John Rentoul: Tory policies contradict their own warnings

Share
Related Topics

A long time ago in an economy far, far away, a Great Leader with a reputation as an Iron Chancellor had a Golden Rule. It said that the government should balance its books, borrowing prudently when needed and paying it back in the good times. But then, in September 2008, Lehman Brothers went bust. The economy shrank; tax revenues dried up; banks were nationalised. Rather suddenly, government borrowing was forecast to go up from about 2.5 per cent of national income to 12.5 per cent – a level that would be regarded in peacetime as disastrous, as Jon Moulton points out.

But Nobel prize-winning economists such as Paul Krugman said governments ought to go on borrowing and spending, to avert a depression. So Labour cut VAT for a year and put off tax rises and spending cuts until after the election, apart from a tax on bankers' bonuses and the 50p rate of tax on incomes over £150,000, which came in this month. Labour promises to halve government borrowing (the annual "deficit") over four years, with about two-thirds achieved by spending cuts and one-third by tax rises. The Conservatives said that cutting the deficit was more urgent, promising to start sooner – this financial year – and with more of the strain taken by spending cuts.

So the first reaction to the Tory promise to cancel £6bn of the planned rise in National Insurance contributions next year was that it contradicted their warnings about the dire state of the public finances. Especially as it is supposed to be funded by £12bn of efficiency savings – the unconvincing recourse of failed Tory opposition leaders past, viz William Hague, Iain Duncan Smith and Michael Howard. The second reaction was that it was a masterstroke that got the Tories out of proposing unpopular medicine that was losing them votes.

React Now

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
iJobs Job Widget
iJobs General

Defendant Personal Injury 2+PQE

Excellent Salary : Austen Lloyd: BRISTOL - NICHE DEFENDANT FIRM - Defendant Pe...

Java Developer

£45000 - £60000 per annum + competitive: Progressive Recruitment: JAVA DEVELO...

HR Business Partner (Maternity Cover 12 Months)

£30000 - £34000 Per Annum 25 days holiday, Private healthcare: Clearwater Peop...

Microsoft Dynamics AX Developer

£475 - £550 per day: Progressive Recruitment: MDAX / Dynamics AX / Microsoft D...

Day In a Page

Read Next
 

Fist bumps will never replace the handshake - we're just not cool enough

Jessica Brown Jessica Brown
The children were playing in the street with toy guns. The air strikes were tragically real

The air strikes were tragically real

The children were playing in the street with toy guns
Boozy, ignorant, intolerant, but very polite – The British, as others see us

Britain as others see us

Boozy, ignorant, intolerant, but very polite
Countries that don’t survey their tigers risk losing them altogether

Countries that don’t survey their tigers risk losing them

Jonathon Porritt sounds the alarm
How did our legends really begin?

How did our legends really begin?

Applying the theory of evolution to the world's many mythologies
Watch out: Lambrusco is back on the menu

Lambrusco is back on the menu

Naff Seventies corner-shop staple is this year's Aperol Spritz
A new Russian revolution: Cracks start to appear in Putin’s Kremlin power bloc

A new Russian revolution

Cracks start to appear in Putin’s Kremlin power bloc
Eugene de Kock: Apartheid’s sadistic killer that his country cannot forgive

Apartheid’s sadistic killer that his country cannot forgive

The debate rages in South Africa over whether Eugene de Kock should ever be released from jail
Standing my ground: If sitting is bad for your health, what happens when you stay on your feet for a whole month?

Standing my ground

If sitting is bad for your health, what happens when you stay on your feet for a whole month?
Commonwealth Games 2014: Dai Greene prays for chance to rebuild after injury agony

Greene prays for chance to rebuild after injury agony

Welsh hurdler was World, European and Commonwealth champion, but then the injuries crept in
Israel-Gaza conflict: Secret report helps Israelis to hide facts

Patrick Cockburn: Secret report helps Israel to hide facts

The slickness of Israel's spokesmen is rooted in directions set down by pollster Frank Luntz
The man who dared to go on holiday

The man who dared to go on holiday

New York's mayor has taken a vacation - in a nation that has still to enforce paid leave, it caused quite a stir, reports Rupert Cornwell
Best comedians: How the professionals go about their funny business, from Sarah Millican to Marcus Brigstocke

Best comedians: How the professionals go about their funny business

For all those wanting to know how stand-ups keep standing, here are some of the best moments
The Guest List 2014: Forget the Man Booker longlist, Literary Editor Katy Guest offers her alternative picks

The Guest List 2014

Forget the Man Booker longlist, Literary Editor Katy Guest offers her alternative picks
Jokes on Hollywood: 'With comedy film audiences shrinking, it’s time to move on'

Jokes on Hollywood

With comedy film audiences shrinking, it’s time to move on