Chancellor Gordon Brown's plans to
spend an extra £43 billion on public services over the next three years are
vulnerable to the threat of economic downturn and may not produce the desired
results, says the Eastern Branch of the Institute of Directors (IoD).
Eastern Branch treasurer Alan Blake
also suggests the spending spree has been funded by large tax increases.
"The Chancellor's generous
spending projections are risky because they are based on the expectation of
continuing economic growth," said Mr Blake. "They are based on the
hope that economic growth will continue for an unprecedented 12 years and the
situation could deteriorate rapidly if there was a significant downturn."
Mr Blake added "There is no
guarantee that the cash injections will deliver the goods.
"Merely pouring an extra £12
billion into education and £13 billion into health services without long
overdue and significant structural and managerial changes is most unlikely to
provide the services that people are increasingly demanding."
However, he welcomed plans to give
extra money to new services which help small businesses, increased spending on
transport, extra flexibility for regional development agencies and greater
emphasis on literacy and numeracy skills.
The IoD calculates that the amount
of tax taken by the government as a proportion of gross domestic product (GDP)
has risen from 35.3 per cent in the financial year 1996/97 to nearly 37 per cent
this year - or nearly 38 per cent if the Working Family Tax Credit is taken into