Today the crisis lurches into yet new horrors. The whole budget
thesis that the planned tax increases and cuts in spending would do
the trick and nobody would feel any pain until the election was
safely over now looks like a sick joke. That wasn’t the half of it
- literally.
You can take all the forecasts of tax rises and cuts and DOUBLE
them! No wonder that Darling missed the budget debate yesterday and
flew unexpectedly to the IMF in Washington. WHY? And why is nobody
asking? Is he after ‘work-experience’ ?
The facts that we all must face are that we can no longer afford to
be a first rank nation for the foreseeable future. We cannot afford
to fund the welfare state. We cannot afford the lunatic Green
expenditure. We cannot afford the Defence spending we have long
thought necessary. But the real ‘killer’is that we cannot afford
the continuing refusal to cut sdpending for the next two years. It
must be cut NOW for every day it isn’t cut the debt mountain grows.
We can’t afford another day of Brown’s government.
It looks ever more certain that the Tories will be faced - for the
third time in my lifetime - to clear up Labour’s disasters. I don’t
know whether they can succeed. I doubt if anyone can, but one thing
is sure - it will be a very rough ride and for half of the population
it will take the rest of our lives. Somehow we’ll have to get
through it.
xxxxxxxxxxxxxxxxxxcs
================================
TELEGRAPH 24.4.09
1.(Leader) The Tories must rise to this challenge
Telegraph View: no Budget in recent memory has prompted the level of
public anger that has greeted Wednesday's statement.
Alistair Darling has flown to Washington to meet the International
Monetary Fund. Sounds familiar? Unlike his predecessor Denis Healey,
the Chancellor is not (yet) looking for a bail-out, even though the
public finances are in far worse shape than in 1976, when the IMF
stepped in to rescue the British economy. The alarming truth is that
the scale of our indebtedness is now so immense that the IMF would be
hard-pressed to offer sufficient help.
Little wonder, then, that no Budget in recent memory has prompted the
level of public anger that has greeted Wednesday's statement. It has
finally become clear to the people of this country that Labour's
reckless stewardship of the economy, combined with the banking
collapse, has burdened not only them but also their children with a
seemingly insurmountable mountain of debt. Most recessions lead to a
few years of austerity; this one looks like ushering in a decade or
more of hard times.
It is futile to look to this Government for any message of hope or
indication of competence, for it has simply lost control of the
economy. Mr Darling himself appeared to be in a state of Zen-like
detachment as he set out the size of the debt and conjured out of the
air wholly implausible growth forecasts on which to base his recovery
strategy. As for any sense of urgency in the face of this crisis –
forget it. The Chancellor blithely confirmed that public spending
will continue to soar this year and next, by £19 billion and £20
billion respectively. Only after that will a tentative start be made
– not at cutting budgets, but at trimming the rate of spending
growth. And of course there was plenty of money to pour into make-
work schemes for "our people". Combine this with the sheer, spiteful
stupidity of breaking a manifesto pledge by pushing up the top rate
of tax, in a move that will trigger an exodus of talented wealth
creators, and the wretched picture is complete.
As it retreats to its bunker, the Government has shown it has no
compunction about treating the better off with contempt. Yet these
are the people who will be left to pick up the bill for Labour's
blinding incompetence. No wonder they are angry. This Budget has
marked a historic rupture between Labour and the middle classes which
helped propel it to power – and offers the Conservatives an
opportunity they must not fumble. The Tories are refusing to make any
commitments on tax levels so far in advance of an election, which may
be understandable. [With the situation changing daily, of course
it’s understandable -cs] What they cannot avoid is setting out
radical plans for a smaller state, without which the public finances
cannot be restored. This will be the battleground for the next
election – and the campaign starts now.
=====
2. Britain's debt will not be under control until 2032
The unprecedented burden of public debt built up by Gordon Brown will
not be brought under control for nearly a quarter of a century,
economists have said.
By James Kirkup, Political Correspondent
”Debt freedom day”, when the national debt returns to sustainable
levels, will not be reached until 2032 - another 23 years away, the
respected Institute for Fiscal Studies said.
Families could soon find themselves paying at least another £1,400 a
year in tax as part of the Government’s attempts to bring public debt
back under control, the IFS predicted.
It said there was a gap between the amount of money that would be
raised by the tax measures in this week’s Budget and the amount the
Government will need to fund its spending plans.
