Our economic story has been one of lurches from boom to bust – or at least has been so, with a few exceptions, since roughly the end of the war.  The economy booms.  But much of the growth is in housing and finance, and disproportionately concentrated in the south-east.  There is too little investment in skills. Big, difficult infrastructure decisions are delayed. Government runs up debt and voters do, too.  Inflation soars, or a balance of payments deficit balloons, or a deficit grows (or all three) – and, sooner or later, interest rates rise.  Then comes bust – and, at the end of the cycle, taxes seem to be no lower: certainly, the system as a whole in no more simple and Tolley’s Tax Guide no more short.  Regulation creep has continued unabashed.  Then eventually the economy moves out of recession…and the cycle begins again.

There is reason to hope that, this time, it will all be different.  The jobs market has been astonishingly buoyant, and talk of a British Employment Miracle may not be over-hyped.  Iain Duncan Smith’s reforms have helped to slash the number of people in workless households and those claiming the main out of work benefits.  Michael Gove is leading an academies revolution.  John Hayes and Matthew Hancock have striven to revive apprenticeships.  Karen Lumley writes about these on this site today – and has previously lauded one of the success stories of the British economy, the car industry.  Certainly, the Osborne Chancellorship has helped to bring growth where Labour predicted flatlining, some big infrastructure decisions have been taken (on nuclear and HS2), and some taxes have been cut (corporation tax, jobs taxes, the top rate: the threshold for paying income tax has risen).

The Chancellor’s vision of a “Northern Powerhouse” is consistent with the stress he placed in opposition on ” economic fundamentals like skills, high-end manufacturing, science investment and regionalism”.  And there will be more next week on City Deals, on which Greg Clark has been working hard.  But there is a clear danger that growth will evaporate in consumption and debt rather than consolidate itself in investment and skills: house prices remain “the biggest risk“.  Perhaps this is what Osborne was thinking of yesterday when he said that he wished “we’d done even more” in the early years of this Parliament.  He may have been thinking of how long it takes to get infrastructure projects completed in Britain, or how long it takes for school or skills reform to work its way through the system…or, most likely, how long it takes to eliminate a structural deficit.

The Coalition Agreement committed the Government to significantly accelerating “the reduction of the structural deficit over the course of a Parliament”.  The Conservative Manifesto pledged “to set out a credible plan for eliminating the bulk of the structural current budget deficit over a Parliament”.  The Government has failed to deliver this aim.  The deficit remains over £100 billion.  And though savings rose during the course of the recession, household debt levels are at an all-time high.  Yet much of the national conversation is about which taxes to cut and what spending to increase: Mark Wallace recently chronicled two classics on this site.  Tim Mongomerie’s warning in the Times (£) yesterday of radical measures to come – such as charges for missed GP appointments, benefit cuts for wealthy pensioners, road tolls, higher council taxes for better-off people – was a lonely corrective.

We need far less talk about tax cuts and far more about spending cuts.  We need tough new fiscal rules to balance the budget over the economic cycle.  We need real zero-based budgeting.  We need a big national conversation about how to cope with the costs of a growing elderly population. We need an Affordability Commission.