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Matthew Sinclair: How Brown wasted our taxes and our chance to prosper
AS the credit crunch has tightened its grip on the economy and our lives, family budgets have tightened and household bills have soared. With taxes also on the rise, the Government – and Gordon Brown in particular, given his former job as Chancellor – have come in for a lot of flack.
People have been understandably angry that after 10 years of being told "no more boom and bust", and having paid huge amounts of extra taxation, the wheels are now coming off.
Throughout the last year, the Government's constant refrain has been that the Prime Minister has been an excellent economic manager, that the country is in safe hands and – crucially – that Britain is somehow better equipped than any other country to weather the credit crunch thanks to his work.
New research published by the TaxPayers' Alliance reveals that, across dozens of key measures, this is not the case – in fact, Gordon Brown has not only failed to prepare the British economy for these more difficult times, his policies have led to huge amounts of our taxes being wasted in the last decade.
His boasts about the amounts spent neglected to mention the failure to deliver equally large improvements in public services and the long term financial problems he was storing up in the public finances.
One key change driven by Mr Brown has been felt by every person, family and business in the land. The tax take has soared during his time in office. In real terms, taking into account inflation, the amount raised in taxes has risen by a whopping 51 per cent. In the same stroke, the complexity of the tax code has increased to a baffling degree, increasing even the tax man's own admin costs by 75 per cent. If the Revenue has struggled with the absurdly complex tax and tax credits system, imagine how much it has cost businesses to keep pace. Ordinary families are trapped in a bewildering web of benefits, taxes and credits that causes hardship and distress.
As taxes have risen, the growth in disposable income has slowed drastically as people radically cut back their wider spending on the high street. While the Government didn't cause the credit crunch, the vulnerability of the nation to tough times has been accentuated by the fact that people were not as rich as they could – and indeed should – have been.
Just as seriously, Gordon Brown failed to take advantage of strong international economic conditions when he had the chance. For all his rhetoric about low interest and inflation rates, Britain still had higher rates than our European and American competitors. At the same time, our economic growth was slower than it should have been. If we had kept pace with the rate of growth enjoyed by the USA, for example, we would now be 14bn a year wealthier.
Mr Brown's response, of course, is that despite the massive cost of his time in office, he has delivered improvements in public services and provided long term stability in return. Unfortunately this, too, is a misrepresentation of his record.
While no-one can deny that huge amounts have been spent in the public sector, spending a lot of money is not always the same as making a lot of progress. Indeed, even the Labour Party's own manifesto said in 1997: "The myth that the solution to every problem is increased spending has been comprehensively dispelled under the Conservatives.
Spending has risen... It is what money is actually spent on that counts more than how much money is spent."
Wise words indeed, but they don't seem to have been heeded by the man who played such a big part in writing them. Far too much of our money, which could have been in our pockets or put to better use if public services had been properly managed, has simply gone to waste.
It is when we consider the two longest term bills of all, though – public debt and the pension system – that we find the most shocking failures. When you include Northern Rock, PFI , Network Rail and other factors, the public debt stands at a staggering 1,898bn. Pensions are in a similarly sorry state. In the aftermath of Brown's infamous pension tax grab in 1998, private pensions have lost 100bn of sorely needed income and have lost millions of members. Meanwhile, public sector pensions remain gold-plated, heavily subscribed and almost unfunded to the tune of 1,000bn.
Famously, Gordon Brown's watchword was "prudence" and he painted himself a reputation as someone who planned for the long term. Instead of being someone who would safeguard all our financial futures, though, he has taxed us more than we could have imagined, squandered a vast amount of that money and left us all in danger of a debt-ridden, poverty-stricken old age.
Matthew Sinclair is a Policy Analyst at the TaxPayers' Alliance. To join the TPA for free, visit www.taxpayersalliance.com
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