This secret “blackhole” could end up adding another £1,430 each year
to the average families’ tax bill, it said.
The stark warning of a generation of austerity ahead came as Alistair
Darling admitted he could not be sure his optimistic forecasts for a
quick economic recovery would be realised.
“It is very difficult to be absolutely certain as to what will
happen,” he admitted.
The Chancellor’s predictions for growth to resume by the end of this
year and to reach boom levels again by 2011 have been widely
questioned, with the International Monetary Fund suggesting the
British economy would actually shrink next year - despite Mr
Darling’s forecast of modest growth. “The crisis is far from over,”
it said.
The IFS warned that despite the tax rises and spending cuts announced
in the Budget this week, future chancellors would be forced to raise
even more money to fill a “breathtaking” long-term hole in the public
finances.
The scale of the problem is so great that even with years of tax
rises and spending cuts, the national debt will not be low enough to
meet Gordon Brown’s now-abandoned “sustainable investment rule” until
2032. This “golden rule” dictated that Government debt should not
rise above 40 per cent of Gross Domestic Product (GDP).
In the Budget however, Mr Darling said he would borrow another £700
billion over the next five years, pushing the accumulated stock of
Government debt to £1.4 trillion, equal to almost 80 per cent gross
domestic product.
The golden rule on borrowing, which Mr Brown actually announced when
he was Chancellor, has been “temporarily suspended” as the UK economy
endures the worst recession for 60 years.
Mr Darling has set out plans for debt to peak at 76.2 per cent of GDP
in 2013/14. Paying the interest on that debt could cost as much as
£58 billion a year by then, more than annual spending on schools in
England.
Bringing the debt back to the level Mr Brown once said was necessary
for economic stability will take another 23 years, according to Carl
Emmerson, an IFS economist. “Public debt will remain high for a
generation,” he said.
”Deliverance from Darling’s Debt Day” will come on 27 February, 2032,
Mr Emmerson said.
As a first step towards controlling the stock of debt, Mr Darling has
set out plans for the Government to stop running up annual deficits
by 2017/18.
To achieve that, Mr Darling on Wednesday set out plans for several
years of tax rises - including a 50 per cent top rate of income tax
-- and an effective freeze on public spending from 2011. [We need
CUTS NOW - not a paltry freeze in two years time -cs]
But as far-reaching and controversial as those measures are, they
will still not be enough to get the Government out of the red,
according to the IFS, an independent think-tank.
Robert Chote, the IFS director, said that collapsing tax revenues and
the cost of bailing out the banking sector have done “breathtaking”
long-term damage to the public finances.
The Budget reveals an “underlying problem,” a permanent hole in the
public finances of around £90 billion a year, he said. “It is this
that will require two full parliaments of mounting austerity.”
In all, the Government will have to bring in an extra £2,840 a year
for every household by the end of the parliament after next.
But the IFS said that the Budget package only explained how around
half of that sum will be raised after 2014.
The rest of the shortfall will have to come from higher taxes, lower
spending, or a combination of the two.
George Osborne, the Conservative shadow chancellor, said the IFS
analysis showed that ministers had understated the scale of the
fiscal crisis facing Britain.
”This secret tax bombshell of £1430 was not even announced by the
Chancellor on Wednesday,” he said. “It shows what a dishonest Budget
it was and how quickly it is unravelling.”
The unexplained gap in the public finances does not open up until
April 2014, which is likely to be in the parliament after next.
[There is absolutely no need to wait that long. The longer we waity
the bigger ther debts -cs]
With opinion polls pointing to a Labour defeat at the next election,
it may fall to a Conservative Government to fill the gap.
”Whoever is in No 11 come 2014 will have to make some difficult
choices. It could be a plan to cut more from public spending, or it
could be more tax rises,” said Mr Emmerson.
David Cameron has signalled that he is likely to retain some of
Labour’s tax rises including the 50p rate, saying that unpopular
decisions will be required to control the debt.
But the Tories are still debating their approach to spending: some
Tory MPs believe the party should commit to squeezing spending harder
than Labour, but Mr Cameron is still wary of making pledges that
could lead to accusations that the Tories will cut front-line
services. [They’ll HAVE TYO be cut and the sooner the less deep they
need be -cs]
The Treasury defended the debt plans. A spokesman said: “To try to
reduce our borrowing overnight would have very bad consequences for
us all, and lead to greater losses in the long term. That is why the
current Budget charts a course to reduce borrowing while at the same
time supporting the economy now, which is critically important for
our recovery.”
