Sean O'Grady: Peanuts: the true value of Brown's economic pledge

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The Independent Online

What are the economic consequences of Mr Brown's speech? They're pretty minimal, and not just because few expect him to be Prime Minister for long. Take the new National Investment Corporation, which will "provide finance for growing manufacturing and other businesses".

It will have a budget of £1bn. That sounds a lot, but is peanuts in the context of the £120bn of annual business investment in the UK, and the £32bn slump in that figure during the recession. It is little more than a cheap way to revive vague memories of past Labour interventionist glories, such as Attlee's Industrial and Commercial Finance Corporation, Wilson's Industrial Reorganisation Corporation and Callaghan's National Enterprise Board. Those were the days, my friends.

Mr Brown also repeated Alistair Darling's promise of a Fiscal Responsibility Act, which, like the old fiscal "golden rules", can be repealed if the going gets rough. And all the pledges on public services will be set to nought when the next government has to scale back the biggest budget deficits in peace time – raising taxes, cutting services, depressing living standards and provoking violent conflict with powerful public sector unions who can be relied on to defend pensions, jobs and wages. There is not, as Mr Brown and Lord Mandelson imply, a "nice" way to cut public spending, exempting "frontline services". There will be blood.