The Chancellor is first and foremost the guardian of the people's money. But during the 1990s the national debt has doubled. This year alone the taxpayer will pay out 25 billion in interest payments on debt, more than we spend on schools. Public finances must be sustainable over the long term. If they are not then it is the poor, the elderly, and those on fixed incomes who depend on public services that will suffer most. So, as with our approach to monetary policy, so in fiscal policy: we will now establish clear rules, a new discipline, openness, and accountability.I have this image of Gordon Brown arriving back from his trip to the sunny climes of South America telling the waiting media: "Crisis? What crisis?"
My first rule - the golden rule - ensures that over the economic cycle the Government will borrow only to invest and that current spending will be met from taxation. My second rule is that, as a proportion of national income, public debt will be held at a prudent and stable level over the economic cycle. And to implement these rules, I am announcing today a five year deficit reduction plan.
Together, these rules and this plan will ensure a historic break from the short-termism and expediency that have characterised the recent fiscal policies of our country. As with our monetary policy, our fiscal policy will be all the more credible for being open and accountable.
Any Budget seeking to achieve high and stable levels of growth and employment must be guided by the true state of the public finances, but also by a clear assessment of the state of the economy. And to that I will now turn.
We have seen a rapid growth of consumer spending, of nearly 4 per cent over the last year. With the prospect of further windfalls' from the building societies, consumer spending is likely to remain strong. There has been a sharp rise of 7 to 11% in house prices, with even higher rises in the South East.
The growth of average earnings has accelerated to 4.5% a year. The rate of broad money growth has been, around 10% for a year. These increases in consumer spending, earnings, and money supply are continuing even as industrial production and manufacturing output have been recovering only slowly.
It is essential that consumer spending is underpinned by investment and industrial growth. Britain cannot afford a recurrence of the all too familiar pattern of previous recoveries: accelerating consumer spending and borrowing side by side with skills shortages, capacity constraints, increased imports and rising inflation.
Already there are warning signs that this pattern could be repeated. In similar circumstances some of my predecessors have ignored these signs while others have deluded themselves into believing that growth, however unbalanced, was evidence of their success. I will not ignore the warning signs and I will not repeat past mistakes.
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Thursday, March 26, 2009
Gordon With Hindsight
This is an excerpt from Gordon Brown's first budget speech in 1997. It makes rather interesting reading in retrospect...
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You know something I'm begining to think this all irrelevant.
There's going to "political snap" in the next year. It's not that what New Labour promised was true and the reality has failed. It's that what they said wasn't true and reality is now going to crash into the voters.
New Labour promised to give them politically correct services in exchange for cash. They have not only failed to deliver services, not only taken their cash, but have now put them in debt. They have failed because they delivered in a politically correct manner - and that can't be done. Political correctness is a corrupt idea - that ends in contradiction and failure.
The large scale of Government spending will have to be rolled back by 20% just to stabilise the countries finances. The Conservatives will now have to reform the public sector in the same way they reformed private sector in the 1980s. The scale of our debts mean they can't escape from the public demanding this. We must have a sustainable economy.
New Labour's pretence is about to be smashed by the internet. The internet is this fabulous communication medium that the parties cannot use but the people can.
Political parties have had a cosy relationship with the media to distribute their message. The media control the criticism and when they will fire it. Today the people can all talk to each other simply by promoting a video (e.g. Hannan) or a website vote (e.g. petrol) - we can see what each other thinks we don't need a pollster or party to tell us. We don't need the media to confirm what is right.
The shit isn't so much going to hit the fan as fan are going to be thrown into the shit.
The Prime Mentalist
"My first rule, the pink rule, is that I will remove all controls on the banking industry and lower interest rates to encourage a consumer fuelled boom, i which I can plough huge amounts of cash in an increasing non-productive public sector.
My second rule, the green rule, is to antagonise Tony by becoming deliberately obstructive to his policies because he didn't let me become prime mentalist in 1997.
My third rule, the brown rule, is when I'm an unelected prime mentalist with one of the largest deficits the UK has ever seen with nothing to show for it, I will pretend it's the USA's fault and get Merv to print out a load of money so that at least I can survive until 2010 and not be the most hated Prime Mentalist ever in the UK"
Is that right?
wv: redbules - lol
Alas poor Prudence we knew her well...
Lets face it he's now just making it up as he goes along ( or flies around this week ).
It started in London with fiscal stimulus as everyone except the evil Tories agrees, by Brussels it was for regulating the Anglo-Saxon banking system - ie selling out your country to the French, New York was - well there are other ways you know like our reducing interest rates to zero ( independent BoE ? !!) and printing money.
No doubt he'll give the Falklands away in South America.
It really is time for Labour MPs to put their country before the second home expense accounts and bring him down, for the sake of our country.
By the way Brown's underlying problem has always been his inability to understand(or at least admit) that all spending isn't investment.
This year alone the taxpayer will pay out 25 billion in interest payments on debt, more than we spend on schools.
To put in current context, as John Redwood has put it: if just 2% of bank assets covered by the govnt's Asset Protection Scheme are lost this is equivalent to the education budget. (In fact banks bear first losses up to 6% of assets protected.) So 8% total losses would reduce us to Taleban-style education. Perhaps.
D'you know what? He really is the most duplicitous deceitful deluded twat that ever lived in No 11 and No. 10 isn't he?
What I and my family and friends cannot understand is how one man, unelected and unwanted as Prime Minister can make decisions which,in effect, will almost bankrupt this Country. Without any meaningful debate in Parliament whatsoever.
This cannot be allowed to happen again.
I do hope that following the general election, the official opposition will be the Lib Dems and that we will have MP's from other parties elected who will give an alternate voice to the EU loving club already there.
I hope the Labour Party is reduced to twenty or thirty MP's.
Brown must not get a seat in the Lords. That is why I do hope Cameron will announce that the Conservatives will ensure we have a fully elected second chamber within two years.
shocking some of the stuff the mainstream media chose to ignore regarding browns old speeches.
i have a transcript of one he made in opposition to the msf union, which i plan to blog on tomorrow, and in terms of now, its dynamite.
not only does he attack the tories of rising unemployment in the manufacturing industry and zero inflation, but he opens with the line "brothers and sisters"!!
but i know that no press will go near it. same as the hannan thing. they simply dont want to know. and thats why they are being shafted by the blogosphere
Can anyone tell me a 'prudent and stable' level of debt other than zero?
It is not prudent to be in debt unless one a) has to be and b) has a plan to pay it back.
Mr Javelin - your first sentence summed up my thoughts exactly.
The petrol protests caught HMG out completely last time. This time I suspect the plod will be well prepared, and I'm genuinley concerned at how merely taking their picture is now an offence.
Coincidently, yesterday my council put up a sign next to my front garden saying "Surveillance Cameras Operate In This Area".
I live in the middle of nowhere FFS - no lights, no buses, no pavement, no postbox or pub - but I do get to be watched.
What is going on?
*off to rant elsewhere*
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