=====
3. Now we are all up to our ears in it
Alistair Darling's calamitous Budget not only consigned the nation to
decades of debt, but also planted a poisonous legacy that will blight
generations to come, says Jeff Randall.
"To preserve [the people's] independence, we must not let our rulers
load us with perpetual debt. We must make our selection between
economy and liberty, or profusion and servitude."
Thomas Jefferson, President of the United States of America,1801-1809.
This week, Alistair Darling made a selection for us. His Budget for
Bankruptcy banished economy and liberty. In their place, he delivered
a profusion of unaffordable spending and a contract of servitude, not
just for this generation, but for the next and the one after that.
This is how independence is murdered. A ball-and-chain of spirit-
sapping debt has been clamped to the nation's future. We are all
serfs now.
In a speech of stunning torpidity (how does he manage it?), the
Chancellor claimed: "You can grow your way out of recession, you
can't cut your way out of it." Growth sounds attractive, an
aspiration for solid citizens. Except the growth that Mr Darling had
in mind was government borrowing, which is shooting up like bindweed
on steroids, choking the economy.
His red numbers are so immense that most pocket calculators cannot
accommodate them. Over the next five years – if all goes according to
plan – Mr Darling will borrow £703,000,000,000. As the late Roy
Castle used to say: "It's a record breaker!"
The United Kingdom is mired in debt, and the Chancellor's fiendishly
clever escape route is, er, to borrow his way out of it. He's in a
hole and digging furiously. Yet Gordon Brown, whose face is beginning
to resemble a smacked bottom, was delighted by his cipher's
performance. This style of presentation – straight from the Ceausescu
handbook of statistics management – appeals to the Prime Minister's
control-freakery.
It sounds complicated, but is surprisingly simple. You start with a
politically desirable conclusion – in this case, the triumph of a
suffocating state over personal responsibility, self-sufficiency and
wealth-creating enterprise – and work backwards: cheating, lying,
fiddling the numbers, until both sides of the balance sheet appear to
be in harmony. This is how Labour operated its fraudulent boom. The
same trick is being tried in a catastrophic bust.
In order for Mr Darling not to overshoot his wild borrowing
forecasts, some heroic assumptions need to be made about Britain's
prospects for robust recovery. So, guess what? He's made them – in
spades. By 2011, the British economy will be powering ahead – yes,
expanding by 3.5 per cent annually (well above long-term trend). It
really will. Lovely jubbly.
The genius of this approach is that it enables the Treasury to
predict that public-sector net borrowing in two years' time will be
down to a "manageable" £140 billion, just 11.9 per cent of GDP.
Covering this claim is a wafer of credibility so thin that even a
blind mole in a deep sleep could see through it.
For the record, when state borrowing rises above 10 per cent of GDP,
you expect the country's leaders to look like Eli Wallach in The
Magnificent Seven, attired in bullet-belts and chewing tobacco. But
remember, these are Mr Darling's best guesses. They could turn out to
be – and almost certainly will turn out to be – much worse.
The form book provides some pointers. When Mr Brown was head chef at
the Book Cooking Department, he almost always underestimated the gap
between spending and receipts. In his final Budget speech in 2007 – a
spectacular example of what The Economist labels his "moralising
drivel" – Mr Brown told us that Government borrowing would be £30
billion in 2009, and then £28 billion, £26 billion and £24 billion; a
total of £108 billion in the four years from 2009 to 12.
In terms of proximity to outcome, the distance apart is most
effectively measured in light years. On Wednesday, Mr Darling
adjusted those numbers to £175 billion, £173 billion, £140 billion
and £118 billion, more than five times his boss's boldly delivered
forecast. Mr Brown does still keep in touch with Prudence, but only
via a Ouija board. In the absence of the economy being fitted with
turbo-charged boosters, there seems not the faintest possibility that
the Budget deficit will, as promised, be halved by 2013-14.
But why are we even discussing events five years hence? In the weird
world of Mr Darling, five months is an eternity. In that time, since
the November pre-Budget report, his guidance has unravelled
completely. It appears to have much in common with Damian McBride's
email output, only without the bile: both are products of life inside
Mr Brown's grand delusion.
