Earlier this summer the Chancellor brought forward his emergency budget and outlined the scale of the cuts that were having to be made to public spending in order to reduce the government’s deficit, currently standing at £155 billion. That was an exercise which was like drawing the lines on a picture. Last Wednesday he returned to the Commons to fill in the rest of the picture and to add the colours.
The unfortunate fact is that this government inherited the largest peacetime deficit in UK history. To continue spending at current levels is unsustainable. We are spending £120 million of taxpayer’s money on interest repayments every day. £1 in every £4 the government spends has been borrowed. That simply cannot be wished away.
Even as someone who is persuaded of the necessity of the measures outlined by the Chancellor, it was still sobering to hear estimates of the number of redundancies we are likely to see across the public sector over this parliament. Listening to the commentators, you could be forgiven for thinking that people were going to turn up at the office the next day to find a P45 on their desk. That is, of course, not the case and most of the job reductions will be accounted for by a combination of retirements, voluntary redundancies and people leaving the public sector as part of their career. It is also still the case that more needs to be done to ensure that those who did most to land us in the mess should pay towards getting us out of it. The banking sector still, in some parts, seems to think it is business as usual. The new banking levy, which will raise £2.5bn every year, is a welcome move in this respect but will be, I hope, only a start with more to come.
In among the doom and gloom there was still some good news. We should not forget that government still spends £700 billion every year and it is possible to do some good with that sort of money! As part of the coalition agreement the government committed itself to protecting important benefits for older people. This is a pledge that was delivered on last week when the Chancellor confirmed that Labour’s temporary increases in cold weather payments would be made permanent.
Also in the coalition agreement was the promise of action to compensate adequately those who lost money after the collapse of Equitable Life. The failure of the last government to act on the recommendations of the parliamentary ombudsman’s report into this sorry episode was shameful. The announcement of details of a £1.5bn compensation scheme at last offers the prospect of meaningful payments.
People often ask me “can we be certain that it will work?” The honest answer is that we cannot. These decisions in life do not come with guarantees. The only certainty is that doing nothing is not an option. Either we tackle this problem or our children will tackle a significantly larger one.
Alistair Carmichael MP