Your Money and How They Spend It (Pt2)

If ever a day summed up the current age of austerity, it's this one: universally gloomy headlines promising even more pain and thousands of public sector workers on strike.

The news from George Osborne yesterday that we face two more years of spending cuts than he'd planned - taking us beyond the next election - raises fascinating questions about the politics of the next few years.

The Tories will have to go into the next election promising to cut spending. Last night Danny Alexander suggested on Newsnight that the Lib Dems would do the same. Ed Miliband used a speech last week to say that deficit reduction would still be necessary when - if - Labour return to government.

The strikes are one manifestation of a new politics of distribution - ie the battle over who gets what when the national cake gets smaller. The Office for Budget Responsibility said yesterday that the economy was now 13% smaller than it had been before the banking crisis ie more than £1 in every £8.

Tonight, is the second part of my series Your Money and How They Spend It. at 9pm on BBC2, which tries to explain how on earth we got here.

It's all about the trouble with tax - and how difficult politicians of all parties have found it to get us to stump up for all the public spending we tell them we want.

As voters, we demand more and more - but we're incredibly resistant to paying for it. For a ballpark figure about how much your household pays in tax, try our tax and spend calculator here.

The central theme of the series is that we all need to have a more honest debate about how politicians raise and spend our money. That's what struck me strongly from talking to thoughtful politicians on all sides over the last few months - as Alistair Darling put it to me: "It would be nice to think - but probably naïve - that come the next election you could have a sensible discussion about these things."

The bleak news George Osborne delivered yesterday makes that discussion more likely - and even more necessary.

Part one of Your Money and How They Spend It can still be watched on I-player here.