‘I think I’ll just stop in bed tomorrow.’ This is what a mortgage broker I know emailed me the day before the budget. ‘I’m single, have no dependents and drive a car.’ Relatively she probably hasn’t done too badly, but then everyone in this country will be bearing some of the burden of repaying our debt.
How could it be otherwise when every man, woman and child in Britain owes £22,400 in terms of national debt? It’s frightening to realise that we borrow £1 out of every £4 we spend.
Britain is like a man who has overspent on his credit card. He’s in grave danger of getting an unfavourable credit rating, being unable to borrow in future and then finding himself in a much worse situation further down the line.
So what are our options? We could go the way of Greece and throw ourselves to the mercy of our neighbours. Or we could tighten our belts, face the problem and put together a plan to deal with the deficit.
This latter is what the coalition government has decided to do. But when you’ve been used to using credit as a way of getting out of trouble, it’s very hard to reduce your spending and work harder.
Speaking in the budget debate this week, I said I thought the emergency budget was ‘tough but fair’.
The most vulnerable will be protected through raising the tax threshold for basic rate taxpayers, increasing child tax credits for basic rate income payers and restoring the earnings link for pensioners.
It is only fair that those with the broadest shoulders bear the heaviest burden.
But unfortunately more pain is to come. There will have to be cuts in the welfare budget and in our front-line services.
Labour had already planned the same scale of cuts, though they have never said how and where the knife will fall. We’ll know the worst after the spending review in the Autumn. I’ll do all I can to make sure they cut carefully.