From the editor’s desk

Labour’s last gasps

Alistair Darling's second Budget was widely hailed as the most important in recent memory - indeed, he admitted the British economy faces its worst year since the Second World War while saying the country will have to borrow the record sum of £175 billion. The public finances are clearly under unprecedented strain from the global recession and some of the mountain of debt against Britain's name was unavoidable because no country is immune from what is happening across the world; some of it is from choice because the Government opted to save the banking system and wants the recession to be shorter and shallower than it would otherwise be; and some of it is from Government mistakes, innocent or culpable. The Opposition wants to blame only the last factor, particularly government profligacy in public spending. Until last autumn, however, the Tories were committed to continue Labour's public-spending projections for two years into the next Parliament, so they cannot have thought there was much wrong at that point. Their indignation contains an element of hindsight, therefore, even if it looks like helping them win the next election.

The real test of this budget lies elsewhere. Two sections of the economy in particular were crying out for help. The house-building programme has fallen so far below target that the housing shortage has been growing rather than shrinking. This forced up the cost of middle-income family homes and exaggerated the recent calamitous house-price bubble, while less-well-off people were sometimes spending 10 years on the social housing waiting list. Now the credit squeeze has undermined demand and the construction industry has started laying off workers, thereby adding both to unemployment and homelessness. Mr Darling has allocated £1bn to boost the supply of housing, of which the only criticism would be to ask why wasn't it more and why wasn't it sooner?

The second group desperate for help are school-leavers and those entering the jobs market for the first time. Experience of past recessions showed that the real long-term damage was not to the economy in general, which recovered quite quickly, but to the poorer communities that tend to rely on unskilled or semi-skilled jobs. Families where two or three generations had never had a job were not uncommon. So the Government has guaranteed to find work or full-time training for anyone under 25 who needs it, once they have been unemployed for more than a year. Again, the only criticism of what is a worthwhile policy has to be why a year and not less, and why a cut-off at 25?

In a headline-grabbing move that saw Mr Darling tear up a Labour election commitment, the Chancellor announced a 50 per cent income-tax rate on earnings over £150,000 a year, and reductions in tax allowances for pension schemes for that group. It is only fair that the better off should share the burdens of the poor, but the extra sums raised are fairly small and the tax-avoidance industry will be delighted. The real courage in this Budget is the decision to stick to expensive interventionist policies to protect the most vulnerable and to kick-start growth, in the face of growing public scepticism and opportunistic attacks from the other parties and most of the media. This is a tired and unpopular Government running out of steam, but in this one crucial area it has stuck to its guns.