Leading article: Mr Darling must make the best of very limited options

Constraints on the public finances may not necessarily be a bad thing

Share
Related Topics

A little heavy-handed, a little obvious, perhaps, but the Prime Minister's call for a Commons vote next week on the vexed question of MPs' expenses was a canny curtain-raiser for today's Budget. It's as well to put your own house in order before trying to line up the voting public behind austerity measures that are bound to inflict pain on the country at large.

If, by July when the details of all MPs' expenses are released, sweeping reform is already on the statute book, the public outcry will be less damaging to the Government than it might have been. MPs, of all parties, with small majorities will still be at risk if voters judge them to have played fast and loose with taxpayers' money, but at least a measure of confidence in Parliament will be restored. Or it will be if the Prime Minister can make the reform happen.

Making things happen will also be crucial to the success, or not, of today's Budget. The illusion of sound management that Gordon Brown liked to create in his years as Chancellor is not an option for Alistair Darling today. He has to be concrete in his proposals, realistic and persuasive. This is not only because of the depressed and embittered mood that pervades the country, and the widespread scepticism of politicians, it is because this is essentially an election budget. It is the last chance the Government has before the election to set objectives and meet them.

Measures designed for three, four, even five years hence will doubtless feature in Mr Darling's speech; the Government must convince financiers and international markets that it has at least a medium-term strategy. It needs to demonstrate that it is, and will remain, credit-worthy. But the Chancellor also has to offer something for the here and now. Over one year, the British public has been plunged from confidence that its economy was a world-beater into a state of acute anxiety, where the old plagues of indebtedness and unemployment are back, and demon inflation seems to lurk just around the corner.

Yes, this is a crisis that grips the whole Western world – and whose reverberations have rocked many more countries besides. But it is also one in which Britain looks less well-equipped than we were led to believe to ride out the storm unscathed. Even if the tiny hints of revival turn out to be real, it would be highly premature to bank on them. At an estimated 11 per cent of GDP, and projected to grow further, the gap in the public finances threatens our financial health into the next generation.

Mr Darling's task is at once complicated and simplified by the emergency action already taken. Interest rates have been reduced as far as they can go; banks have been bailed out; loans guaranteed; the pound devalued, and money has started to be pumped into the economy. The tax rises for high-earners, announced in the Pre-Budget Report last November, are not due to take effect until next year, and their efficacy has anyway been questioned. The Chancellor's further options look restricted in the extreme.

The customary Budget leaks have focused on housing, public sector savings and credit guarantees for business. Of all ideas floated, that of a new bank to assist innovation and start-ups is the most imaginative, and the one that sends the most positive message about the future.

The measures mooted to boost housing owe much to the Liberal Democrats' proposals for buying up unsold or incomplete housing and boosting the social sector – but they are none the worse for that. With unemployment inexorably rising, social housing in many places in desperately short supply, and construction almost at a standstill for want of credit, help for this sector looks like a sensible investment. If handled innovatively, both projects could also help advance the green agenda.

Big savings from the public sector will be essential; but we doubt whether the "efficiency" savings proposed will suffice. Efficiency often means that front-line services suffer to save questionable layers of management. With so many services now delegated in some way, the time is surely ripe for a review of exactly what central government does. We suspect that the NHS, in particular, which has received so much public money, could use it far more effectively.

This may not be the time to address the disparity between public and private sector pensions, and the downside to removing higher-rate tax relief on pension contributions is that the gap would widen further. A more productive approach might be to offer some encouragement to savers, many of them pensioners, who have been disproportionately penalised for prudence.

Mr Darling has his work cut out. But with his options so limited and the public mood so gloomy, this could be, as Barack Obama's chief of staff memorably put it, a crisis too good to waste. With the election believed, in many quarters, to be already lost, perhaps he could surprise us – pleasantly – with some radicalism and some hope.

React Now

Latest stories from i100
SPONSORED FEATURES
iJobs Job Widget
iJobs General

Recruitment Genius: Technical Support Analyst

£20000 - £22000 per annum: Recruitment Genius: One of the UK's leading indepen...

Recruitment Genius: Linux Systems Administrator

£26000 - £35000 per annum: Recruitment Genius: A Systems Administrator is requ...

