A Strong Voice for Croydon Central - Gavin Barwell MP
Help me
Contact me

A dishonest Budget
25/04/2009 10:08:00

The figures announced by the Chancellor in his Budget on Wednesday - which showed that the UK is in the worst recession with the fastest rising unemployment and the worst public finances since the Second World War - were depressing enough. But what was even more depressing was the lack of any credible, immediate action to address these problems.

If you look at the small print, the Government is proposing tax increases for the many not the few and reductions in public spending after the next Election - presumably because Labour don’t expect to win the next Election and hope the Conservatives will get the blame for these unpopular measures.

But for the next couple of years, it proposes to continue increasing public spending. The Chancellor did announce a couple of tax increases, the headline measure being an increase in the tax rate for earnings over £150,000, which the Chancellor says will raise £2 billion. That’s almost certainly an over-estimate - it will be very easy for many of those affected to re-arrange their finances to avoid some or all of this increase and some will no doubt move to countries with lower marginal rates of tax. But even if the Chancellor is right, £2 billion is a drop in the ocean when you look at the state of the public finances. This measure was included to distract the media’s attention from the bad news, not because it is going to have a meaningful impact on the budget deficit.

According to the Chancellor’s figures, the national debt will double over the next five years to £1,400,000,000,000 - that’s £22,500 of debt for every man, woman and child in the country. The annual interest on this debt will be more than we spend on our schools. But the Chancellor’s figures are based on highly optimistic forecasts of how the economy is going to fare:

- He is predicting that the UK economy is going to grow by 1.25% in 2010. A couple of hours after he sat down, the International Monetary

- He said he believed that the economy had contracted by about 1.6% in the first three months of this year. The official figures were published yesterday and showed a contraction of 1.9%.

All of which means we are going to need to borrow more than the Government is admitting. Even on the Chancellor’s figures, it is going to take 25 years to get debt back to 2007 levels. There is something fundamentally immoral about burdening our children with this level of debt.

So what should we do? Well, when you are in a hole the first thing to do is stop digging. The Government is currently spending £4 for every £3 it raises. We can’t go on like that. If we want to avoid the crippling tax rises Labour have planned for after the Election, we need to restrain Government spending now. That’s going to involve some tough decisions. But if we put it off - as the Government is proposing - it is only going to make things worse.

Comment on this blog



 More Blog Posts
Friday night's attack on a 17 year-old asylum seeker
  Read Story
Reflections on yesterday's attack
  Read Story
IVF services in Croydon
  Read Story
Government backs upgrade of London to Brighton railway and refuses to fund BML2 concept that would be bad news for Addiscombe in particular
  Read Story
Spot the difference
  Read Story
Second interim report on Croydon tram crash
  Read Story
Fixing our broken housing market.
  Read Story
Government provides £14m for refurbishment of Fairfield Halls and redevelopment of College Green.
  Read Story
Southern Rail latest update
  Read Story
How I will vote on the EU (Notification of Withdrawal) Bill
  Read Story

Full list of blog posts here

Gavin Barwell, House of Commons, SW1A 1AA, Tel  020 8660 0491      © Gavin Barwell  2017       Promoted by Ian Parker on behalf of Gavin Barwell, both at 36 Brighton Road, Purley, CR8 2LG