Monday, November 07, 2005

UK - a £30bn deficit and public services in chaos

Andrew Dilnot, Principal of St Hugh's College in Oxford, claims that with a £30bn deficit and public services in chaos, Blair's fincance minister Gordon Brown has not fulfilled his promise.

Now he faces a crisis, says Dilnot.

In the Observer and on Channel 4's Dispatches, 6-7 November 2005, Dilnot explained:

http://observer.guardian.co.uk/comment/story/0,6903,1635363,00.html

Gordon Brown's 'been Chancellor for long enough for his luck to run out. He has run up a deficit of more than £30 billion and it has taken some creative accounting to avoid breaking his own famous 'rules'.'

Dilnot relates that, in 1999, Tony Blair went on Breakfast with Frost and announced enormous increases in public spending on health.

Dilnot explains:

'In the budget of the following year there was more money for education too. Where did it come from? A bit from increases in taxation, but mostly from a massive shift from a public sector surplus to a public sector deficit - a shift of over £50bn, more than £1,000 for every adult in the UK.

'There was no very clear sense of how the money should be spent and in the past few years we have seen a bewildering array of initiatives in health and education which have left doctors, nurses, headteachers and managers spinning furiously in an attempt to keep up with the latest demands.

'Stories of distortions created by centrally administered targets abound and very few of those on the ground can discern a clear strategy.'

According to Dilnot, from April 2008 Brown faces these choices:

1. taxes up,
2. borrowing rules broken, or
3. a return to much slower funding growth for health and education.

Dilnot considers the Private Finance Initiative.

Dilnot says: 'I suspect that he is attracted to PFI because this borrowing doesn't appear on the public sector balance sheets.

'Just like the £21bn owed by National Rail is not registered as part of the National Debt.

'The sad story of the railways is a reminder of one area where we haven't seen much extra spending. Transport spending by the public sector has been lower as a share of national income over the past eight years than under Margaret Thatcher. Little surprise that our transport infrastructure is in such a mess.'




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