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Borrowed time

Wednesday, 12th March 2008

The Spectator on Budget 2008

On the issue of government debt, the situation is in fact dire: unlike almost all comparable industrial nations, Britain has piled on public debt through the boom years, and is set to go on doing so at least until 2012, with severe implications for our international competitiveness, and with very unsatisfactory results in terms of actual improvements in the public services on which the borrowed money is so liberally showered. Yet Darling presented his borrowing figures with a momentary hint of Brownian smugness — on the grounds that the outcome for this year is slightly less bad than some pundits expected — and failed entirely to mention the impact on the national balance sheet of the ownership of Northern Rock or the impending reclassification of many private-finance deals, the combination of which will certainly smash through the government’s own proudly proclaimed rule that national debt must not exceed 40 per cent of GDP.

As for business, Darling had nothing to offer at all beyond some minor encouragements for smaller businesses — which, in a perfect example of what Labour politicians erroneously believe makes the economy tick, are to be encouraged to bid for more public sector contract work — and, rather patronisingly, ‘women entrepreneurs’. Not only was there not a single word of response to the CBI’s well-argued case for a radical reform of corporate taxes to bring Britain in to line with the likes of Ireland and promote stronger economic growth as a result; but the ill-conceived new capital gains tax regime which has caused such anger and distress in the business community was ‘confirmed’ without further comment. Likewise the £30,000 penalty on the non-domiciled residents who contribute so much to the economic life of London but are now threatening to depart in droves.

Then there was the much-flagged ‘green’ element of the Budget — which turned out to be nothing much more than a mention of the possibility of a levy on single-use carrier bags, but not yet; and a piffling extra £26 million to help homeowners insulate their houses. This year’s soft target, the only segment of the population to receive any startling news from the Chancellor, turned out to be boozers, who suffer above-inflation rises in duty. For the rest, this was a Budget that might as well never have happened. It was not frank, it was not firm, it did not set a path for action to protect the nation’s finances and businesses in the harsh times to come. Nothing about Alistair Darling’s Chancellorship prior to this Budget suggested that he is fit for the job at a time of crisis; this speech was a crucial opportunity to make us think better of him — and he failed.

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