Lest you think that doubts on the accuracy of Mr Darling's foresight
are cast only by curmudgeons in the press and other enemies of the
NuLabocracy, allow me to draw your attention to a comment from
Compass, the centre-Left pressure group, in its post-Budget press
release: "We would warn the Government that its forecasts for
economic growth contained in the Budget are all calculated on a boom-
and-bust, pre-crash economic model which assumes rising consumption,
rising house prices and the resulting consumer debt; the very same
factors that contributed to the current economic and climate crisis."
Spot on.
Part of Mr Darling's dangerous fiction is that by breaking his
party's manifesto promise, and raising the top rate of tax to 50 per
cent, the widening chasm in state finances will be filled by the ill-
gotten gains of the "rich". This is crude electioneering. It appeals
largely to those who lose count past 10 fingers and toes. If you add
receipts from the upper-limit tax hike to the additional income
generated by his attack on top earners' pensions (through a
restriction of tax relief), how much comes in? Well, on a sunny day,
with a fair wind, with all the coins in the right slot, about £7
billion.
Marvellous. When you are spending, as Mr Darling is, £671 billion a
year, £7 billion is little more than a rounding error. In order to
drag back the deficit to somewhere near a sustainable level, there
will have to be a squeeze on public spending not seen since Geoffrey
Howe's courageous but (at the time) immensely unpopular Budget of
1981. There is no evidence to suggest that Messrs Darling and Brown
have either the appetite or backbone to impose such discipline. Their
view of taxpayers' cash is as a means to bribe voters.
Compare this year's Budget with 2008's and you'll get the picture. At
a time when most families are being forced to make sacrifices, the
state is stepping up its binge. Overall, projected expenditure will
increase by £53 billion, the biggest chunk of which will be swallowed
by the euphemistically labelled "social protection" (mostly welfare
payments). At £189 billion, this is expected to account for more than
a quarter of all government outgoings. The really troubling category,
however, is "other", on which £72 billion is lavished (up from £67
billion). This is twice the allotment for defence. One dreads to
think of the profligacy that is masked therein.
If the tipster at the bottom of The Racing Post's naps column had a
forecasting record on a par with Mr Darling's, his newspaper would
shunt him to the obituaries section. But, for argument's sake, let's
assume that the Chancellor's projections are broadly correct. By
2013-14, Britain's net debt will be 79 per cent of national output.
At this level, we face possible humiliation as our creditworthiness
crumbles and investors refuse to buy the Government's devalued IOUs.
As a country, we will be skint.
The most stomach-churning development to emerge from this debacle is
that, as a result of Labour's disgraceful stewardship, Britain is now
locked into long-term structural indebtedness. Economic cycles come
and go, but when the credit crunch eases, and the recovery begins,
the need for very high levels of government borrowing, and therefore
taxation, will not go away.
Jefferson set out the choices. This useless Government picked the
wrong one.
TELEGRAPH 24.4.09
1.(Leader) The Tories must rise to this challenge
Telegraph View: no Budget in recent memory has prompted the level of
public anger that has greeted Wednesday's statement.
Alistair Darling has flown to Washington to meet the International
Monetary Fund. Sounds familiar? Unlike his predecessor Denis Healey,
the Chancellor is not (yet) looking for a bail-out, even though the
public finances are in far worse shape than in 1976, when the IMF
stepped in to rescue the British economy. The alarming truth is that
the scale of our indebtedness is now so immense that the IMF would be
hard-pressed to offer sufficient help.
Little wonder, then, that no Budget in recent memory has prompted the
level of public anger that has greeted Wednesday's statement. It has
finally become clear to the people of this country that Labour's
reckless stewardship of the economy, combined with the banking
collapse, has burdened not only them but also their children with a
seemingly insurmountable mountain of debt. Most recessions lead to a
few years of austerity; this one looks like ushering in a decade or
more of hard times.
It is futile to look to this Government for any message of hope or
indication of competence, for it has simply lost control of the
economy. Mr Darling himself appeared to be in a state of Zen-like
detachment as he set out the size of the debt and conjured out of the
air wholly implausible growth forecasts on which to base his recovery
strategy. As for any sense of urgency in the face of this crisis –
forget it. The Chancellor blithely confirmed that public spending
will continue to soar this year and next, by £19 billion and £20
billion respectively. Only after that will a tentative start be made
– not at cutting budgets, but at trimming the rate of spending
growth. And of course there was plenty of money to pour into make-
work schemes for "our people". Combine this with the sheer, spiteful
stupidity of breaking a manifesto pledge by pushing up the top rate
of tax, in a move that will trigger an exodus of talented wealth
creators, and the wretched picture is complete.
