Steve Richards: Tory policy is a recipe for disaster

For all the Government's agonies, Mandelson's main argument is irrefutable

Share
Related Topics

Strip away the layers of evasive political guile and what was most striking about Peter Mandelson's speech yesterday was the reasoned modesty of his arguments. Much thought had gone into his address on the explosive topic of public spending and quite a few hands had laboured over it, but his arguments in favour of a fiscal stimulus during a recession and the sensitivity about when and how the debt is repaid would not be particularly contentious in other equivalent countries. In Britain alone the debate is at a fever pitch and this is because of how Conservatives have responded to the economic crisis.

Apparently Gordon Brown is obsessed with searching for dividing lines in relation to his opponents. Over the economy he has not had to look very far. David Cameron gave him one when he took the most politically significant policy decision of this parliament.

More or less a year ago, Cameron and George Osborne declared that they were scrapping their much-vaunted plans to stick with Labour's spending commitments. Instead they called for immediate spending cuts and opposed the fiscal stimulus being planned by the government. A little earlier they had also chosen to oppose the nationalisation of Northern Rock, a decision that had been urged on the Government from more sensible voices across the political spectrum. These are very big dividing lines which the Conservatives chose to erect. They did not have to do so. There were powerful arguments they could have made if they had moved in a different direction.

Presumably if the duo had been in power rather than in the more constrained position of choosing to erect dividing lines, there would have been spending cuts at the height of the recession, no fiscal stimulus and no takeover of banks on the verge of collapse. Their policies would have left Britain isolated from the rest of the world, from the last gasps of the Bush era and on to Obama in the US to Germany and France. The US, France and Germany launched fiscal stimulus packages that were substantially bigger than the one unveiled in Britain. The main debate in those countries was whether it should have been bigger still.

The distinct economic illiteracy of the Conservatives' position merits further exploration, as it tells us much about the leadership of both Cameron and Osborne. They were adamant at the start of their reign that they would stick at first to the Government's projected spending plans, which were eye-wateringly tight. This was astute partly for tactical reasons as they recognised the dangers of getting into a detailed pre-election debate about cuts. Perhaps even a bit of them believed it was the right policy, given that the Government's future spending plans were tough and demands on public services would continue to grow. They knew some activists disapproved. They knew they would come under pressure from their right-wing supporters in the media to change their stance. They were insistent they would not do so.

At the first whiff of gunfire last autumn they changed and marched back to their comfort zone of immediate spending cuts, the equivalent of Neil Kinnock announcing that in the early 1990s he had changed his mind on the virtues of multilateralism and was switching back to his previous support for unilateral nuclear disarmament. Kinnock would have been slaughtered for making such a move. But Cameron is still widely hailed as a great modernising leader in spite of his focus on cuts and the party's still rabid euro-scepticism, two of its defining features in the 1990s.

I can see why Cameron and Osborne re-shaped their party's economic policy. Having exaggerated the scale of Britain's debt crisis, they obviously needed distinctive policies to address it. Lacking experience in economic policy-making, Cameron and Osborne consulted the party's three former chancellors, Geoffrey Howe, Norman Lamont and Kenneth Clarke. I am a fan of all three, but they are all still too nostalgically attached to the 1981 budget, not surprisingly in Howe's case as he delivered it. This was the budget that defined the Thatcher government's monetarist path, one that incidentally it did not follow for very long.

The causes and consequences of the 1980s' recession were incomparably different to the current one and yet the Tory leadership speak as if it is the same, even reviving Thatcher's simplistic metaphors about the country being the same as a household that must repay its debt. Probably the former chancellors told Cameron and Osborne what they wanted to hear. In the end, Messrs Hague, Duncan Smith and Howard found it easier to flow with media and party orthodoxy. The current leadership has done the same in relation to public spending as it did when the row about grammar schools erupted in the summer of 2007.

