Brian Monteith: Parties bankrupted by their worthless vows on economy
THE Institute of Fiscal Studies has done the nation a great favour by exposing the poverty of analysis and debate between the main parties on the horrendous state of our country's finances.
The failure of Brown, Cameron and Clegg to fully explain how they will tackle the national public debt has been one of the most striking aspects of the election and deserves the criticism that has been levelled.
It is not as if the IFS is a lone voice in trying to kick-start this most fundamental of discussions. Last week we had the TaxPayers' Alliance Debt Clock arriving outside the Scottish Parliament and the RBS HQ to illustrate not just the scale of the debt (currently at about 780 billion) but how quickly compound interest makes it climb – by the time we vote next week the total will have increased by 6bn.
There have also been statements from Scotland's Auditor General, Robert Black, and the Scottish Government's chief economic adviser, Dr Andrew Goudie, warning of the depth and severity of public spending cuts that will have to be faced as we try to pay for past excesses. The response from politicians has been silence.
In The Scotsman we have also had a string of commentators from different ranges of the political and economic spectrums, such as Michael Fry and Alf Young, explaining just how dire the circumstances are and decrying our politicians' failure to be honest with us.
Yet, despite all of this doom and gloom our leaders continue to pay lip service to the economic reality by offering some "tough decisions" but then going on to offer yet more free services they plainly do not have the money for. Not to be outdone Alex Salmond continues to suggest there is no need to cut anything at all – justifying the past spending (which his party said was not enough when in opposition) and seeking to blame London (a convenient euphemism for England).
The Labour government says it has the answer to the debt crisis because it is committed to halving the deficit. This is a cunning sleight of hand that disguises a lie. Chancellor Alistair Darling is banking on the confusion that many people have between the deficit, which is the annual figure that measures tax receipts against spending, and the debt, which is a cumulative sum of the borrowing to pay for past deficits – with interest growing by the day.
To illustrate this neat little deception, let me provide the government's own estimates that are freely available but which even opposition politicians don't want to talk about. Labour is planning to almost halve the deficit over the next five years from 163bn to 74bn – but over the same period the national debt will rise from nearly 776bn to 1,406bn.
That is 1.4 trillion – a figure even economists find hard to comprehend. Let me help: if you were to stack 1.4 trillion one pound coins on top of each other, they would climb 2,756,250 miles high, which is the same as going to the Moon and back five times.
So, while Labour might be halving the deficit it is allowing the debt to nearly double – and these figures are based upon optimistic rates of economic growth of 3 to 3.5 per cent. The OECD has said is more likely to be 2.2 per cent.
Nor does it take account of the persistent failure in overestimating tax receipts and underestimate unemployment or include the 200bn of public finance initiatives that is debt kept off the balance sheet.
THE national debt is a real problem for every party, for it sucks out of the system taxpayers' money just to pay the interest – which next year will amount to 43bn. That's the nation's defence budget in one gulp. With inflation now rising no-one can seriously expect current interest rates to remain low – thus we can expect the total interest and its debt total to be still higher than the figures anticipate.
Not content with being disingenuous towards the public at large, the political parties are also betraying their supporters by forgetting their core philosophies.
Labour is being dishonest because, as a social democratic party that says it believes in social justice, it should at least be saying how it will deliver the necessary public spending cuts so that it can protect the weakest and most vulnerable. It should explain exactly which cuts it will make and which taxes it will increase so it can reassure the people it says it was founded to protect.
The proposed hike in national insurance is a typical example of how politicians deceive – for while Labour says it will protect the NHS and other public services it has not allocated the NHS, schools and police forces the extra money that they will need to fund their NI increases – amounting to 400 million in the NHS alone.
Aneurin Bevan said "the language of priorities is the religion of socialism" but Gordon Brown's answer is to suggest everything has the same priority and nothing will be sacrificed. This is just not tenable.
The Conservative Party offers no virtue either, as the party of fiscal prudence and low taxes it could be expected to say more about how it will deliver economic growth so we might trade our way out of the debt. Party workers look for such statements in vain. Instead there are only incomplete calculations and a heavy reliance on efficiency savings. This only serves to stretch any belief that Cameron and Osborne know what they are doing.
Indeed, as the IFS points out, the difference the Tory policies will make to Labour's plans for reducing the national debt mountain will only amount to 8bn.
Turning to the Liberal Democrats offers little improvement – with only a marginally better explanation for their spending commitments – but at 25p for every pound needed Clegg is well short of being the new politician he suggests.
Why do they all do it? One can only conclude they think we cannot handle the truth – when it is they that cannot face up to the error of their ways.
When you have such large sums as 1.4tn being discussed people find it hard to quantify what is at stake. Thanks to the IFS report, the Debt Clock and commentators constantly banging on about the nation's finances, the electorate might just waken up to scale of the problems by next Thursday.
Will the BBC put the necessary questions or will we be treated to more X Factor gloss? We certainly deserve better than what we have had so far.
• Brian Monteith is policy director of ThinkScotland.org
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