Brown confident of meeting fiscal rules
Gordon Brown has pledged to abide with his “golden” fiscal rule, despite fears of a record shortfall in funding in September.
The Treasury’s budget deficit grew to £10.8 billion in September from £3.3 billion year-on-year.
In the last fiscal year, the deficit as a whole expanded to £37 billion, three per cent of gross domestic product, the biggest deficit since 1997.
In a speech to a new left-wing think-tank, Compass, the Chancellor of the Exchequer said he would be keeping a vigilant eye on spending and reiterated the Treasury mantra that it would only borrow to invest in the course of an economic cycle.
Mr Brown told 500 delegates at the conference on Saturday the Treasury could not afford to relax its stringent rules given the “the fragile state of the economy.”
“We will do nothing that puts at risk the short-term or long-term stability of the economy. There will be no relaxation of our discipline,” he said.
“With oil price at over $50 a barrel, having doubled in two years, and a slowdown in growth in all the major countries, I will continue to take the necessary action to entrench stability and promote the conditions for growth.
“We will meet our rules in this cycle and the next. There will be no return to inflationary wage demands,” he said.
Mr Brown also dismissed pleas from public service unions to retract plans to cut 104,000 government jobs.
Backers of the efficiency plan say the Treasury will save £21.5 billion by fiscal 2008.
But the Public & Commercial Services Union has called a strike for November 5th to protest against the cuts.
With only six in ten of eligible British adults voting at the last election, Mr Brown deplored the lack of trust in British politics and called for a new era of progressive, less-market driven politics, in Britain.
“We must build trust in a British way forward. We must reach out far beyond our traditional constituencies. We must show we are rooted in our communities, not remote from them,” he said.
“Looking back on seven years we all understand – and I do myself – that we have not done enough to respond to the yearning in 1997, not just for different policies, but for a different politics.”
Saying the market was not the panacea for all social ills, Mr Brown made the case for putting radical politics back at the heart of government.
“We must also explain the limits to the markets and the role of government: that the town square is more than a marketplace, the city centre more than where people buy and sell, the community more than a collection of individuals.”
“In every local community a measure of success would be that people think not of the hospital, or even just my hospital, but our hospital.”
