As the government releases plans for a £300 million fuel subsidy for the poorest households, I cannot help but wonder if it can afford to keep dishing out money to stay popular. The national debt has been steadily rising since 2002: one of the peak years in the economy’s boom. Instead of tightening fiscal policy when he had a chance, Gordon Brown’s ‘miracle economy’ kept taxes low, and debt rising, which means the government has no money left during the tough times ahead. One of Gordon Brown’s golden rules of national debt has already been broken: we have a debt of over 40%, while borrowing £2.7bn back in May to clear up the 10p tax band saga really pushed his ‘borrowing should only be used to pay for investment’ rule to the limit.
However, Alistair Darling is still announcing massive financial gifts to the public, presumably in an attempt to slow Labour’s tumble in the polls. This is not what the economy needs, and not what government finances can handle. The government must take a harder line and keep its accounts in order, and reduce welfare and public sector spending As unemployment rises welfare payouts will grow and tax revenue will shrink: £300 million payouts for rising fuel bills are simply not a sustainable way of clawing back some popularity. Brown must realise that he must be ‘fair' to future generations and not borrow to splurge on this generation of voters at the expense of the next’. It may not be popular, but it is what the economy needs.