As it retreats to its bunker, the Government has shown it has no
compunction about treating the better off with contempt. Yet these
are the people who will be left to pick up the bill for Labour's
blinding incompetence. No wonder they are angry. This Budget has
marked a historic rupture between Labour and the middle classes which
helped propel it to power – and offers the Conservatives an
opportunity they must not fumble. The Tories are refusing to make any
commitments on tax levels so far in advance of an election, which may
be understandable. [With the situation changing daily, of course
it’s understandable -cs] What they cannot avoid is setting out
radical plans for a smaller state, without which the public finances
cannot be restored. This will be the battleground for the next
election – and the campaign starts now.
=====
2. Britain's debt will not be under control until 2032
The unprecedented burden of public debt built up by Gordon Brown will
not be brought under control for nearly a quarter of a century,
economists have said.
By James Kirkup, Political Correspondent
”Debt freedom day”, when the national debt returns to sustainable
levels, will not be reached until 2032 - another 23 years away, the
respected Institute for Fiscal Studies said.
Families could soon find themselves paying at least another £1,400 a
year in tax as part of the Government’s attempts to bring public debt
back under control, the IFS predicted.
It said there was a gap between the amount of money that would be
raised by the tax measures in this week’s Budget and the amount the
Government will need to fund its spending plans.
This secret “blackhole” could end up adding another £1,430 each year
to the average families’ tax bill, it said.
The stark warning of a generation of austerity ahead came as Alistair
Darling admitted he could not be sure his optimistic forecasts for a
quick economic recovery would be realised.
“It is very difficult to be absolutely certain as to what will
happen,” he admitted.
The Chancellor’s predictions for growth to resume by the end of this
year and to reach boom levels again by 2011 have been widely
questioned, with the International Monetary Fund suggesting the
British economy would actually shrink next year - despite Mr
Darling’s forecast of modest growth. “The crisis is far from over,”
it said.
The IFS warned that despite the tax rises and spending cuts announced
in the Budget this week, future chancellors would be forced to raise
even more money to fill a “breathtaking” long-term hole in the public
finances.
The scale of the problem is so great that even with years of tax
rises and spending cuts, the national debt will not be low enough to
meet Gordon Brown’s now-abandoned “sustainable investment rule” until
2032. This “golden rule” dictated that Government debt should not
rise above 40 per cent of Gross Domestic Product (GDP).
In the Budget however, Mr Darling said he would borrow another £700
billion over the next five years, pushing the accumulated stock of
Government debt to £1.4 trillion, equal to almost 80 per cent gross
domestic product.
The golden rule on borrowing, which Mr Brown actually announced when
he was Chancellor, has been “temporarily suspended” as the UK economy
endures the worst recession for 60 years.
Mr Darling has set out plans for debt to peak at 76.2 per cent of GDP
in 2013/14. Paying the interest on that debt could cost as much as
£58 billion a year by then, more than annual spending on schools in
England.
Bringing the debt back to the level Mr Brown once said was necessary
for economic stability will take another 23 years, according to Carl
Emmerson, an IFS economist. “Public debt will remain high for a
generation,” he said.
”Deliverance from Darling’s Debt Day” will come on 27 February, 2032,
Mr Emmerson said.
As a first step towards controlling the stock of debt, Mr Darling has
set out plans for the Government to stop running up annual deficits
by 2017/18.
To achieve that, Mr Darling on Wednesday set out plans for several
years of tax rises - including a 50 per cent top rate of income tax
-- and an effective freeze on public spending from 2011. [We need
CUTS NOW - not a paltry freeze in two years time -cs]
But as far-reaching and controversial as those measures are, they
will still not be enough to get the Government out of the red,
according to the IFS, an independent think-tank.
Robert Chote, the IFS director, said that collapsing tax revenues and
the cost of bailing out the banking sector have done “breathtaking”
long-term damage to the public finances.
The Budget reveals an “underlying problem,” a permanent hole in the
public finances of around £90 billion a year, he said. “It is this
that will require two full parliaments of mounting austerity.”
In all, the Government will have to bring in an extra £2,840 a year
for every household by the end of the parliament after next.
