Teresa Hunter: Here's hoping for a happy ending to Darling's fairytale

Published on Saturday 12 December 2009 13:31

ONCE upon a time there was a poor Chancellor, sorry Miller, who was so desperate to win favour with the markets, I mean the King, that he boasted his daughter could spin straw into gold.

Just like that Miller, you have to give Chancellor Alistair Darling top marks for initiative when he delivered his Pre-Budget Report. the Brothers Grimm would have been proud.

Taxpayers though may be less impressed. We are being asked to spin straw into gold. The nation is bankrupt yet we continue to spend 247 million more per day on public services than we raise in taxes. Not only will that have to stop, but at some point the funny money holding up the economy will also be taken away.

People understand the scale of the threat all this involves and are ready to make sacrifices. Yet adding 1 per cent to the National Insurance of most staff and their employers is about the worst way to proceed. If Government wanted to hike taxes, it should have been honest and added 2p to income tax. To place a new burden on employers is a blunder on a par with returning to the gold standard.

To add salt to the wound, these extra taxes will do nothing to reduce debt but merely pay for more profligacy. Here though I have some sympathy with the Chancellor. He has been criticised for increasing pensions by roughly 2 per week. Similarly, child benefit edges up a 20p per child. How could he possibly have done less?

The Miller's daughter is saved temporarily by the mad, evil goblin Rumpelstiltskin, but he demands she sacrifice her first born child; exactly the pact we have made with the markets. They will bail us out, but our children and their children will pay the price.

Those familiar with the story will know that the moral of Rumpelstiltskin is you have to name your demon, and only when you name and know him, can you defeat him.

The Miller's daughter is told she can keep her baby, if she can uncover the evil goblin's name; which for the sake of a happy ending she does.

So where do we find our happy ending? Of course, Darling's speech was little more than festive fun. There will be an election before much of this can be implemented. Talk of a March poll is growing.

And so the playground name-calling has begun, with the decisive knockout battle coming over how quickly we should cut spending and pay down the deficit.

But where's the evidence? Labour says we should wait, and the Conservatives argue we can't afford to. Who is right?

I haven't a clue. Neither do a majority of the electorate, or indeed most parliamentarians. But I do know that getting this monumental decision wrong either way could prove catastrophic. Placing fingers in the wind, or drawing up policy because they "feel it in their bones" is as purposeful in rescuing our economy as locking the Miller's daughter in a room and telling her to spin gold.

We must name and nail this demon of debt, and doing so is hardly rocket science. We need some sort of commission of cross-party parliamentarians, leading economists and business people from all sides of the argument, served by a platoon of statisticians. These should be locked in a room until they have hammered out every argument and calculated every possible model and outcome. We let them out when they have come up with the most exhaustively researched and best answer available.

The other demons we need to name and shame are the bits of the welfare state we can live without. It makes no sense to pay state pensions to millionaires, and child benefit to wealthy families.

Yet I am of a generation brought up to believe in universal benefits. If I had to decide between protecting these, and the many other activities the state has become entangled with, I'd happily cut the rest of them away in a heart beat.

Kiss loans goodbye

Mortgage lending in October grew strongly with 55,000 properties changing hands, the highest figure since 2007. But if you fancy celebrating with a quick kiss under the mistletoe I'd hold fire for a bit.

House prices have not turned out to be the disaster in 2009 that most were predicting, yet when the figures finally come in we will be lucky to have matched 2008's catastrophically low 516,000 transactions. With two of the quietest months of the year to go we have only managed 403,000. The Chancellor says the banks are lending. Oh no they're not!