Sunday 31st January
I couldn’t quite believe what I was hearing. Only two month ago at the Autumn Statement our Chancellor stood up and declared that he didn’t actually need to cut Family Tax Credits after all. There had been denials of a U-turn for weeks and threats to completely emasculate the House of Lords, even Cameron on Andrew Marr had insisted that the cuts would go ahead. And all the commentators had said it couldn’t be done; that Osborne would really struggle to find the amount he was going to lose (by not cutting) from other cuts. Well our beaming Chancellor stood up and said that due to revisions by the (supposedly) independent Office for Budget Responsibility he would actually be well into surplus by 2020; that not only would he pay down the deficit but have money to spare – so he didn’t need to make changes to Family Tax Credits at all. And I was as puzzled as everyone else. This simply didn’t make sense, but there the head of the OBR was, concurring with Osborne’s confident view of the next four years.
Only a few days later and we got the news that borrowing so far this year was far from improving but was actually much higher than last year, and again commentators were saying that it was highly unlikely that Osborne would even match last year’s borrowing, let alone achieve his own (now made into law) target. Then we had January. Stock market volatility, huge China sell-offs, oil prices falling; in fact the North Sea has practically stopped production and of course will pay far less in taxes next year as a consequence. A couple of days ago Osborne announced that his projected sale of another tranche of Lloyds shares would not go ahead as the share price was too low. In the last five years the Government has actually made over 20 billion out of sell-offs and there is only Tupperware left in the family’s silver cupboard now.
The final nail in the coffin also came a few days ago – the economy is beginning to slump again. In the last three months GDP has fallen to an annual rate of only 2%, down from a projected 3% only a few months ago. And even worse, it is our manufacturing and construction industries that are pulling everything else down; in fact it was only spending in the shops which has been good. And if you wonder why that might be, you only have to look at the personal indebtedness figures which are now back higher than before the crash of 2008, in other words we are, Government and individuals, all borrowing to even keep ourselves afloat, let alone swimming confidently into a shiny new future.
The actual budget is still a few weeks away, but I cannot see our Chancellor smiling with confidence now. We will all have to pay now, as there is sure to be lots of trouble ahead.