Why slightly better news on public finances isn't nearly good enough

June 20, 2014 4:38 PM

Public finances data released this morning shows continued but slow improvement in the state of government accounts.

Net borrowing in 2013-14 was just £107 billion, down from the £107.8 billion estimated in March for Budget 2014, the £111.2 billion in December last year for the Autumn Statement and also the £119.8 billion estimated in March last year for Budget 2013.

This £12.8 billion improvement, however, is put in perspective when contrasted with the June 2010 projection of £60.1 billion. Last March the Government thought the finances would be £59.7 billion worse than it expected them to be when they took over in 2010. Now we know they are only £46.9 billion worse than expected. An improvement but still very bad.

And all this borrowing has added up. At the end of April 2010, just before the May election, net debt excluding financial interventions stood at £834 billion. By the end of last month it had risen by an enormous £451 billion and now stands at a staggering £1,285 billion. See how our debt clock shows it rising every second!

We are still struggling under the weight of a ridiculously complex tax system that takes too much from our pockets, diverting our cash from the things we want to the things that politicians and bureaucrats want. These taxes gum up our housing markets, destroy jobs, lower our wages and kill off investment. Yes, the economy is growing again. But we should have been growing long ago and productivity and wage growth still disappoints.

Business projects are still not going ahead because tax makes the difference between profitability and loss. Personal taxes still act as a barrier between taking a job and not, especially for many who might be contemplating low paid work. And beyond that unnecessary complexity makes it all much worse than it needs to be. So tax reform is a necessary component of restoring incentives and therefore growth and prosperity we need.

And while we need to cut taxes, we also need to shrink the deficit harder and faster. That can only mean one thing. Politicians must join our War on Waste, root out unnecessary spending and put a stop to it.

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