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A decade to balance the books, admits Darling
Joe Murphy, Political Editor20 Apr 2009
Alistair Darling will this week admit it will take almost 10 years to get the public finances back into shape, the Evening Standard has learned.
Unveiling a big increase in borrowing in the short term, the Chancellor will warn that it will take longer to balance the books than he had hoped.
But pledging a return to sound finances in the long term, Mr Darling will also announce efficiency savings to trim £15 billion off Whitehall's planned spending growth, spread over four years.
He is also expected to confirm his recent optimistic forecasts that the economy will start to grow again at the end of this year, marking the end of the worst recession in a generation.
Unveiling his second Budget under the theme Investing in the Recovery, the Chancellor will attempt to rebuild public faith in the Government's ability to run the economy by promising about £500 million for job-creating investment in environmental improvements, plus a series of measures to invest in “future industries” such as green technology.
With borrowing set to surge to some £170 billion this year — up £50 billion from the figure in the pre-Budget report last autumn — Mr Darling
will have to amend his PBR forecast that the books will be back in balance by 2015/16. It will take a year or two longer, delaying the date when debts can begin to be repaid until about 2017 or 2018.
After a fortnight of political disasters for Labour, Cabinet ministers are pinning their hopes on a reassuring performance by the calm Mr Darling to steady the markets, increase optimism among voters and, ultimately, start rebuilding Labour's election hopes.
However, Mr Darling will admit that the downturn has been far sharper and deeper than he expected just a few months ago.
In addition, he will concede that taxpayers are likely to be left with £60 billion losses for money used to bail out the banks that is never going to be recouped.
A big investment in green initiatives, with targeted action to shore up low-carbon industries stricken by the recession, will be at the heart of Mr Darling's recovery package.
The aim is to secure tens of thousands of jobs that are under threat while retaining industries that are expected to be of growing importance to the economy in the next decades. An extra £100 million to pay for council and social housing to be better insulated will be announced, along with some £200 million to promote schemes to harness wind and wave power and other clean-energy technologies.
Officials believe the UK's low-carbon sector can grow by almost a half, £150 billion, and employ 1.3 million people by 2015.
North Sea oil firms will get tax incentives to explore and develop new fields in hard-to-reach areas.
There is a rising expectation of a “scrappage” scheme which will pay motorists about £2,000 for their old car if they invest in a clean new vehicle. Details are still being thrashed out, however, and officials say no final decision has yet been taken.
Shadow chancellor George Osborne said the Budget would be a “day of reckoning” for Labour and see a government admission of the worst recession since the Second World War and the worst public finances in the world.
Reader views (20)
Having been handed a poisoned chalice by his chum Gordon, Alister has certainly been handed the smelly end of the stick.
But then, what are friends for.
- J R J, Glen Vine, 21/04/2009 09:55
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Cut backs coming, any housewife could have told this lot in power years ago. That you can not hire and employ more than than the money coming in allows.
- Ebin Donk, angus scotland, 20/04/2009 18:11
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I wouldn't worry too much Darling, it'll be well out of your hands by the time the next election comes around, consider it your legacy, best get as many expense claims in before then as possible eh?
- Bob, Cheam, 20/04/2009 16:28
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Does anyone believe that the economy will grow again in a year?
- Simon, London, 20/04/2009 15:54
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Well said Paul. No doubt at this very moment the Police are kicking down the doors to number 11 to stem the yet another budget leak.
- Sean, London, 20/04/2009 14:58
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I thought according to doom & bust Brown that Great Britain was well placed for recovery but then again he now tells us the current recession is an 'enormous opportunity'. Yes, well take advantage of it please doom & bust Brown and call a General Election while you look for another job.
- Jow, Thornton Heath, UK, 20/04/2009 14:50
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Um I'm confused. Is this a leak if the announcement goes out later this week? But if it's a leak, it's an authorised one so it's ok?
