Over the Brown years the Chancellor/PM has applied an iron law to the Opposition – they must speak no tax cuts and no spending increases. If they venture either Labour reserves the right to list the worst kind of spending cuts to “pay” for them, as no “unfunded” spending increases and tax cuts are allowed.
Gordon Brown has ignored this rule himself, increasing spending massively (often on the wrong things) by increasing borrowing. He has from time to time tried to pay for the increased spending through tax increases, but these are usually unpopular and recently have derailed him This has led to a series of spectacular partial reversals of budget policy (10 p compensation package, cancellation of prospective fuel duty increase, review of VED increase, partial climbdown on CGT etc).
Today we learn of the final irony – he is considering, according to the briefing, a package of unfunded tax reductions!
As if we needed more government debt. Government debt is simply taxation deferred, where we the taxpayers not only have to repay the debt with taxes, but have to pay interest on it as well.
It can make sense for governments to borrow during a downswing or period of slow growth, but isn’t this government already doing that to excess thanks to their mismanagement of the economy and the cycle?
If Gordon at the eleventh hour is looking for some tax cuts they should at least be funded out of reductions in much hated spending, like all the spending on regional government in England, the ID cards computer and the apparatus of his surveillance society.
Meanwhile, the Conservatives will wisely stick to Prudence, and prepare themselves for the shock of just how bad the budget deficit is going to be by this time next year. Does no-one in government care at all about the surge in government borrowing? Do they think the markets will just let them get on with it, without extracting a price?