Alistair Darling’s proposed spending spree on bringing forward major capital projects suggests the government is prepared to sacrifice the economy’s long-term interests for short-term political gain.
Anthony Hilton rightly points out the sums involved are too small to save us from recession. Yet they are significant in terms of the budget deficit. As the public accounts slide even further into the red, private investment will be crowded out and before long taxes will have to rise to pay for the Chancellor’s largesse. These effects will delay the private sector’s recovery and threaten to make the current slowdown more like the prolonged Japanese slump of the Nineties than the short, sharp adjustment experienced by the UK in 1981.
Only private enterprise can lead the economy out of recession. Rather than increase government spending, the Chancellor should focus on making life easier for British business.
There needs to be a huge bonfire of red tape to lower costs. Burdensome new environmental and employment laws should be abandoned and the minimum wage scrapped to address rising unemployment. Given the perilous state of the public finances, radical deregulation is now the only practical option.
Letter by Richard Wellings published in the Evening Standard on 23 October 2008.