LABOUR have been cock-a-hoop this week over the decision by the ratings agency Moody’s to strip the UK of its cherished triple A credit rating.
You have to wonder about a political party that sees a piece of such awful bad news, one that is so potentially damaging to our country, as a reason for unbridled celebration. I suppose that if people start starving on the streets, the Left will be absolutely delighted. But in some ways Labour’s unseemly gloating is only to be expected.
For almost three years, George Osborne made retaining the top AAA credit rating the key indicator of success of his Chancellorship. So to be ejected from the elite of gold-plated economies in such humiliating circumstances is a blow from which he, and Prime Minister David Cameron, may never recover.
I’m no fan of Osborne; rather than becoming the radical tax-cutting chancellor whom we hoped would take urgent action to promote much-needed growth, he has proved himself to be wedded to the dreary orthodoxy of ever increasing taxes.
In stark contrast to the revolutionary growth boosting chancellors of the Thatcher era, such as Nigel Lawson or Geoffrey Howe, Osborne will be best remembered for endlessly seeking ingenious new ways of relieving the citizenry of their hard-earned cash to feed the insatiable maw of the state.
From the granny tax to the caravan tax, charity tax, cathedral tax and onto the pasty tax – Osborne’s tenure at Number 11 has so far been a tale of tax, tax, and yet more tax. You would think that politicians would have realised that this isn’t going to work. If raising taxes promoted national prosperity, we’d all be millionaires by now.
But before we join in Labour’s jeering of Osborne it is worth pausing for a moment to examine Moody’s reasons for downgrading the UK. Moody’s did not say that the Government was cutting “too far and too fast” as Ed Balls would have it. In fact, the agency identified the real problem is that there have not been any meaningful cuts in government spending at all.
And here is the central myth about the economy – that government spending is being cut. It isn’t. Despite what you might hear on the BBC about “drastic” spending cuts, government spending, borrowing and debt are all increasing, not declining.
State expenditure, which was £644bn in 2010/11, will rocket to £756bn by 2017. Our main hope is that the shock of losing the triple A rating may persuade Osborne to try something radical in his budget, which is just three weeks away.
What is needed are massive tax cuts to stimulate the wealth-creating sectors and finally spark some life into a moribund economy. This should be funded by real reductions in state spending – particularly in the benefits bill, which has soared over recent years. Instead of constantly talking about making cuts, and taking the flak for it, Osborne should take a hint from the old Nike advert and “just do it”.
Not so smart
I WAS having a beer in the pub this week with a couple of normally entertaining companions when, unusually for us, the conversation began to lag.
It wasn’t hard to deduce the reason why – both my friends spent about 90 per cent of their time peering at their smartphones, jabbing and swiping away in silence.
In fact the pub was pretty quiet because most of the customers were doing precisely the same thing. Digital communications have become such an all encompassing obsession that people don’t actually talk to each other any more. It is what a colleague called “digital hypnosis”.
Smartphones are a marvellous tool but can I make a plea? Just once in a while switch the sodding thing off.