Frank Field looks ahead to the Budget
It is difficult to overdramatise the danger that is engulfing our country. In some ways our position is more precarious than in 1940 when we stood alone against the Nazi tyranny.
The danger can be stated easily enough. Far from building up reserves during the latter stages of the boom, the government went on a borrowing spree amounting to £200 billion or so. This borrowing disguised the fundamental structural imbalance in our national accounts. No government, however intent on making the pips of the rich squeak, has been able to raise in taxation more than 37 per cent of our gross domestic product. It is as though one of Adam Smith’s invisible hands has constructed a lead ceiling over the amount of income governments can lift off us taxpayers.
But no such ceiling operates on government expenditure. The most profligate of administrations spend up to half of all the income we create to finance what appears to have been a never-ending extension of public projects. The severity of the current slump magnifies many times over this fundamental faultline. But it is in no way its cause. If the economic recession was reversed this evening the huge imbalance between what governments raise and what they wish to spend would remain.
From the first signs of economic collapse the government has minimised its impact on its balance sheet. The Pre-Budget Report put the amount the government would need to borrow at £78 billion. But since then revenue has collapsed and expenditure is coming in way ahead of the government’s prediction. The unemployment level predicted for the end of 2009 was surpassed in February, meaning a much higher unemployment benefit bill has arrived ten months ahead of schedule. Clearly no one, including the government, has much idea yet of the true magnitude of borrowing. The last guestimate put it at £360-380 billion over the next two years when, at that stage, the government has stopped making any projections. While we clinically talk of public debt we are euphemistically speaking of trying to grab part of the income belonging to future generations to spend on ourselves.
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De Rigueur
April 16th, 2009 6:04pm Report this commentGood time for the opposition to call a no confidence motion, eh?
As possibly the only honest Labour MP, which way would you vote Frank?
Very good piece, even so.
Gary, HK
April 17th, 2009 1:57pm Report this commentImpressive piece of writing. It takes a Labour MP to write down what the Tories really need to be doing. People will understand, I am sure.
Good article; thanks for penning it.
Chris lancashire
April 17th, 2009 3:15pm Report this commentBrilliant piece from a very sound MP. Hopefully it will add to the debate of how and what we cut and replace pathetic namecalling from the Govt. about "Tory Cuts".
John Corfield
April 17th, 2009 4:41pm Report this commentA superb article Mr Field but what irks me is why you the most respected MP in the House by the public not the goons in Westminster is still a member of probably the worst Government in living memory even surpassing John Majors shambles of an administration, its beyond me.
Trevor
April 17th, 2009 5:05pm Report this commentFrank,
Come one, hop over to the Lib Dems or Tories and use this brilliant text as you go. Given the lasting damage that this government is causing, it's the least you can do.
Please, this is getting serious.
Chris
April 17th, 2009 5:27pm Report this commentThank you for writing the only believable, sensible and honest article I have read from a Labour MP in months. I hope you find greater recognition within your party and with it a louder voice.
Dee
April 17th, 2009 5:37pm Report this commentIt's not just the Government that needs the money, it's the fixed rate mortgage industry that need to replace the existing source of funds. Why should the Far East economies support a country that clearly intends to inflate itself out of its self inflicted trouble.
Just wish there were more people like Frank Field in Parliament.
Neil Craig
April 17th, 2009 5:41pm Report this commentImpressive article.
"No government, however intent on making the pips of the rich squeak, has been able to raise in taxation more than 37 per cent of our gross domestic product. It is as though one of Adam Smith’s invisible hands has constructed a lead ceiling over the amount of income governments can lift off us taxpayers."
I'm sure Mr Field thinks this is indeed a practical ceiling - that above that level it is so much worth working in the black economy, or in Switzerland, or in taking up even the most expensive tax fiddles or just putting one's feet up that this is indeed a ceiling. In which case he is right that government spending simply cannot permanently be above that.
Chas
April 17th, 2009 5:57pm Report this commentThis article could easily have been written by John Redwood, except that it is written in a clearer style. Why o why is Frank Field not a member of the Conservative party?
Nick
April 17th, 2009 5:58pm Report this commentExcellent piece - although I think the cost of Trident is £15-£20 BILLION, not million.
Nick Leaton
April 17th, 2009 7:15pm Report this commentSO, since the overspend this year is 175 billion (25% of government spending) just what are you going to cut Frank?
Susan Hill
April 17th, 2009 7:27pm Report this commentThe one good man, in every sense, in this government. Long may he continue to speak the truth without fear or favour. This is probably the best article I have read on our economic situation and future -crystal clear, balanced and measured. And truthful, as you would expect. Frank Field, I salute you.
Rufus
April 17th, 2009 8:08pm Report this commentThe article is analytical and gives food for thought. The author mentions "that available cash", "the world’s money lenders", "competition for funds"
Who are these money lenders and where did they get the funds from?
Mark Solomon
April 18th, 2009 2:22am Report this commentFrank, how long are you going to take being ignored and spurned by your party - which must be so far removed from the party you joined as to be unrecognisable - before you finally do the decent thing and defect? They are going to take as much notice of you on this issue as they did over your attempted restructuring of welfare a decade ago, when the rug was pulled from under you....
If there is any sunlight in the cloud of doom approaching, it is the hope that the urgency imposed by this crisis will make someone decide to take a chainsaw to the welfare budget and bring some common sense to what is by far the largest source of expenditure. People who have never worked, never paid in, should not be able to get any money at all in benefits. Those that have paid in should only be able to claim for a limited time dependant on their contribution history. Leaving school, not working and then getting a pension at the end of it should no longer be a career option. Non-EU immigrants should not qualify for any assistance until they have paid in for a number of years. And the obscenity of setting up single parent households and then 'loaning' them money to buy washing-machines repayable out of their 'earnings' (benefits) must be ended forthwith.
If the UK's welfare system resembled the majority of the rest of Europe's then there might not even be any need for tax increases! And you know that is true...
Ian C
April 18th, 2009 12:59pm Report this commentYou speak and write as no other Labour MP, which of itself should tell you something Frank.
You also spell out clearly how difficult cutting public spending will be and how little the effect will be of cutting some of the more unpopular choices e.g.health will be.
What you do not give, like all politicians, is what the solution is. We all know that we need growth and to get growth quickly we need a rapid unlocking of entrepreneurialism.
The reason politicians won't say it is because it’s Thatcher/Reaganite and that has allowed to bee dishonestly tarred as the source of the current crisis.
Until respected politicians, such as you, start telling it how it really is the country will continue in its prolonged and devastating descent. Wake up properly Frank (and the Tories), stop pretending. Nice Op-Ed pieces in the Spectator may be good for you but all you have done is confirm to the world that even the best of politicians are wringing their hands in craven forelock tugging to an already deceived electorate.
Ray
April 18th, 2009 11:13pm Report this commentSorry Frank no disrepect but you persona is ...well not good, and you can defect if you want,not stand at the next election whatever and nobody is going to take any notice and Gordo knows it
peter reddington
April 21st, 2009 1:44pm Report this commentUs tax payers Frank, what's with the "us", don't tell me you're one, and here's me thinking all labour MPs were the same. Why don't you cross over to the lib dems Frank, I don't think anyone would blame you, it's not a labour party anymore, it's a kennel, and the people know it.
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