Mark Wallace

Budget 2009: The Budget nasties come to light

Budget 2009: The Budget nasties come to light
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Today’s Budget was never going to be a good one for taxpayers. With the recession exacerbated by a Government wedded to high spending; shooting for a record debt level; and unwilling or unable to admit that there is such a thing as public sector waste, the question for many was simply “How bad is it going to be?” Unfortunately, the closer one looks, the worse the answer seems.

The TPA’s research team have been looking into different aspects of the Budget this afternoon to both put the Budget’s own figures into context and to investigate some of the small print of the Government’s plans. Predictably, more than a few Budget Nasties have reared their heads already.

First, let’s look at the national debt. Even at first glance, the numbers involved are huge, but in a historical context they are staggering. David Cameron’s initial assessment of the sums involved as being more than all Government borrowing in the previous 300 years combined is of course accurate, but critics will undoubtedly argue that he has ignored the effects of inflation. Even taking inflation into account, though, the amount that will be borrowed from 2008-09 to 2013-14 is more than the debt this country ran up to win World War One, World War Two and the Napoleonic Wars combined. Where Napoleon, the Kaiser and Hitler could not exhaust our national financial resources, there is a real chance that this Government might do so.

Next up for scrutiny is the much-vaunted green jobs scheme. On page 135 of the Budget, the Chancellor lays out his intention to create 400,000 more jobs in green industries. Unfortunately, a new report [http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a2PHwqAs7BS0 ] by the King Juan Carlos University in Spain estimates that the Spanish policy of subsidising green jobs actually ended up destroying two jobs in other sectors for every green collar job it created. The detailed policies the Government intends to apply are yet to be laid out but, if they pursue subsidies, then the Spanish experience would suggest the plan could actually result in a net loss of over 400,000 jobs in the UK economy as a whole.

Even the car scrappage scheme has its potential pitfalls. Given that it applies only to cars that are more than ten years old - of which there are approximately 7 million on the road in Britain - the potential bill could reach £14 billion. More controversially, much of that money would end up supporting foreign manufacturing. Only 14% of cars bought in Britain are British made, and even if you take into account the money that will go to British car dealerships, that still translates into an extremely inefficient subsidy for the British motor manufacturing sector. The Germans, the French and the Japanese were quick to introduce just such a scrappage scheme because it works well for them as countries which mostly buy their own, domestically produced cars. In Britain the picture is very different.

There were some good things about the 2009 Budget – such as the intention to make £15 billion of savings – but, sadly, they were few and far between.

Mark Wallace is Campaign Director at the Taxpayers' Alliance.