Bill Carmichael: The only way back to growth

WELCOME to 2011 – a year of higher taxes, increased unemployment, higher inflation and a stagnating economy.

To add to the gloom Mervyn King, the Bank of England Governor, announced this week that families face the biggest squeeze on incomes since the 1920s. Unfortunately, this is probably not an exaggeration. Statistics already demonstrate that household incomes at the end of last year were lower than they were five years ago.

It certainly isn't a cheerful picture.

But for shadow Chancellor Ed Balls to blame the coalition government and pose as our economic saviour takes brass neck of the highest order.

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Balls, along with his mentor, Gordon Brown, was the chief architect of the profligate and unsustainable boom and bust policies that got us into the current mess in the first place. If he wants to know who is responsible for our current economic woes he should take a long hard look in the mirror.

The Morley and Outwood MP made an ass of himself this week when he attempted to blame the shock 0.5 per cent contraction in the economy on the Government's spending cuts and the increase in VAT.

Wiser heads quickly pointed out that the cuts had yet to be imposed and could not, therefore, affect last quarter's figures, and a VAT increase in January would boost spending in December, not depress it.

So much for Balls being an economic whizz kid.

And what is his solution to the economic crisis he helped create? Why, just keep spending, borrowing and adding to the already terrifying levels of debt, that's what.

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Sure, that'll work. After all, throwing money at the problem worked fantastically well for the last Labour government didn't it?

No, I'm afraid there really is no alternative to the current austerity measures. We have to bring some sanity back to our nation's finances and stop spending borrowed cash like a drunken sailor on shore leave. We can only hope this painful period is over as quickly as possible.

Labour is dead right in one way, however, when it says that the only way to deal permanently with the deficit is through economic growth, but, unfortunately, it has absolutely no idea of how to get there.

There is one sure-fire, proven way to stimulate economic growth – lower taxes. As soon as taxes are lowered, the economy receives a tremendous boost. Citizens see it is worth their while to work harder, launch businesses, buy goods and services and employ people.

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Instead of being hoovered up by wasteful and bureaucratic government structures, the wealth that is created is spent in local communities, helping spread the benefits of prosperity to all. The public sector, which sucks the life out of the creative and innovative private sector, has to be hacked right back.

It can be summed up in just four words – smaller government, lower taxes.

A sick joke

Statistics released this week show that only six per cent of the one million people who tried to claim 96 a week sickness benefits over the past two years were actually incapable of working.

Almost four in 10 – some 400,000 people – were found to be fit enough to start work immediately. Another 36 per cent dropped their claims when they were asked to undergo medical tests. Only just over 61,000 were found to be so ill that they couldn't work.

With lead-swinging on this scale, is it any wonder it is widely known as "inva-diddly benefit".