An inkling of the pain likely to follow the Government’s public borrowing splurge was provided today by Steve Bundred, chief executive of the Audit Commission.
Speaking on the Today programme, Mr Bundred warned:
“The measures that the Government is taking to stimulate the economy may well be absolutely necessary but they involve unprecedented levels of public borrowing and public debt and as soon as we see some signs of recovery, in order to maintain overseas confidence it is inevitable that the Government will have to rebalance public finances and that will involve very substantial expenditure cuts.
“That won’t be able to be achieved simply through the tax increases that have already been announced; it will require very substantial reductions in public spending.
“And what I am saying to those who manage public services is that they need to see that coming and they need to prepare for that now.”
Bundred’s warning makes it all the more difficult for Labour to play the “Tory cuts” card in the run-up to the next general election. Furthermore, Gordon Brown’s wasteful and ineffectual VAT rate cut, which has cost over £12 billion and achieved nothing, makes it all the more likely that Labour’s own public expenditure cuts will have to be both painful and deep.
There is little doubt that whichever party is in power and that is unlikely to be Labour, public sector expenditure will have to face cuts and no doubt, the hard-pressed taxpayer will be expected to stump up even more money. That said, there is inevitably a great deal of money that is wasted in the public sector, therefore, cuts in expenditure, need not necessarily lead to a cut in services and anyone that says otherwise, does not deserve to be in power.
“Labour’s own public expenditure cuts will have to be both painful and deep.”
Not much sign of that so far. Quite the opposite. Their mantra about unfunded Tory policies seems equally shot.