Monday, April 20, 2009

The Budget

Last week the only British political issue of major significance was smear-gate. The reason that it grabbed and then dominated the headlines was that it resonated with how so many British people think Gordon Brown operates. The Prime Minister might have thought he could isolate himself from association with the unpleasantness that flowed from the 'black' culture he himself has always encouraged. But that was not how it turned out. And that's because the British people are not so daft. It was a question of credibility.

This week, the only British political issue is going to be the budget. The biggest challenge facing the Chancellor on Wednesday, is again one of credibility - persuading the British people to believe what he says. He starts at a great disadvantage, because of his incredible predictions when he delivered last November's Pre-budget Report. No-one believed what he said at the time, and his predictions, as expected, turned out to be fantasy. Let us recap on these predictions.

A year ago, the Chancellor, predicted that the Government would need to borrow £38 billion to balance the books in 2009/10. That was not believed. And the last November he increased this figure to £118 billion, a figure calculated on the utterly ridiculous basis that Britain would exit recession in July. No-one believed that either. This week he is expected to increase his prediction of public borrowing in 2009/10 to well over £150 million - and that does not include the many billions put at risk through the bailouts of the banks. These are figures way beyond anything we could ever have imagined. It means that Britain will exit the recession (at some stage) with a truly massive mountain of debt. Rucksackfuls of debt have been loaded onto the backs of our children. Its a gluttonous extravaganza of irresponsibility and greed by one generation at the expense of the next. This dreadful Government has enveloped the current generation which elected it in a collective shroud of shame.

If the 'leaks' are to be believed and the Chancellor intends to base his 'route map' out of this mess, and into some sort of balanced budget, sometime in the next decade on the basis of 'cuts' in bureaucracy and administration, and tax increases which kick in after the next election, he will not be believed. He will be mocked and he will be derided. And he will deserve it. Usually, when the Chancellor sits down at the end of his budget speech, attention immediately turns to studio analysts as they begin calculating how many pounds better off or worse off particular groups are. This year a higher proportion of these listeners will want to hear the Conservative's response. But the most important aspect of it all will be whether what the Chancellor says is believable.


Anonymous said...

A good analysis the only thing that we can believe it that darling will be unbelievable.

Jeff Jones said...

All the evidence is that Darling will tell the truth about the national finances. The real issue however is how to we to quote an interesting paper by the Reform think tank get 'Back to Black.' When I stated a few weeks ago that the Conservatives should set out their preferred savings you said that no future Chancellor could do this. This was probably true in the past when often oppositions didn't have a real clue until they took office. A classic example of that was in 1964 when Labour took over from the Tories. Today we all know the task that is in front of the country over the next 10 years. As one anonymous senior minister in the Times puts it this morning 'Whoever wins the next election is going to have to make cuts.' The real debate between the parties should now be where those cuts will take place and the balance between cuts and tax increases. This debate also applies to both the Assembly and local government. The Assembly in particular has to look at can we afford any longer to go down the road of the gimmick free services policy.Politicians at all levels have to realise that the party in the words of Crosland is well and truely over.What is now required is a fundamental debate about what should be provided by government at all levels. At national level we could start by stop fooling ourselves that the UK is still a world power.The replacement for Trident and the two new aircraft carriers should both be scrapped. Throw in the scrapping of ID cards and we are beginning to perhaps get a debate. I think Glyn that at the next election the British voter requires a bit of honesty from politicians of all parties and a real competition of ideas.

Glyn Davies said...

Anon - I do think he gives the impression of being a puppet, saying just what hw thinks the Prime Minister wants to hear.

Jeff - If he does tell us the truth, it will be the first time. I agree that the challenge facing an incoming government is becoming better defined by the day. There is going to have to be constraint on public spending - so any commitment that increases Government spending lack credibility, unless it is a politically irreversible commitment such as Osbourne's Inheritance Tax change. And I verymuch agree with your opinion that there should be a serious debate about what all levels of government will be able to do. I have suggested such a 'Chatham House Rules' discussion amongst Conservative Councillors (plus others) in Powys - but it hasn't happened yet.

Anonymous said...

I see that plaid cymru are demanding more public spending and a big increase in the state pension in the budget. what do you think of that glyn

Jeff Jones said...

The inheritance tax change should not be politically irreversible because it is frankly a stupid promise in my opinion. Inheritance tax is paid by just 6% of the population on death and even then it is paid by those who benefit from the estate of the deceased. Government should now start to target where any increase in public expenditure occurs. Certain areas such as education and training should be protected for two reasons. Any economic growth will obviously require a well educated workforce in the future and it also essential that young people now about to enter the labour market should not be allowed to just go on benefits if there is no employment available. Money should also be found for new infrastructure projects particularly if those projects will either add to the economic wealth of the country or save money in the long run.In Wales we don't need Air Ieuan or gimmmick trains between the North and the South. What is required is real investment in a transport service in south east Wales, for example, serving the capital city which at least matches minimum standards found in the rest of Europe. Finally more money should be found for those on low incomes such as pensioners not only for social justice reasons but also because they are more likely to spend that money and thus provide a boost to the economy. Above all we need an open debate which will produce the ideas that will lead to economic recovery. In my home town we have a large empty industrial site where once over 2000 people used to be employed. Yet according to one of my local councllors all the local council can talk about for the valley is low wage, low skill tourism. Given the need for a new green economy the site would be an ideal place for new industries such as building the turbines needed for the expansion in wind farms which the Chancellor will probably announce tomorrow. As Dylan Jones-Evans quite rightly often states on his blog we already have many of the powers needed but still don't seem to be able to get our act together in Wales 10 years after devolution.