Remember how we taunted Gordon for being a “stealth tax and spend” Chancellor? You cannot say that about the new chap, even if you are on more than £150,000 a year and had a bonus you planned to stash away tax-free in your pension pot.
Under Alistair Darling, Britain is more lightly taxed today than at any time since 1961. So says Carl Emmerson at the Institute for Fiscal Studies, where they really know about these things.
Selwyn Lloyd was Chancellor in 1961 and his gentle way with taxes did him no good. Harold Macmillan sacked him the next year, along with most of the Cabinet. Chancellor Darling cannot expect to last any longer. If by some psephological freak the British electorate fails to sack him next year, a triumphant Gordon most certainly will.
Darling, you see, is a borrow and spend Chancellor, such as we have never had before. He told us on Wednesday as he did last November, that it is “the right thing” to counter the recession with a wall of public spending. That may be so. It has never been tried before.
But his numbers on Wednesday were not the ones he thought of in November. Then he embarked on a £40 billion “stimulus”, the temporary cut in VAT and so on. He topped it up with a relatively modest £5 billion on Wednesday. Meantime, though, collapsing tax revenues and billowing social spending have wrought havoc with his sums. No peacetime Chancellor has borrowed like this.
Mr Emmerson has worked out that February 27, 2032, will be “Freedom from Darling’s Debt Day” when the Government’s finances are back in the not entirely glorious condition in which he inherited them from Gordon. Don’t bother ticking off the days, let alone try thinking of all the things that can go wrong – or even right – along the way.
Darling sketched out a repayment plan stretching over two Parliaments, building up to combined tax increases and spending cuts of £90 billion a year, £2,840 for each British family, by 2017-18. In the first Parliament, 80 per cent would come from cuts in public sector investment and spending and only 20 per cent from tax increases. How the second Parliament would go about it is understandably vague. The IFS reckons the tax increases announced so far will raise only ten per cent of what the Treasury is looking for.
No Government, however hard-nosed can find the other 90 per cent from “efficiency” – not even by doing something brutal to civil service pensions. Cuts that make a difference will be cuts that hurt us all. The same goes for taxes.
The alternative is to give up, let pay and prices rip and inflate the debt away. It has been done before. The experience was not painless.