The pips squeak

25 April 2009

The Spectator on Budget 2009

As to specifics, on the matter of public spending cuts there were none at all, only a vague reference to an additional £9 billion of ‘efficiency gains’ by 2014. But as Frank Field explained so eloquently in The Spectator last week, the country’s solvency is at stake unless there is serious plan to scale back spending soon — which is likely to mean freezing departmental spending and slashing pet projects, innumerable quangos and the grotesque paraphernalia of ‘regional government’. From the Chancellor we got not even a hint of any of that to come. Instead, we got a ragbag of spending measures. The much-vaunted car scrappage subsidy scheme will no doubt be welcomed by the German and French carmakers who supply so many of our new cars. The scheme to restart abandoned house-building projects is a total waste of money until the construction industry itself decides that its market has stabilised. And in what was heavily spun beforehand as a ‘budget for jobs’, the measures to help school leavers and recent graduates into work, and to boost the services offered by Job Centres, looked very much like retreads of similar schemes from the past which produced very mixed results.

A real boost to private-sector employment might have been achieved by far more radical reductions in tax and red tape for smaller companies and start-ups, but there were at least some useful minor tax measures to ease companies’ cash flow. As to genuine ‘investment’, perhaps the only announcement of note was a £750 million strategic fund for the hi-tech, low-carbon manufacturing sectors which are the target of Lord Mandelson’s new industrial policy. Finally, there was perhaps a little more help for pensioners than we had been led to expect.

Yet in almost every significant sense, this Budget was a darkly depressing performance, which presented shocking and historically unprecedented public borrowing figures without any real acceptance of responsibility for what has gone wrong, and with a ‘strategy’ for returning to fiscal balance many years hence only on the basis of economic forecasts that almost no one believes. The Chancellor did not rise to the occasion, and he did not deserve our sympathy.