Having done a bit of jiggery-pokery before the election with his capital expenditure figures, Gordon Brown is at it again.
He outlined his plans Tuesday to the House of Commons Treasury select committee. First, he’s going to set the spending levels for each and every government department for the next 5 years meaning that whoever succeeds him as Chancellor is going to have had the job’s biggest decisions already taken for them.
But the second is the really devious one. According to Gordon ‘Prudence’ Brown sound financial management means that, over an economic cycle, the sum of all the deficits and surpluses should cancel each other out. Now, the economy he inherited from the last Conservative government has been doing pretty well but, obviously, nothing can keep up forever with the Labour tax-and-spend machine. We’re running out of money and taxes must rise. So Brown is going to convince himself (and only himself because the rest of us aren’t likely to fall for it) that the cycle he’s been referring to all this time is actually not the one he first thought it was. He’s convinced himself it’s a different - better - one:
He said he now believes the cycle started in 1997-98, not 1999-2000 - a move which gives another £13 billion of leeway. The cycle is due to end in 2006, and economists predicted that he would miss his target.
Well he won’t be missing it now, will he? The move was greeted with seething fury on the select committee:
Susan Kramer, a Liberal Democrat, said there is a “perception that the government is marking its own exam papers”.
Okay, not quite seething…
Independent commentators in The Guardian put it a little more starkly:
“The change in the cycle makes it slightly easier to meet the rule but as soon as you fiddle around with the rules, the credibility benefits of having those rules is rather less,” said John Hawkworth, fiscal expert at PricewaterhouseCoopers.
The CBI’s chief economist, Ian McCafferty, said: “The announcement only serves to highlight the sharp contrast between monetary policy, which is well-understood and appears genuinely free of political involvement, and fiscal policy, where the Treasury is able to act as both judge and jury.”
Which means really we’re not solving our problems; rather, we’re simply storing them for a slightly later date. And when the economy falters - as it appears to be doing - these problems will come home to roost and then we’ll have to deal with them at a time when we’re least able to.
Always nice to have something to look forward to, eh?
