For every £5 the Government spends this year, it will raise less than £4 in tax revenue, an almost unprecedented 25 per cent difference between what the Treasury collects and what it spends. It doesn’t take Charles Dickens to tell us that the net result of this situation is misery.
So what are the political parties proposing to do about this untenable fiscal situation? We will find out the Government’s response in the pre-Budget Report tomorrow, but the £12 billion efficiency drive announced yesterday (assuming that it is effective) would save the equivalent of 9p in every £5 of spending. Similarly, the £7 billion of actual spending cuts announced at the Conservative Party conference in Manchester would save 5p.
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