Innocent victims of the train wreck


I spoke to the Year 13's at Townsend School on budget day. I asked them how it felt to be innocent victims of a train wreck, when they will be picking up the pieces from the current shambles of our economy for the rest of their working lives (which could last up to fifty years if they want to ensure they earn enough for a decent retirement). Inflation according to the RPI formula has gone negative - but that's not the case for old people who don't have mortgages and spend disproportionately on food and energy.

 

Later on the same Budget Day afternoon I spoke to an elederly resident in Chiswell Green. He hasn't seen a rise in his private pension for eight years. We don't yet know what the long-term impact will be of "quantitative easing" (printing money to you and me). The cynic in me says that whatever party gets into government, there will be the age-old temptation to allow inflation to reduce the real cost of the eye-watering levels of national debt.

That is bad news for every pensioner who does not benefit from guaranteed index-linking. But the biggest disaster of this economic smash is that it condemns Britain to yet more decades of shoddy and under-invested public services. For it will always be the frontline which bears the brunt of so-called efficiency savings.Partly this will be because within the overall envelope of much lower planned increases in public expenditure, a much bigger slice of taxpayers money will need to be used to pay huge interest bills on ballooning public debt and to pay benefits to far greater numbers of unemployed people. The Institute of Fiscal Studies calculates that spending departments will face annual budget cuts of 2.3 percent.

Hands up anyone who believes this won't result in more schools with leaky roofs, more unimproved council houses, less money for crucial medicines and treatments in the NHS, and more holes in our roads. That is why we need to have a proper debate about which areas of public expenditure need major changes and reductions rather than simply salami-slicing everything. Vince Cable has highlighted the increasingly absurd ambition that 50 percent of people should go to university. Can we really afford to go on playing world policeman?

What do we do about publoc sector pensions? It is certainly not a time for Conservative political point-scoring and gloating at Mr Brown's discomfort - the Year 13s of Townsend School deserve better.


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