This could be the greatest waste of public money in peacetime

FOR THE last five years a huge number of people in this country have been spending more than they earn and borrowing heavily to make up the difference. Today Chancellor Gordon Brown showed anything we can do, Government can do better.

In his pre-Budget statement, delivered with his trademark deluge of statistics in the Commons at lunchtime, one fundamental truth defied all his attempts to obscure it. This year his Government will borrow somewhere close to £37bn to pay for the increased spending on health, education and welfare.

In cash terms that is vastly more than any Government has ever borrowed before. And however much he pretends this is all part of a grand plan, the fact remains that three years ago, when he embarked on his spending spree, he promised us that this particular figure would be only £10bn.

In fairness this does not mean the economy is doing badly. It can absorb this level of borrowing. Indeed, things look better today than for several years, even if almost all the 1.7m new jobs created in the last few years are in the public sector.

Brown is also probably right in his claim that even better times are to come - though his forecast of growth of 3% to 3.5% next year and the year after seems to be pushing it a bit, and is rather more than the Bank of England thinks we can manage.

THE problem he did not admit to, however, is that most people will not notice any growth in their own purses and wallets because all the extra cash is being siphoned off to pay for Government spending. The amount of money people have to take home, particularly after this year's big rises in council tax, will go up barely at all.

Brown has proved again he is a great bluffer, but he must in the back of his mind have a serious nagging doubt about how things will pan out. His contract with the voters was that people would agree to higher taxes in return for better public services. He has ensured they have got the higher taxes, but the improvements are as elusive as ever.

Some people working in the NHS say they are coming through - but voters have less and less faith in a happy ending and are beginning to lose patience. In recent opinion polls they have been telling the Government they are paying quite enough tax.

Before they will pay any more, they want proof that the extra spending on public services is not going straight down the drain.

In a totally prudent world it would be wiser to tax more and borrow a bit less now - or rein back on the spending plans - but it is not essential because the Government's credit is good.

Borrowing even on this scale can be used as an alternative to tax rises at least till after the next General Election.

The golden and sustainable rules Brown has invented for himself remain unbroken because he does not count in the billions borrowed for Public Finance Initiatives, nor the taxes progressively reclassified as benefits. But he must be aware that people will know if they feel poorer, and all the financial smoke and mirrors will neither conceal that nor do anything for his personal ambition to succeed Tony Blair as Prime Minister.

Moving to No 10 with a reputation for prudence would have been one thing; getting there having presided over what has the potential to become the greatest waste of public money ever seen in peacetime is a much greater challenge.

In spite of his bravado and fighting words today, his thoughts must surely increasingly turn on whether he will be able to move on before it all goes too obviously wrong.