91훑괵 NEWS | The Reporters

End of an era...

Evan Davis | Notes on Real Life |
21 Mar 07, 07:33 AM

This is a more important Budget than usual.

Not just for the obvious reason, that it probably marks the end of an unprecedented ten year reign at Number 11. But also because it shapes the rest of the parliament. A three year comprehensive spending review is underway, and the chancellor has to reveal now the total amount the government intends to spend right up to 2011.

And all the evidence is that the squeeze starts here. Unless the chancellor wants a significant rise in taxes in the next few years, which he doesn't, the growth of public spending looks set to be held back, well below the growth rate of the economy.

In the Pre-Budget Report, Mr Brown pencilled in spending growth for the three years 2008/09 to 2010/11 of 2.0%, 1.9% and 1.9% respectively. He's bound to confirm figures close to that tomorrow, when the policy is set.

It'll probably feel like a cut in spending, certainly relative to the last few years.

It means that in his last Budget, the chancellor looks likely to revert to his earliest form - because before "Brown the munificant" handed out big doses of cash to public services, he was "Brown the Iron Chancellor", tough on spending. A form he is now trying to rediscover.

On one issue at least, Mr Brown will be able to make a boast. Over his ten years, he has met his famous Golden Rule, only to borrow for investment spending.

Sure, he wouldn't have met the rule without fiddling a bit with the timing of the economic cycle, (or without measuring his borrowing not in billions of pounds, but as a percentage of GDP, which gives more weight to the early years of surplus).

But at least he will be able to say that on his definition, over one complete economic cycle that coincides with his period in office, he invested about six billion more pounds than he borrowed.

Mind you: that is running it pretty close to the wire. Over the ten years he has spent 4.3 trillion pounds.

Comments Post your comment

1.
At 10:20 AM on 21 Mar 2007,
Dave Webb wrote:

Better late than never I suppose. Gordon Brown's main failing in recent years has not been in failing to raise enough revenue (he is obviously a fan of Colbert who said that the point of taxation was to pluck the goose with the least amount of hissing) but in failing to keep control of expenditure. The result is that despite the very healthy state of the economy he is still running budget deficits at a time when he should be running surpluses to put money aside for the inevitable rainy day. Lets hope that his moves to restrict expenditure now will not be too late.

2.
At 10:31 AM on 21 Mar 2007,
Kristinn wrote:

Both your blog and your review of Mr Brown Achievements (18 March) overlook what has happened to private pensions over the last 10 years.

The pensions problem may not be soley the fault of Mr Brown and the Treasury. However, they were a significant player, as taxing pensions hardly helped.

The demise of prviate pensions (in value and coverage) is the most tragic element of Mr Brown's legacy.

3.
At 11:06 AM on 21 Mar 2007,
Lossaversion wrote:

As usual Brown's acheivements are form over substance.

PFI is what has realy helped him become "fiscaly prudent" as well as the tax on income for pension fund assets. PFI is not fully recognised on the books and will create a growing liability for future taxpayers - ironic really as being the lowest cost borrower had Brown not starpped himself into the "prudent" mantra he could have achieved so much more in substance rather than leaving a legacy for which we are not fully aware of the real liability.

Inequality has widened signficantly ie rich get richer poorer get poorer and middle get squeezed.

Lets not forget the national insurance hike to put more money into NHS - hiking national insurance was akin to a tax rate rise in all but name but helped keep Labour's promise of no rise in income taxe rates.

Under Brown public services have deteriorated owing to the perverse application of economics and the dissonance of the man is something to behold

Oh yes lets not also forget that he wrote the cheques to fudn the misadventure that is Iraq -

All in all a great lesson in how not to be a loss averse Chancellor driven by cognitie dissonance

4.
At 01:20 PM on 21 Mar 2007,
ian wrote:

I don't why people bother to listen to the Budget. It's just another find the pea game. If I was the opposition I would have taken the day off. Then tomorrow I would have read the papers to check how much more tax individuals and small companies will have to pay in tax and compare it to how much less the large corporations and rich people will.

There's nothing worse for a country than people like Brown and Blair who think they know what's good for it.

5.
At 01:26 PM on 21 Mar 2007,
Holly wrote:

You forget to mention fiddling the books with PFI - which is spectacularly uncompetitive over the long term in comparison with standard government borrowing - purely to maintain his utterly fatuous 40% rule.

He is far more concerned with flattering chicanery than with the performance of the economy. I suspect this budget will smack far more of a populist manifesto than a coherent spending plan.

6.
At 04:37 PM on 21 Mar 2007,
michael wrote:

What news for war disablement pensioners?

7.
At 11:39 PM on 21 Mar 2007,
Dan Matthews wrote:

On the face of it Brown has done two things to his credit: given the Bank of England independence to setting interest rates and keeping to his golden rule. But before claiming the latter of these as a success just how true is it? PFI isn't properly accounted for for a start. Then there's the big question of what the economic cycle is exactly; he predicted that we'd be in surplus some time ago and continues to get that prediction wrong time and time again - so it's premature to say that he has really met that crtieria.
But what about the black hole that is public sector pensions? I'm betting these don't show up on the books either and the public sector is bigger than ever before. Just how does the golden rule stand up when these are taken into account?