In the last Sunday Times, the economic analysis of the great New Labour Comprehensive Spending Review (5 year plan et al) nailed the essential point - the grim state of public finances.
Where there is cause for concern is over the public finances. When critics say Britain has the biggest cyclically-adjusted budget deficit of any EU member (preenlargement) they are right. Denmark, Sweden, Finland, Ireland, Spain, Luxembourg and Belgium have structural surpluses. Britain has a bigger deficit than Italy or Greece.
The Treasury adding billions of borrowing each time it revisits the numbers, as Darling did to the tune of £16 billion over five years last week. In normal circumstances we would be talking of tax rises to close the gap, not slipping the NHS an extra £2 billion in 2010 to make the numbers look better. The Institute for Fiscal Studies said there was now a 44% chance of government debt exceeding the 40% ceiling in 2010-11.
I am of the firm belief that there will be a significant revision of opinion on the Brown tenure (particularly 2000-present) predicated on a belated realisation that;
- Despite enjoying a period of exceptional worldwide growth, UK economic growth as seen by the public (average gdp/head not absolute gdp) is slowing to a crawl
- A large part of this growth has been a result of unsustainable public expenditure. Large scale Government borrowing is now structural.
- A significant aspect of headline GDP growth has resulted from unprecedented immigration, which even the government has admitted has unclear benefits in terms of income/head (http://news.bbc.co.uk/1/hi/uk_politics/7047610.stm)
- Compensating benefits in public service delivery are noticeable by their absence
We are in the process of turning a corner, although it may still be many months or even a year or so before most people can look back and recognise that things changed in 2007. The Gordon Brown economic experiment is coming to an ignominious end. Its death will probably be drawn out and ugly as the wheels of the New Labour machine fall off.
A downturn of any material nature will horribly expose the Government finances which are now structurally in deep debt
- The public appetite for increased taxation has vanished
- The Brown Government tactic of shouting down opposition suggestions of tax cuts with the usual shroud waving and cries of "cuts" has lost its political force.
- The arguments of the left are losing ethical and moral potency as Government led monolithic services let down those most in need (see http://news.bbc.co.uk/1/hi/england/kent/7046442.stm)
All a Tory opposition now has to do is focus on the issues that matter to the public and articulate the financial and moral case for;
- Reduction in government spending through change in the way public services are provided
- Significant reduction in the role of the State across society, greater emphasis on family and private enterprise
- Significantly reducing the incentives that lead to 5 million people in the UK of working age that are economically inactive
The Left has run out of ideas and is having a crisis of confidence (http://news.bbc.co.uk/1/hi/uk_politics/7042780.stm) as its core public service programmes have proven to be expensive white elephants (http://www.telegraph.co.uk/news/main.jhtml?xml=/news/2007/08/28/nlearn128.xml). Its time the Right had the confidence to move the debate onward.
Of course, whether Cameron & Co will do this is another matter. The battles of the 1980's were prepared by the intellectual debate led by Keith Joseph in the 1970's. The battles ahead relate to true and radical public service reform and a fundamental reassement of the role of the state. A conservative party will win on these issues. Not on global warming. Not on African poverty. Not on windmills on roofs, windfarms, taxes on large cars, taxing supermarket parking or taxing flights to Spain.
