It's back to old Labour habits of spend and tax

Brown has long since jettisoned his old flame Prudence. He is enjoying an affair with profligacy
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The Independent Online

I'm going to be spending more than the Tories on everything." This was not actually what Gordon Brown said during his 40-minute speech yesterday but it was the political interpretation put on the statement by Charlie Whelan, his former spin-doctor.

I'm going to be spending more than the Tories on everything." This was not actually what Gordon Brown said during his 40-minute speech yesterday but it was the political interpretation put on the statement by Charlie Whelan, his former spin-doctor. And for all the whiz bangs, incomprehensible statistics and wizardry we have come to expect on these occasions, Mr Brown might just as well have made Mr Whelan's suggested one-sentence speech. He might also have added that if Labour wins a third term it will be thanks to him, rather than to Tony Blair, "and so while we're about it, it's about time I ran the whole show for real".

Gordon Brown has long since jettisoned his old flame Prudence. He has now been enjoying a passionate affair with profligacy for some time. He hopes that between now and the next general election, expected on 5 May next year, no one will notice he will have to raise taxes once he and Mr Blair are safely back in Downing Street. But the central message of yesterday's spending announcement is that this Labour government is now doing what all Labour governments always, eventually, do. It spends, it taxes and it borrows. Since Labour came to power seven years ago the state's share of gross national product has increased from just over 37 per cent to more than 42 per cent. In the early years, Mr Brown could lay claim to his prudent reputation when he stuck rigidly to Conservative spending plans. This enabled him to appear to hold headline rates of income tax and to repay debt. But the past three years since the 2001 general election have seen a public sector binge which would be the envy of Denis Healey or other past Labour chancellors. Of course, the personal pain for voters has been largely anaesthetised thanks to a 12-year run of unprecedented economic growth, low inflation and interest rates which have masked significant increases in stealth and council taxes.

The growth in the size of the state means that this is a Labour government eventually tracked to become one of the biggest governments, relative to the size of the rest of the economy and the private sector, that we have known in history. This is a big Chancellor presiding over big government. Of course, the black hole in the public finances, currently running in excess of £30bn annually, will carry the Chancellor to polling day without further tax rises. Mr Brown will be doing, in the short run, exactly what most private citizens will be doing - living on the national credit card. But he will be contributing to the pressure on the Bank of England to increase interest rates - the most likely way in which householders could be squeezed. The crucial question is what voters will think will happen after the election, when the bills for yesterday's announcement will have to be paid. Mr Brown is predicating the ability to pay for the extra spending on the sacking of 84,030 civil servants in order to fund the bulk of his annual £20bn of administrative savings. The precision of this figure is presumably designed to lend a vague vestige of credibility to his promise to make savings in government running costs. It is this promise to cut waste that will determine the ability of the Government to deliver the nirvana of public service investment without further tax rises.

But the history of Mr Brown's ability to control and reduce waste and bureaucracy is not borne out by his efforts to date. As Robert Chote, the director of the Institute for Fiscal Studies, has noted "as public spending has risen, so the number of civil servants has climbed from less than 500,000 in 1999 to more than 550,000 in 2003, reversing the decline of the previous four years". And Oliver Letwin, the shadow Chancellor, has pointed out that, only two years ago, Mr Brown announced that he was going to axe 18,000 jobs at the Work and Pensions Department. Since that announcement staff numbers in this department have actually increased by 3,500. But Mr Brown has posed an awkward challenge to the Tories. Dare they go into the next election promising to reverse any of yesterday's departmental increases? Mr Letwin had already trapped himself to spend more on health and education while holding down expenditure on departments such as defence and law and order. If he does what Michael Portillo has suggested on a number of previous occasions - commit the Tories to match Labour on total public expenditure - then his room for manoeuvre on tax cuts will be extremely limited. But if he rises to Mr Brown's challenge to say whether he will reverse increases in such items as defence and law and order, he will face difficulties from his own departmental spokesmen.

Mr Letwin strikes a chord, however, when he talks about the need to "cut this big fat Labour Government down to size". Mr Brown's new pose as the "waste-finder general" is not borne out by his seven-year record to date. If he fails, taxes will inevitably rise - once polling day is behind him. And if future growth should eventually falter then the long-term future of Mr Brown either as tenant of Number 11 or Number 10 Downing Street will be bleak.

mrbrown@pimlico.freeserve.co.uk

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