Darling’s Recession Budget
You’ve got to hand it to Alistair Darling. Only this most emollient of politicians could manage to make this Budget seem boring. Yet the content of the speech was, in many ways, explosive. He told the country that British prosperity was, in important respects, as fraudulent as collateralised debt obligation; that the boasts of ‘no more Tory boom and bust’ are a joke; that the economic forecasts he gave only last November were nonsense, and the public finances are deteriorating at a rate never seen before in peacetime. And all with a deadpan face.
Darling announced a rash of measure to steer Britain towards recovery, but the Chancellor’s efforts to offer a little to everyone failed to find approval in most quarters. Indeed, he faced a chorus of disappointment.
Apart from the sheer mess of the economy, the big problem facing Darling was that hopes were perversely high. This was one of the most anticipated Budgets in decades, with commentators on both the left and right urging dramatic action. Be bold Chancellor, you could be our next Lloyd George,” said Polly Toynbee in The Guardian. “Give voters a rock-solid reminder of what Labour is for”. The Times was equally convinced that that Chancellor should follow the advice of President Obama’s chief to staff, Rahm Emanuel, and not let “a serious crisis to go to waste”.
With the weight of the public finances endangering the nation’s prospects for recovery, the Budget presented a perfect opportunity for ministers to change course away from ever-rising public expenditure and to profoundly change the shape of the government. In the event, the Chancellor did announce a cut in public service spending growth: it will fall from 1.1%, to 0.7% in 2001-12. He also announced £15bn in “efficiency savings”. But this is a little more than tinkering around the edges, £15bn over five years represents only a fraction of Britain’s annual interest payments on its public debt. Far more profound changes are needed in a public sector that has grown out of all proportions to Britain’s ability to pay.
Darling’s Budget task was daunting enough to evoke pity. He had to reassure investors that Britain isn’t going bust, but to do so without taking too much money from the beleaguered taxpayer, or out of and economy in deep recession. His response was a flight into fantasy. There was no bust Britain, he seemed to say, only a temporarily tripped-up Britain, which would soon be swanning along again. He offered no meaningful explanation of how the deficit would be shrunk. He acted like a fantasist – presenting the terrible news and pretending it didn’t matter. Britain’s black hole required an adult response. We didn’t get it.