David Prosser: Darling faces another row with Brown


Outlook Be careful what you wish for. Alistair Darling will be delighted that government borrowing now looks set to come in well below the forecasts he made three months ago in his pre-Budget report – such revisions have generally been the other way round with this Government in recent times. Still, now the Chancellor has a tricky decision to make: does he spend his windfall next week on Budget sweeteners for swing voters, or leave it in the bank as a downpayment on deficit reduction?

It is not too difficult to imagine what his boss will want. Gordon Brown, who in a land that time has almost forgotten, angered many in his own party with a succession of penny-pinching Budgets, abandoned his claim to prudence well before moving from No 11 Downing Street to No 10. And since becoming Prime Minister, Mr Brown has pressured his Chancellor into a number of Budget announcements that Mr Darling did not want to make.

Indeed, within months of becoming Prime Minister in 2007, Mr Brown – panicked after calling off plans for a snap election – forced Mr Darling to come up with a contrived new policy on inheritance tax in order to head off a Tory initiative on the same duty that he thought would be popular. Ever since then, Mr Darling's instincts have been to be more open about the fear of recession and the need for cuts, while Mr Brown has wanted to be more guarded. To some extent, this game of poker is played out between every Chancellor and his Prime Minister. But it is difficult to think of a Budget where the stakes have been so high.

All rational argument suggests that the Chancellor must leave his £15bn unspent – it is not extra money in the Treasury coffers but a smaller borrowing requirement in the gilts market. And when you ask your bank for an overdraft facility and then discover you do not need to use it in its entirety, you do not spend the money anyway (not unless you are grossly irresponsible).

The public finances we know, are not to be compared to a household budget. During tough times it is right for a Government to borrow in order to intervene in the economy where the private sector is unable to get us out of trouble. This is the argument about jeopardising the recovery by withdrawing state support from the economy too quickly.

But the Chancellor has already offered that support – to offer more now, particularly if it is flagrantly handed out with electoral success in mind, would send out entirely the wrong signals about the Treasury's intent to make good on the promises it has made about reducing borrowing. Mr Darling has resisted the Prime Minister's entreaties before – refusing to give up his Chancellorship in favour of a lesser post – and he should do so again next week.

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