PracticeConsultingView from the House

View from the House

By Nick Gibb

I have often lamented the way in which Labour spin doctors have spun the public finances to the point of misleading the public. Gordon Brown’s pre-Budget report has taken this to new extremes.

Despite announcing a lower growth figure for 1999/2000, down to 1% from the 2% previously forecast, the report actually raises the forecast for the following two years by 0.25% in 2000/2001 (to 2.5%) and by 0.5% in 2001/2002 (to 2.75%). This cannot be right. If Britain’s economy slows next year to 1%, it is more likely that growth the year after will be less than the 2.25% previously forecast, not more.

So why has Brown risked his credibility with unrealistic forecasts? The reason is to ensure that figures for public-sector borrowing do not escalate by the #36bn which the Centre for Economic and Business Research, for example, calculates would be the consequence of lower growth.

For government figures to reveal such a borrowing level over the next three years would expose the irresponsibility of the comprehensive review announced in July.

Other devices were also adopted to manipulate the numbers. Unemployment is now assumed to be based on September 1998 levels rather than April 1998 and is assumed to remain constant over the three years. As the September unemployment figures are lower than April’s, this contributes to the #37bn fall in social security spending in 1999/2000.

One of the most misleading aspects of Brown’s report is to claim there is a Budget ‘current surplus’ of some #33bn. The truth is, from 1999 onwards, the government is running a deficit each year of between #1bn and #5bn.

In July, Brown claimed a ‘current surplus’ or ‘cushion’ of #30bn, a cumulative total of the three years to 2001/2002. Now, according to Brown, even after lower growth, that ‘cushion’ has risen to #33bn because it is now calculated as the cumulative total of the five years to 2003/2004.

These are tedious issues for an opposition to explain, but unless we succeed in doing so, the government will get away with presenting a completely misleading picture of the state of the public finances.

Nick Gibb is Conservative MP for Bognor Regis

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