- Paul, Enfield England, 20/04/2009 13:40
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Hang on a minute, I thought the money used to bail out the banks was effectively the government buying shares in the bank that they could sell in the future once they got back on their feet. Now Darling is saying that the £60 BILLION he threw at them is gone forever?? Incompetence does not begin to describe it. I think Whitehall needs to be shrunk by 50% - that should help balance the books without taxing the public the highest amount in western europe in order to pay for the mistakes of this government.
- Ag, London Village, 20/04/2009 13:22
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It really of annoys me when everyone keeps moaning about the economy and how the government’s dealing with it. The overwhelming majority of this country votes for pro capitalist parties, so you get what you vote for. We could all change things and it would make a better country to live-in for EVERYONE, not just the top 5 percent as it is now. To all those people complaining, please just shut-up. If you are unwilling to vote for another party except Labour of the Conservatives nothing will ever change.
- Paul, London, 20/04/2009 13:15
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Wayne/Keith - True,Gordon will show us. But only how he has run out of ideas.
- Dave Davies, Basingstoke, 20/04/2009 13:08
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Gordon will show you all on Wednesday that he know's what he's doing !
- Wayne, Herts, Uk, 20/04/2009 12:41
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Is that a decade for him to work out what has happened?
- Dave Davies, Basingstoke, 20/04/2009 12:36
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They thinks its all over ....it is now.
Bye bye NuLabour. You will be out of power for a generation - again.
- Dave Davies, Basingstoke, 20/04/2009 12:13
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Another good reason to bring on the election.
- Dave Davies, Basingstoke, 20/04/2009 11:59
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I have noticed that for the past two weeks every possible prediction concerning the state of the UK economy spelt big trouble ahead.
Somebody in Downing Street must have smashed up a few TV sets or given the goldfish to the cat - alas, today, everything is said to be sweetness and light - and do you know what? I DO NOT BELIEVE ONE SINGLE WORD THAT ANYONE IN GOVERNMENT UTTERS.
Talking of the Downing Street cat - that little moggy possesses more credibility and dignity than any politician. That crumbliong heap of bricks in Westminster is not know as the HOUSE OF CONMEN for nothing.
Lies, spin, deceit, waffle, smoke and mirrors. Umpteen "advisers" with their snouts in the taxpayer's trough employed by Brown. One day it is Mandleson allegedly throwing a proverbial fit in Downing Street, the next day it is control freak Gormless Brown shouting the odds.
Have you noticed - during the entire time Brown was Chancellor of the Exchequer he did not smile once? He has now been taking lessons from his coach on how to smile - and, you just know that smile is a phony as the words that slide out of the corner of his mouth.
I will not bother listening to what Darling has to say about the state of the UK economy. I am partially sighted yet, even I can see the UK is wholly bankrupt.
God help the children in the UK and their children - because they will be paying for this Labour Balls-up for the next 30 years at least.
- Reuben Camara, Morecambe UK, 20/04/2009 11:53
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"it will take longer to balance the books than he had hoped"
I was under the impression that "hope" was not a very scientific way to run an economy.
- Nobby Clark, Perth, Scotland, 20/04/2009 11:40
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... and that's an optimistic forecast .... Gulp!
- Marianne, SW France, 20/04/2009 11:22
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that will be 10 years of the next Tory Government then!
- Gary, amersham, 20/04/2009 11:15
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In the Treasury there is an army of researchers predicting the future course of the UK economy, yet, for the past 4 years, both Brown and Darling have been willfully wrong. If a person running an investment company knowingly gave a false prospectus for a particular investment, they would be prosecuted for fraud.
It beggars belief that both incumbents were unaware of the forthcoming demise of the UK economy and the sickening aspect of the this budget is that the same false prospectus will be put to the British nation.
Voters should be implored not to believe a word of this budget and, as sure as eggs are eggs, not a single prediction made by Brown and Darling in this budget will come to fruition.
- Bingham Macnamara, lymington, hampshire, 20/04/2009 10:55
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Crash Gordon is well on the route towards bankrupting Britain as the liabilities by 2012 will exceed £3.5 trillion from £1.5 trillion at the end of 2007, as the prime consideration for Brown is to win the next election at clearly ANY COST.
- Down With Brown, London, 20/04/2009 10:50
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