But the IFS said that the Budget package only explained how around
half of that sum will be raised after 2014.
The rest of the shortfall will have to come from higher taxes, lower
spending, or a combination of the two.
George Osborne, the Conservative shadow chancellor, said the IFS
analysis showed that ministers had understated the scale of the
fiscal crisis facing Britain.
”This secret tax bombshell of £1430 was not even announced by the
Chancellor on Wednesday,” he said. “It shows what a dishonest Budget
it was and how quickly it is unravelling.”
The unexplained gap in the public finances does not open up until
April 2014, which is likely to be in the parliament after next.
[There is absolutely no need to wait that long. The longer we waity
the bigger ther debts -cs]
With opinion polls pointing to a Labour defeat at the next election,
it may fall to a Conservative Government to fill the gap.
”Whoever is in No 11 come 2014 will have to make some difficult
choices. It could be a plan to cut more from public spending, or it
could be more tax rises,” said Mr Emmerson.
David Cameron has signalled that he is likely to retain some of
Labour’s tax rises including the 50p rate, saying that unpopular
decisions will be required to control the debt.
But the Tories are still debating their approach to spending: some
Tory MPs believe the party should commit to squeezing spending harder
than Labour, but Mr Cameron is still wary of making pledges that
could lead to accusations that the Tories will cut front-line
services. [They’ll HAVE TYO be cut and the sooner the less deep they
need be -cs]
The Treasury defended the debt plans. A spokesman said: “To try to
reduce our borrowing overnight would have very bad consequences for
us all, and lead to greater losses in the long term. That is why the
current Budget charts a course to reduce borrowing while at the same
time supporting the economy now, which is critically important for
our recovery.”
=====
3. Now we are all up to our ears in it
Alistair Darling's calamitous Budget not only consigned the nation to
decades of debt, but also planted a poisonous legacy that will blight
generations to come, says Jeff Randall.
"To preserve [the people's] independence, we must not let our rulers
load us with perpetual debt. We must make our selection between
economy and liberty, or profusion and servitude."
Thomas Jefferson, President of the United States of America,1801-1809.
This week, Alistair Darling made a selection for us. His Budget for
Bankruptcy banished economy and liberty. In their place, he delivered
a profusion of unaffordable spending and a contract of servitude, not
just for this generation, but for the next and the one after that.
This is how independence is murdered. A ball-and-chain of spirit-
sapping debt has been clamped to the nation's future. We are all
serfs now.
In a speech of stunning torpidity (how does he manage it?), the
Chancellor claimed: "You can grow your way out of recession, you
can't cut your way out of it." Growth sounds attractive, an
aspiration for solid citizens. Except the growth that Mr Darling had
in mind was government borrowing, which is shooting up like bindweed
on steroids, choking the economy.
His red numbers are so immense that most pocket calculators cannot
accommodate them. Over the next five years – if all goes according to
plan – Mr Darling will borrow £703,000,000,000. As the late Roy
Castle used to say: "It's a record breaker!"
The United Kingdom is mired in debt, and the Chancellor's fiendishly
clever escape route is, er, to borrow his way out of it. He's in a
hole and digging furiously. Yet Gordon Brown, whose face is beginning
to resemble a smacked bottom, was delighted by his cipher's
performance. This style of presentation – straight from the Ceausescu
handbook of statistics management – appeals to the Prime Minister's
control-freakery.
It sounds complicated, but is surprisingly simple. You start with a
politically desirable conclusion – in this case, the triumph of a
suffocating state over personal responsibility, self-sufficiency and
wealth-creating enterprise – and work backwards: cheating, lying,
fiddling the numbers, until both sides of the balance sheet appear to
be in harmony. This is how Labour operated its fraudulent boom. The
same trick is being tried in a catastrophic bust.
In order for Mr Darling not to overshoot his wild borrowing
forecasts, some heroic assumptions need to be made about Britain's
prospects for robust recovery. So, guess what? He's made them – in
spades. By 2011, the British economy will be powering ahead – yes,
expanding by 3.5 per cent annually (well above long-term trend). It
really will. Lovely jubbly.
The genius of this approach is that it enables the Treasury to
predict that public-sector net borrowing in two years' time will be
down to a "manageable" £140 billion, just 11.9 per cent of GDP.
Covering this claim is a wafer of credibility so thin that even a
blind mole in a deep sleep could see through it.
