How Gordon Brown made us borrow from our children

Opinion polls and the Bradford West by-election suggest that none of the mainstream parties are very popular with the public at the moment and I can fully understand that.

Whoever had won the 2010 election would have been left a terrible mess to sort out and been forced to decided, now whether to kick everybody, including vulnerable people, in the teeth, but how and when to kick everybody in the teeth.

There is a particularly good article in the Telegraph today by Ruth Porter, entitled "Gordon Brown’s poisonous legacy lives on" which describes some of the worst aspects of the situation inherited by the present coalition government, particularly the fact that the benefits changes under Gordon Brown "systematically pulled families with children into the benefits system" with the consequence that by 2010 "the state was the main provider for a third of all UK households."

The first problem with this is that it was one of the major reasons why government spending reached 50% of GDP, the budget defecit reached the unsustainable position where the government was spending four pounds for every three coming in, and the government's debts reached 1.2 trillion pounds.

Effectively the people behind this policy made families with children feel better off for a few years - at the price of running up debts for the country which we will still be paying off when those children, have become adults. Effectively Gordon Brown gave us money by borrowing from our children's future.

The second problem is that it enormously extended the dependency culture, e.g. making people dependent on the state instead of themselves.

The third problem is that when economic reality finally bit and a government of whatever colour finally had to move back towards economic balance or face a Greek-style crisis, the massive expansion of such benefits made it certain that any government trying to keep the country solvent would be handicapped by the need to remove benefits from large numbers of people in the "Squeezed middle" and squeeze them even harder.

As Ruth Porter points out, it is vital that any changes to the benefits system must

"take into account how benefit and tax changes alter our behaviour – for example, whether they make us spend more or less, take a job or accept a promotion or decide to employ someone. It is change on this scale that makes the biggest difference to people’s household incomes.

"The big picture is that the Coalition needs to sort out the economy, rebalance the books and wean us all off state dependency. It is families with children who have most to gain here. Surely we want future generations to grow up in a country with jobs, great schools and hospitals and without inheriting debt at dizzyingly high levels."

We must sure that everyone has incentives to work, to save, and to do the right thing for themselves and society.

You can read the full article here.


Jim said…
I always thought it was important to save and to build up a nest egg for our old age. Though thanks to Gordon's pension raid, Im not so sure anymore.

My parents retired about 4 years ago, and its hurting them bad. They both regret not spending it now, when will the pensions raid be over?

At the moment I do wonder, is it even worth it? that is of course the problem you are aiming to cure, and this is the right course of action, but we must stop this tax raid on pension funds now.

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