Recruitment Genius: ICT Infrastructure Manager

£27000 - £32000 per annum: Recruitment Genius: This Edinburgh city centre Scho...

SThree: Trainee Recruitment Consulant

£20000 - £25000 per annum + competitive: SThree: SThree are a global FTSE 250...

Day In a Page

Read Next
Britain's Prince William, Duke of Cambridge, arrives with his son Prince George at the Lindo Wing to visit his wife and newborn daughter at St. Mary's Hospital in Paddington, west London, Britain, 02 May 2015  

Prince George's £18,000 birthday gift speaks volumes about Britain's widening wealth inequality

Olivia Acland
Nicky Clarke has criticised the Duchess of Cambridge for having grey hair  

Letting one’s hair turn grey would be the most subversive Royal act

Rosie Millard
Mullah Omar, creator of the Taliban, is dead... for the fourth time

Mullah Omar, creator of the Taliban, is dead... again

I was once told that intelligence services declare their enemies dead to provoke them into popping up their heads and revealing their location, says Robert Fisk
Margaret Attwood on climate change: 'Time is running out for our fragile, Goldilocks planet'

Margaret Attwood on climate change

The author looks back on what she wrote about oil in 2009, and reflects on how the conversation has changed in a mere six years
New Dr Seuss manuscript discovered: What Pet Should I Get? goes on sale this week

New Dr Seuss manuscript discovered

What Pet Should I Get? goes on sale this week
Oculus Rift and the lonely cartoon hedgehog who could become the first ever virtual reality movie star

The cartoon hedgehog leading the way into a whole new reality

Virtual reality is the 'next chapter' of entertainment. Tim Walker gives it a try
Ants have unique ability to switch between individual and collective action, says study

Secrets of ants' teamwork revealed

The insects have an almost unique ability to switch between individual and collective action
Donovan interview: The singer is releasing a greatest hits album to mark his 50th year in folk

Donovan marks his 50th year in folk

The singer tells Nick Duerden about receiving death threats, why the world is 'mentally ill', and how he can write a song about anything, from ecology to crumpets
Let's Race simulator: Ultra-realistic technology recreates thrill of the Formula One circuit

Simulator recreates thrill of F1 circuit

Rory Buckeridge gets behind the wheel and explains how it works
Twitter accused of 'Facebookisation' over plans to overhaul reverse-chronological timeline

Twitter accused of 'Facebookisation'

Facebook exasperates its users by deciding which posts they can and can’t see. So why has Twitter announced plans to do the same?
Jane Birkin asks Hermès to rename bag - but what else could the fashion house call it?

Jane Birkin asks Hermès to rename bag

The star was shocked by a Peta investigation into the exotic skins trade
10 best waterproof mascaras

Whatever the weather: 10 best waterproof mascaras

We found lash-enhancing beauties that won’t budge no matter what you throw at them
Diego Costa biography: Chelsea striker's route to the top - from those who shared his journey

Diego Costa: I go to war. You come with me...

Chelsea's rampaging striker had to fight his way from a poor city in Brazil to life at the top of the Premier League. A new book speaks to those who shared his journey
Ashes 2015: England show the mettle to strike back hard in third Test

England show the mettle to strike back hard in third Test

The biggest problem facing them in Birmingham was the recovery of the zeitgeist that drained so quickly under the weight of Australian runs at Lord's, says Kevin Garside
Women's Open 2015: Charley Hull - 'I know I'm a good golfer but I'm also just a person'

Charley Hull: 'I know I'm a good golfer but I'm also just a person'

British teen keeps her feet on ground ahead of Women's Open
Turkey's conflict with Kurdish guerrillas in Iraq can benefit Isis in Syria

Turkey's conflict with Kurdish guerrillas in Iraq can benefit Isis in Syria

Turkish President Erdogan could benefit politically from the targeting of the PKK, says Patrick Cockburn
Yvette Cooper: Our choice is years of Tory rule under Jeremy Corbyn or a return to a Labour government

Our choice is years of Tory rule under Corbyn or a return to a Labour government

Yvette Cooper urged Labour members to 'get serious' about the next general election rather than become 'a protest movement'