For the record, when state borrowing rises above 10 per cent of GDP,
you expect the country's leaders to look like Eli Wallach in The
Magnificent Seven, attired in bullet-belts and chewing tobacco. But
remember, these are Mr Darling's best guesses. They could turn out to
be – and almost certainly will turn out to be – much worse.
The form book provides some pointers. When Mr Brown was head chef at
the Book Cooking Department, he almost always underestimated the gap
between spending and receipts. In his final Budget speech in 2007 – a
spectacular example of what The Economist labels his "moralising
drivel" – Mr Brown told us that Government borrowing would be £30
billion in 2009, and then £28 billion, £26 billion and £24 billion; a
total of £108 billion in the four years from 2009 to 12.
In terms of proximity to outcome, the distance apart is most
effectively measured in light years. On Wednesday, Mr Darling
adjusted those numbers to £175 billion, £173 billion, £140 billion
and £118 billion, more than five times his boss's boldly delivered
forecast. Mr Brown does still keep in touch with Prudence, but only
via a Ouija board. In the absence of the economy being fitted with
turbo-charged boosters, there seems not the faintest possibility that
the Budget deficit will, as promised, be halved by 2013-14.
But why are we even discussing events five years hence? In the weird
world of Mr Darling, five months is an eternity. In that time, since
the November pre-Budget report, his guidance has unravelled
completely. It appears to have much in common with Damian McBride's
email output, only without the bile: both are products of life inside
Mr Brown's grand delusion.
Lest you think that doubts on the accuracy of Mr Darling's foresight
are cast only by curmudgeons in the press and other enemies of the
NuLabocracy, allow me to draw your attention to a comment from
Compass, the centre-Left pressure group, in its post-Budget press
release: "We would warn the Government that its forecasts for
economic growth contained in the Budget are all calculated on a boom-
and-bust, pre-crash economic model which assumes rising consumption,
rising house prices and the resulting consumer debt; the very same
factors that contributed to the current economic and climate crisis."
Spot on.
Part of Mr Darling's dangerous fiction is that by breaking his
party's manifesto promise, and raising the top rate of tax to 50 per
cent, the widening chasm in state finances will be filled by the ill-
gotten gains of the "rich". This is crude electioneering. It appeals
largely to those who lose count past 10 fingers and toes. If you add
receipts from the upper-limit tax hike to the additional income
generated by his attack on top earners' pensions (through a
restriction of tax relief), how much comes in? Well, on a sunny day,
with a fair wind, with all the coins in the right slot, about £7
billion.
Marvellous. When you are spending, as Mr Darling is, £671 billion a
year, £7 billion is little more than a rounding error. In order to
drag back the deficit to somewhere near a sustainable level, there
will have to be a squeeze on public spending not seen since Geoffrey
Howe's courageous but (at the time) immensely unpopular Budget of
1981. There is no evidence to suggest that Messrs Darling and Brown
have either the appetite or backbone to impose such discipline. Their
view of taxpayers' cash is as a means to bribe voters.
Compare this year's Budget with 2008's and you'll get the picture. At
a time when most families are being forced to make sacrifices, the
state is stepping up its binge. Overall, projected expenditure will
increase by £53 billion, the biggest chunk of which will be swallowed
by the euphemistically labelled "social protection" (mostly welfare
payments). At £189 billion, this is expected to account for more than
a quarter of all government outgoings. The really troubling category,
however, is "other", on which £72 billion is lavished (up from £67
billion). This is twice the allotment for defence. One dreads to
think of the profligacy that is masked therein.
If the tipster at the bottom of The Racing Post's naps column had a
forecasting record on a par with Mr Darling's, his newspaper would
shunt him to the obituaries section. But, for argument's sake, let's
assume that the Chancellor's projections are broadly correct. By
2013-14, Britain's net debt will be 79 per cent of national output.
At this level, we face possible humiliation as our creditworthiness
crumbles and investors refuse to buy the Government's devalued IOUs.
As a country, we will be skint.
The most stomach-churning development to emerge from this debacle is
that, as a result of Labour's disgraceful stewardship, Britain is now
locked into long-term structural indebtedness. Economic cycles come
and go, but when the credit crunch eases, and the recovery begins,
the need for very high levels of government borrowing, and therefore
taxation, will not go away.
Jefferson set out the choices. This useless Government picked the
wrong one.
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