions spent on debt interest.
These are not small numbers, and they are not problems that will simply disappear. Where is the urgency? Where is the serious national debate? And where is the plan?
Britain is drowning in debt. It is time we started talking about it.
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StandbyScotland — Independent Political Commentary and Analysis
Editorial note: The financial exercise is illustrative and does not constitute an official fiscal forecast. Its figures draw on different reporting periods, and the proposed savings require further verification for feasibility, timing, overlap and impact on public services. The historical borrowing, debt-interest and expenditure figures should be checked against their original official sources before publication.