Frankly, this Budget is ghastly. There are some consolations such as progress towards the 10k tax allowance, but overall it’s awful.
I don’t blame Labour for everything. While they made mistakes, they were right to bail out the banks. And it is true that most of the pain is due to the international economic crisis.
But Labour did make this crisis worse. After a few years of financial restraint, they flooded public services with money. They should have increased the spending more gradually, and coupled it with reform to improve productivity. Instead, productivity fell. This isn’t hindsight, the point was made at the time: there was so much money going in that the departments didn’t know how to spend it.
Former NatWest chief executive Derek Wanless wrote a report in 2002 on the NHS. He said: “Money on its own is not enough and provides no guarantee of success – it is essential that resources are efficiently and effectively used. Resources and reform must go hand in hand – both are vital. Neither will deliver without the other.”
But reform didn’t happen.
The NHS has dodged the bullet of real-term cuts for now.
Instead, welfare provision to the poor will be hit. I hate this. But when we are borrowing one pound for every four that the state spends, excruciating pain is unavoidable.
If Labour had kept close to a balanced budget during the boom, that would have helped in three ways:
- If their deficit in the good years had been less than £10 billion, rather than £40 billion, that’d mean £30 billion less of cuts now.
- The private sector would have been larger, and would now be better placed to take on new employees at a time when the public sector has to be cut back.
- The financial markets would have had more confidence in our ability to handle our deficit, which would have reduced the need for drastic cuts to keep market confidence.
Some on the left seem to think that a budget deficit is a progressive policy. Far from it. It takes from future generations to pay the bills of today’s. Britain will be poorer over the next few years, which means that Labour’s deficits from 2003 were Robin Hood in reverse.
I’m also angry with Labour for their use of government policy to wrong-foot the opposition.
Were their authoritarian policies primarily driven by a desire to reduce crime or terrorism? In my opinion, they were not. Their main motivation was to paint the opposition as being soft of terrorism.
With similar opportunism, they refused to prepare the public for the budget pain that would be necessary. In an opposition political party, such reluctance would be understandable, in a government, it was irresponsible. A year ago, both the Lib Dems and Conservatives spoke of the seriousness of the budget crisis. The government did not do the same.
Labour claimed that it was economically necessary to delay a public spending review until well after the election. I don’t believe them. A review, even if it was describing projected cuts in a years time, would have reassured the markets that the government was serious about tackling the deficit. Such reassurance would have meant lower interest rates, and lower rates for government borrowing. Instead, they did no more than the opposition parties, and vaguely spoke about £44 billion of efficiency savings.
Labour claim that they would have waited until 2011 before cutting. Again, I do not believe them. Once the election was out of the way, they’d have claimed the international situation had changed and started cutting right away, and cutting savagely. Their calculation would have been, better to cut four years from the next election than three years.
So, no. I don’t blame Labour for the whole economic crisis. They didn’t create the catastrophe. They just made a terrible situation, somewhat worse. And now they are trying to make political capital out of a situation that they are, in some part, responsible for.
That’s enough reasons to be angry.