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Sunday, June 21, 2009


There is an interesting synthesis today between this article by Andew Rawnsley in the Observer and reports of further Cabinet splits in the Sunday Times.

Rawnsley discusses the Tories' dilemma as to how specific they should be on where their cuts in public spending should come and what the consequences for them and the country will be. He points out that only Kenneth Clarke amongst the Shadow Cabinet has any real experience of how bad it will get but he also points out that this is not just a problem for the Conservatives:

The deficit is now soaring towards £1 trillion. Everyone, except, apparently, Gordon Brown, understands that a squeeze on public spending is coming, the like of which has not been seen since Thatcher's first term. No one now active in the front rank of British politics, with the exception of Ken Clarke, has any concept of the excruciating levels of pain that will be inflicted on spending departments. Senior Treasury officials whisper that their current Labour masters, their anticipated Tory ones and Whitehall as a whole are all in denial. In fact, even those Treasury officials have yet to get their heads round it. There is no institutional memory within the Treasury about what it is like to have to conduct spending negotiations which impose real cuts on departments. The civil servants are all too young. None of them has ever done it. Nor is there any experience in the rest of Whitehall of how to shrink a budget. They only know how to preside over growth. Those who lead public services are braced for a crunch. The unions are preparing their defences. The voters tell pollsters that they know cuts are coming. But there's a big difference between anticipating the blade and feeling the slice.

He suggests that these forthcoming cuts pose an acute dilemma for both the Tories and Labour: Do they decide to be candid about what is in store at the risk of losing votes before the election? Or are they dishonest with the country now and guarantee that they are reviled if they find themselves in power after the election? But he also picks up on discontent about the position of the Labour Government and suggests that they need to change tack:

What Labour can't convincingly deny is that they would have to cut too. In the event that Gordon Brown pulls off a Lazarus-like recovery and wins the next election, he will face the same challenge. You do not need to gaze into the crystal ball to see Labour cuts; you just have to look in the Red Book. Mr Lansley's figures came from the Treasury's own forecasts of spending and debt repayment.

The prime minister has got back on his trusty old war horse of "Labour investment versus Tory cuts" in the belief that it helped win the elections of 2001 and 2005. He does not seem to have noticed what is obvious to everyone else: the horse that he is flogging is not only dead, it is beginning to smell.

One former Treasury minister, who worked there alongside Mr Brown for some years, thinks it will prove to be a strategic error for Labour to persist with the line that it won't have to cut as well. "No one believes it," says this former member of the cabinet. The independent experts don't believe it, the media don't believe it, Whitehall doesn't believe it and the evidence of the opinion polls is that most voters don't believe it either.

The government has enough problems with trust without making claims about future spending that are simply incredible.

What he suggests instead is that Labour acknowledge the inevitable and argue instead that they will protect the vulnerable from the worst excesses of these cuts in a way that the Tories will not.

This fits in very nicely with the report in the Sunday Times that highlights further disquiet within the Cabinet about the Prime Minister's tactics. They say that the Prime Minister was challenged at a session of the full cabinet last week after he insisted Labour should fight the general election on a platform of more public spending in contrast to Tory “cuts”:

Cabinet colleagues fear the strategy is “too crude” and are concerned that the government has not been candid enough about the challenges posed by Britain’s £175 billion budget deficit.

Among those who spoke out at Tuesday’s cabinet was Yvette Cooper, the work and pensions secretary, who is normally regarded as Brown’s most loyal female minister. Alistair Darling, the chancellor, warned that Brown’s central assertion that a Tory government would cut spending by 10% was based on flimsy extrapolations.

A cabinet source told The Sunday Times: “We should be putting balls in the back of the net, but we are missing every shot against the Tories.” According to one source who was present, Brown was visibly irritated at the way he had been undermined, and brought the meeting to an early close, avoiding further debate.

This of course goes to the heart of Gordon Brown's problem, he is no longer credible on the economy. Last weeks Prime Minister's Question Time was a case in point. The PM insisted that capital spending was going to increase year-on-year right up to Olympics despite the fact that the Government's own projections show that not to be the case. A whole series of Labour backbenchers were lined up to ask planted questions so as to highlight Andrew Lansley's 'gaff' that the Tories would cut spending by 10% across the board. Yet none of this Labour bluster was believable or even likely.

The fact is that most people understand that the recession will bring painful cuts even if none of us are prepared for how difficult that process will be. For the Prime Minister to continue to charge at the issue like an out-of-control bull just leads many of us to believe that he is more interested in scoring party political points than governing.

There are strong arguments in favour of a centre-left approach to managing this process over that which will inevitably be adopted by the Tories, but whilst Gordon Brown remains in denial then he and his party will cease to attract the confidence of the country and trust in politicians will continue to plummet.
Good post Peter.

Brown seems pathologicially incapable of anything other than short term tactics against the Tories now irrespective of whether his claims have any grip on reality. Which in this case they don't.
Peter. This is a quote from a very interesting article in today's Guardian by Larry Elliott. PWC estimates that "To fill this fiscal gap without further tax rises we estimate that total departmental spending might need to be cut by around 11% in real inflation adjusted terms in the next three years to 2013-14(about twice as large a real cut as our estimate of what is implied by current budget plans). If health is protected,then departmental spending would ned to be cut by around 15% in real terms." The choice facing any government after the next election is increased taxes or cuts or more likely a combination of both. Failure to do any of this will see the UK 's international credit rating downgraded at a time when the country has already been placed on negative watch. Such a move would be a disaster for the country. All politicians of whatever their poltical persuasion have to stop playing politics and present honest alternatives to the voters at the next election. As a country we have been living beyond our means for too long and it is time to face the consequences.
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