Yesterday I tried to make it easy for the Chancellor. I asked him a question I have asked before, thinking this time he might have thought about it and have an answer to hand. I should have known better.
I asked what limits he thought there needed to be to public borrowing in current conditions, to avoid any danger of gilt market strikes, trips to the IMF or national bankruptcy. He treated me to a lecture about how we have to borrow during difficult times, as if I disagreed with that or thought we could somehow avoid some borrowing. He failed to answer a civil question with a helpful answer. Doesn’t he realise the question I asked is the one many people need to know the answer to? Markets need to know there is a way out of excessive borrowing. They need to know there are some limits and some startegy to keep the public finances in order.
We used to have a control framework. It wasn’t a very good one, and it was subject to political change, but for several years it seemed to work and the government got away with it. There was a control on how much the running deficit could be each year, and a control on the total stock of debt as a proportion of naitonal income. In theory the government only borrowed for investment, not for day to day expenses, over a cycle as a whole.
Neither of these two controls now operate. The government is flying blind, feels free to borrow and print as much as they like, refuses to come clean about how much or when they might slow down. Meanwhile they add more and more debt onto the groaning taxpayer, as they collect bad banks and bad loan portfolios for the taxpayer to bail out or guarantee.
I urge the Chancellor to think again and to drop me a line to answer the big unanswered question. Commentators are filling in their own sums, and some of them are going to be scary, in the absence of credible official figures.
The media should start reading what the government does put out. Instead of using the £78 billion Chancellor’s figure for 2008-9 borrowing, they should use the published Treasury figure of borrowing in excess of £150 billion, well above 10% of national Income.
In the first few years of this government Prudence was at hand to offer some restraint. Mr Brown divorced her, and Mr Darling claims never to have met her. One day he will wish he had. She is a great lady who may take her revenge.