A recent report from PricewaterhouseCoopers has shown how painful. In March 2008, the Budget deficit for this year was forecast to be two per cent of GDP. In November 2008, the Chancellor of the Exchequer, Alistair Darling, increased it to eight per cent and it is now likely to be 12 per cent. This will lead to a fiscal gap of £175 billion in 2009-2010-how can that be met? One way would be a cut in all public spending of 1.4 per cent a year. That seems very little but it has never been achieved over the last 40 years. If health and education spending is protected, then the cuts for police, prisons, defence, local government and the environment would be three per cent. The other prospect is significant tax increases. Both government and opposition must face up to the deep problems of the new Age of Austerity. Every part of government expenditure should be questioned. Do we need two aircraft carriers or even one? Why are we sending troops to Afghanistan when the major source of instability has moved to the tribal areas of Pakistan? How can the state meet the increasing demands of an ageing society and the cost of expensive life-saving drugs?

The private sector is already responding to lower economic activity by reducing pay; four-day working weeks; pay freezes; 15 per cent cuts with no redundancy. Will the next round of public sector pay start with a freeze or a cut? Ireland cut public sector pay and Dublin marched. The disparity between pensions in the public sector and the private sector with its devastated pension pots is now vast and seen to be totally unfair. A start should be made by the new MPs after the next election entering a new pension scheme based upon direct contributions-they must give a lead.

In this Age of Austerity, people know that they are in for a long haul. As there are no quick fixes they want burdens to be shared fairly, a return to financial probity and common sense, savings to be rewarded and not penalised, past mistakes to be recognised and learnt from, more modesty and no false hope.