The unpaid bill behind our sofas

23rd June, 2010

Halfway through her second glass of champagne on Monday night, my wife sheepishly suggested that perhaps we should hold our own emergency Budget. If George Osborne feels obliged to pronounce gloom and make swingeing cuts, shouldn’t we do our bit too? She took a guilty-looking sip.
I admonished her not to feel the weight of the champagne on her conscience, partly because it was our anniversary, but mostly because, in buying champagne and tipping the Polish waiter, we were selflessly doing our bit to stimulate the economies of our fellow Europeans.
That said, the idea of a household Budget is intriguing. I have recently taken to dividing Budget numbers by 60m, roughly per capita, or by 25m, roughly the number of households in the UK. The effect is bracing: Britain is borrowing £6,000 per household this year. This is, to use a technical macroeconomic term, a fair whack.
Such an approach can draw the sting from some of the chancellor’s more eye-catching initiatives. Take the abolition of Alistair Darling’s tax break for the video games industry; supposed to pay for corporation tax reform, this is a bold fiscal tightening of just £1.60 per household. By forgoing the revenue from a higher cider tax, Mr Osborne will increase the deficit by a dizzying 60 pence per household.
Admittedly, what Mr Osborne’s fiscal tightening lacked in subtlety it more than made up for in determination. Over the next four years we shall see £90bn of tax rises and spending cuts, more than half of which were inherited from Labour. That is £1,500 a year per person or £300 per household per month. We are going to notice.
Yet while breaking the cuts down per household is a handy way to put things in perspective, most Budgets bear little resemblance to a household efficiency exercise. No sensible family would tolerate the grandstanding that chancellors of the exchequer tend to enjoy.
In the real world, a budget would involve adding up income and spending, taking a realistic view of future income and figuring out the least painful place to spend less. Tough choices, perhaps, but you can figure out your own emergency Budget with little more than pen, paper and Mr Micawber’s dictum about the sixpences.
In Westminster, Budgets are very different. The ideal Budget skewers about 30 per cent of the population in some subtle way and showers the other 70 per cent with eye-catching goodies. The losers may be rotated from year to year, although if they are smokers they will suffer every time.
I am not sure how this would work in the Harford household. Suppose I had let my wife spend a decade or so rearranging chocolate button quotas. Then I would sweep in, announcing that I had suddenly found a gigantic credit card bill stuffed behind the sofa, when in fact it had been attached to the front of the fridge. I would then give each of my daughters a lollipop and send them out to work on an assembly line, preferably outside the south-east so I’d enjoy a tax break. That’s what I call private wealth creation.
This time around, the Budget did feel different, and not just because the chancellor was younger than England’s goalkeeper and flanked by Liberal Democrat fullbacks, poised to intervene if young George fumbled a shot from the backbenches. No, this Budget was different because Mr Osborne really did start to sound like Micawber. For one thing, neither seems to have any idea what fiscal stimulus is.
A more surprising parallel: I have not checked the speech transcript but I am fairly sure that at one point Mr Osborne burst into tears as he declaimed: “Welcome misery, welcome houselessness, welcome hunger, rags, tempest, and beggary!”
But third, and more seriously, the Budget really did seem to involve totting up everything we were earning, everything we were spending, and doing whatever it took to make the numbers add up. Result happiness? I am not sure. But it was quite a change.

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