Leader: Needs of the country must come first in the Budget

Published on 21/03/2012 12:22

AMID the torrent of leaks, hints, nudges and now formal announcements about the contents of today’s Budget, it is vital in the political jockeying between the two partners in the coalition government that Chancellor George Osborne does not lose sight of the over- arching purpose of his statement.

It is to balance the need to bolster business and household confidence and help breathe life into a deeply uncertain economy, while maintaining firm downward pressure on levels of public debt and deficit which have soared to levels without precedent in peacetime.

A reality check on the overall picture is timely. Last November, the independent Office for Budget Responsibility lowered its forecast for UK economic growth in 2012 to just 0.7 per cent. In Scotland, independent forecasters predict an even more meagre outcome. Unemployment is continuing to rise – with the percentage level higher in Scotland than across the UK. However, after considerable anxiety that we might slip back into recession, there have been encouraging signs recently of a gradual improvement, particularly evident in surveys of private sector hiring intentions. But we should be under no illusion that the economy is poised to spring back to pre-financial crisis rates of growth. If the OBR refreshes its forecast at all for 2012, it will be by a marginal amount.

Meanwhile, the public finances are still overshadowed by an Everest of debt. Last November, the OBR estimated that central government net debt would exceed £1 trillion for the financial year just ending and that it would continue to climb to £1.47 trillion or 78 per cent of GDP in 2014-15. Lest such figures be seen as meaningless abstractions, the annual cost of servicing this debt mountain is set to suck £50 billion out of the government’s budget next year before it can spend anything. This debt interest charge is projected to climb to £66.8bn in 2015-16, or comfortably twice the total budget of the Scottish Government. First Minister Alex Salmond’s call for a further £300m on infrastructure spending is hard to justify if it simply adds to this debt total. Better, surely, is to ensure that Scotland gets its fair share of cash released by pension funds for investment in housing and infrastructure improvement.

Bearing down on the debt total is the most important duty of the Chancellor, both to preserve our coveted triple A rating and to prevent this debt burden crushing the economy. It is argued that debt reduction and recovery support are incompatible. This is not quite so. The Chancellor has some leeway by which to raise the income tax threshold to £9,000, with a commitment to raise this to £10,000 in 2013-14. This would relieve pressure on lower-income households, boost demand and encourage business to expand and take on staff. Credit easing to encourage lending to small firms should help. But we should be under no illusion that confidence can rally without sound public finance.

Raising a toast to historic inn’s revival

Pubs are having a tough time. Clobbered by a combination of the Scottish Government’s smoking ban and the predatory pricing of alcohol by the big supermarket chains, they are struggling to survive. Surveys show something like 25 pubs close across Britain every week. In Scotland, it is estimated about 150 have closed every year since 2005.

Some might shrug their shoulders at this. So what? Why does it matter? Those who wish to drink can get alcohol more cheaply in the big stores, even with restrictions in place on special deals. Those who worry about the terrible effects of alcohol abuse will argue that pubs have been at the heart of Scotland’s unenviable relationship with drink, so good riddance.

There is, however, another side to pubs. Well-run establishments can be at the heart of their local communities, places where people meet their neighbours over a drink and something to eat, and where they catch up on the latest local news and, yes, gossip. The pub is where weddings and wakes are held, and a source of employment.

Good news, therefore, that The Crook Inn in Tweedsmuir, one of Scotland’s oldest and most historic inns, is to reopen its doors to the public after it was closed six years ago. The Tweedsmuir Community Company has secured a contract and needs to find £160,000 to enable it to buy the inn, run it and make initial renovations.

It will, no doubt, be difficult to raise the money, the minimum the local community needs, but we hope they do and by providing reasonably priced drinks, decent food and congenial surroundings they show there is a future for the good old-fashioned “local”.

Happy and glorious, round and sweet

St ANDREW’S House, 19 March. Confidential. Draft of words for the Queen’s Jubilee address to Westminster:

First Minister, following our conversation, this is a draft based on the sentiments you asked me to craft into a press statement:

“To your most gracious, utterly graciously gracious Majesty, ruler of Scotland’s hills and glens, buts and bens, loons and quines. Thank you for long reigning over us, happy and glorious. Thank you for agreeing to my plan to allow you and the duke, whose views I so much admire, to remain Head of State once we achieve a new social union with our best friends south of the Border, nothing at all to do with casting off the yoke of English tyranny.

“Thank you for remaining in the affection of our people. If I may use a Scottish metaphor, Your Majesty is like a Tunnock’s Tea Cake: well-rounded on the outside with soft sweetness in the middle (note to FM: one of the education secretary’s suggestions).

“And thank you for being so understanding about my plans to put an end to the British Army, the British Isles, Rule Britannia and British Home Stores. God Save the Queen.”

(Further note to FM: Mr Pringle thinks this might be a little OTT. Roseanna has shut up about republicanism lately. Can redraft. Happy to discuss.)