£175,000,000,000. That’s how much extra debt Darling proposes to load onto us this year, in the biggest Budget deficit ever.
Brown accused the Tories of unfunded tax cuts in the argument over reform of inheritance tax. But their doubtfully-funded proposals amounted to £2 billion. What about £175 billion of unfunded spending – over a quarter of all government expenditure?
Worse, Darling proposes a further £173 billion deficit next year. And that’s assuming that we come out of recession before Christmas; if not, the deficit will probably be more than £200 billion.
Nor is this a short-term problem caused by the recession.
The recession has exposed a long-term problem that had been hidden by the previous boom. As I said yesterday, Brown presided over an enormous increase in government spending (to little discernable benefit), which even the huge tax receipts from the City and the property industry during the boom were not enough to fund.
And what does Darling propose doing to get us out of this problem? Nothing.
The proposed 50% tax rate for the rich (more on that shortly) serves no purpose other than Brown’s political manoeuvres. Even on the Treasury’s optimistic assumptions it will raise only £1.8 billion per year, a trivial 1% of the deficit.
No, the only thing he can do is fiddle with the figures. By increasing his estimate of long-term growth, claiming that he expects the economy to grow by 3.25% per year after next year, Darling was able to say that the public accounts would eventually be brought back into line. But that growth level looks unrealistic; in 2002, Gordon Brown’s estimate of long-term growth was just 1.75%. Have things really got so much better now?
So we are faced with deficits for the foreseeable future. Over the next five years the government plans to borrow more than £700 billion. Anyone who intends to stay in the UK after that is going to have to pay for this folly.