Before I go any further I ought to confess that I am a Labour Party supporter and I work in a publicly-funded job. Now that the dust has settled the following points strike me as worth a comment.
I found the budget to pretty much as I expected it to be with the exception that drinkers, smokers and motorists were not to be penalised yet again. Whatever party had won the general election we would have faced tax rises and budget cuts simply because the nation is in massive debt. From what I gather, economists believe Labour would have had to cut by an aggregate 20% while the Coalition has gone to 25%.
Failure to begin paying the debt off would have serious consequences, not least that our bonds would have been downgraded from AAA status. This would mean in order to attract further money to finance our debt we would have to pay considerably higher interest rates to investors thus impacting further on our ability to pay for public services, etc.
In addition to our debt mountain, we also face a pensions crisis. Although there were other factors at play Gordon Brown’s “pension raid” in his first budget as Chancellor has certainly exacerbated the problem as this article makes clear
The current Chancellor was right to focus on SMEs and business. Unpalatable as it may be, the public sector does not create wealth. Rather, it spends it on staff wages, providing services and distributing various benefits. There are many advantages to having a strong, efficient public sector to provide essential services and I believe that a civilised society should bear those costs to support people less fortunate. However, these have to be paid for and the only way to earn the money is to have an equally vibrant private sector.
Some two months on the budget seems to be working. International loan rates are down, Lloyds TSB and RSB shares are showing a paper profit for the Government, the Pound/Euro rate has stabilised and even increased in Sterling’s favour, and there are other encouraging signs. There seems to be a genuine commitment to reduce waste in the public sector by excising the multitude of quangos, curbing MoD spend, simplifying the benefits systems and to be an open government. So far, so good.
I think the talk of 25 % cuts across the board is exaggerated to prepare the public for the actual cuts that will happen. One reason for my belief is that a 25% cut will repay the deficit in less than five years. I suspect that, come the spending review, we will see smaller cuts of around 15% on aggregate. Hence the Coalition will gain a PR victory.
There are challenges ahead. The Brown-created pension crisis must be addressed in a way that allows savers to retain control of their assets and not to be penally taxed, the arcane benefit system must be simplified in a manner that is equitable and encourages claimants to work, the MoD v Treasury funding battles have to be settled, NHS provision must be made to be patient-centred rather than target-led, the convoluted taxation system should be simplified and our creaking education system must be improved.
For far too long the UK electorate has been subjected to a centralised command and control ideology where the cost of services was measured and managed by a plethora of superfluous management intent on tick-box targets with budgets focussed on these targets. These budgets are huge. As Bob Dylan sang: “The times they are a-changing”. I hope that they are changing to a time where we see less interference in our daily lives, where we see innovation is nurtured, where people are responsible for themselves and where essential public services like defence, health and education are exemplars to the world. Is that too much to ask?