Matthew Sinclair: Beleaguered Britain can't afford to carry on borrowing

There is no way the Government can go on borrowing the best part of half a billion pounds a day, spending more than 5 for every 4 they raise in taxes. We are already being warned by the ratings agencies that our credit rating is under threat. If we lose our AAA rating, this will make the cost of servicing the debt go up and the problem of dealing with high borrowing become much harder.

The parties need to set out a credible plan to get the public finances under control. Unfortunately, that's one thing we almost certainly won't get from the Chancellor of the Exchequer in his Budget Speech.

Some people argue that we need to keep borrowing in order to keep the economy on track. The reality is that businesses and families know a crunch is coming and the threat of tax rises tomorrow to pay for today's deficit is undermining confidence and economic growth.

That is probably why our exports are doing so badly, and the trade gap has widened from 2.6bn to 3.8bn despite a weak pound. Manufacturers will be wary of investing in expanded production if they think they'll be clobbered with higher taxes on the returns to that investment.

The deficit is best dealt with by cuts in spending, not increases in taxation. We have already had a decade of tax rises, which have put up the price of everything from driving to work to taking a much-needed holiday. Increased National Insurance rates are already making it harder for people to find a job. Further tax rises will fit into one of two categories. They will either be politically satisfying but economically disastrous attempts to "bash the rich" that reduce prosperity and employment without raising much money. Or they will hit ordinary families and increase poverty and dependence on

state benefits.

So the question is how can we cut spending? That's the subject of the upcoming book from the TaxPayers' Alliance. At the moment, the plans that politicians have laid out are distinctly inadequate. It isn't just that they haven't shown they can find cuts on the tens of billions scale needed.

They are also simultaneously not proposing cuts that are broad enough or specific enough.

Entire areas of spending have been guaranteed protection from cuts, like the NHS and international development. The health budget has more than doubled over the last decade, to more than 110bn a year, and there is plenty of fat to cut, like the bloated bureaucracy away from the front-line. International development spending is set to be one of the fastest growing budgets and just a one-year freeze, which seems a fair way for the Department for International Development to do its bit, would save 862m.

At the same time, politicians are not identifying specific programmes and organisations to abolish entirely. Doing so is important as there are huge fixed costs to running Britain's 1,148 quangos. Outright abolition of unessential organisations and programmes is often the only way of really getting to grips with the overheads. In our new book, we've recommended a range of bodies for the chop, from the Carbon Trust to the School Food Trust. And programmes like the Bus Service

Operator's Grant and Preventing Violent Extremism grants.

As well as building up a programme of potential cuts, the Government should also be thinking about other things they can do to build the case for cuts. They can publish more detailed spending data so that ordinary people can see how their money is spent.

We have a right to know and that will mean more people can get involved finding potential savings. They also need to reform expensive climate change policies. They should get experts in from the private sector to be "tireless bloodhounds" working to root out government inefficiency, as the Grace Commission were asked to by President Reagan in the United States. But even the best top-down efficiency drive isn't enough. Local services need to be given more flexibility, and be made accountable to local people, so that they can respond to conditions in their area.

That's the kind of programme that can get the public finances and the economy back on track. Unfortunately, we won't get that kind of plan in Alistair Darling's speech. Instead, we'll get electioneering and an attempt to persuade the public that it is responsible to put the issue off for a year.

None of the parties are yet proposing a credible way forward. They need to get serious and show that they can address the big issues; that they are in politics for more than expenses claims and photo opportunities.

Matthew Sinclair is the research director at the TaxPayers' Alliance and author of the new book How to cut public spending (and still win an election) published by Biteback Publishing.