But in the longer term, the shift presents Cameron and his shadow cabinet with the problems he had forecast when he briefly adopted a more pragmatic approach. He is now pledged to a revolutionary shrinking of the state without being able to specify how he will go about making the big changes. His speech last week about cutting the subsidies on meals in parliament was beyond parody. Cameron is still trying to play Tony Blair in the run-up to 1997, proposing small incremental policies. The difference is that Blair was only planning incremental change.

Yesterday Mandelson made use of the space that has opened up in policy terms by highlighting the differences. For all the Government's recent hopelessly agonised contortions, his main arguments are irrefutable. The Government had to invest in the recent past in order to revive derelict public services and it has to do so now to stimulate economic recovery.

At a point when the move can be made without wrecking the economy, the debt will be re-paid. The message does not fit easily into a soundbite as it comprises a defence of the past, an investment-versus-cuts message during the recession, and a need to find substantial savings when the economy is growing again. Whatever the complexities and evasiveness of Mandelson's speech, the arguments are echoed in various forms around the world. The Conservatives choose to be in a different place and, for the country, it is a dangerous one.

s.richards@independent.co.uk

React Now

iJobs Job Widget
iJobs General

JavaScript Developer (Angular, Web Forms, HTML5, Ext JS,CSS3)

£40000 - £45000 per annum + Benefits + Bonus: Harrington Starr: JavaScript Dev...

BC2

£50000 - £70000 per annum: Harrington Starr: Business Analyst Consultant (Fina...

SAP Data Migration Consultant

competitive: Progressive Recruitment: My client, a FTSE 100 organisation are u...

Programme Support, Coms, Bristol, £300-350p/d

£300 - £350 per day + competitive: Orgtel: My client, a leading bank, is curre...

Day In a Page

Read Next
 

i Editor's Letter: The final instalment of our WW1 series

Oliver Duff Oliver Duff
 

Simon Usborne: The more you watch pro cycling, the more you understand its social complexity

Simon Usborne
A History of the First World War in 100 Moments: Peace without magnanimity - the summit in a railway siding that ended the fighting

A History of the First World War in 100 Moments

Peace without magnanimity - the summit in a railway siding that ended the fighting
Scottish independence: How the Commonwealth Games could swing the vote

Scottish independence: How the Commonwealth Games could swing the vote

In the final part of our series, Chris Green arrives in Glasgow - a host city struggling to keep the politics out of its celebration of sport
Out in the cold: A writer spends a night on the streets and hears the stories of the homeless

A writer spends a night on the streets

Rough sleepers - the homeless, the destitute and the drunk - exist in every city. Will Nicoll meets those whose luck has run out
Striking new stations, high-speed links and (whisper it) better services - the UK's railways are entering a new golden age

UK's railways are entering a new golden age

New stations are opening across the country and our railways appear to be entering an era not seen in Britain since the early 1950s
Conchita Wurst becomes a 'bride' on the Paris catwalk - and proves there is life after Eurovision

Conchita becomes a 'bride' on Paris catwalk

Alexander Fury salutes the Eurovision Song Contest winner's latest triumph
Pétanque World Championship in Marseilles hit by

Pétanque 'world cup' hit by death threats

This year's most acrimonious sporting event took place in France, not Brazil. How did pétanque get so passionate?
Whelks are healthy, versatile and sustainable - so why did we stop eating them in the UK?

Why did we stop eating whelks?

Whelks were the Victorian equivalent of the donor kebab and our stocks are abundant. So why do we now export them all to the Far East?
10 best women's sunglasses

In the shade: 10 best women's sunglasses

From luxury bespoke eyewear to fun festival sunnies, we round up the shades to be seen in this summer
Germany vs Argentina World Cup 2014: Lionel Messi? Javier Mascherano is key for Argentina...

World Cup final: Messi? Mascherano is key for Argentina...

No 10 is always centre of attention but Barça team-mate is just as crucial to finalists’ hopes
Siobhan-Marie O’Connor: Swimmer knows she needs Glasgow joy on road to Rio

Siobhan-Marie O’Connor: Swimmer needs Glasgow joy on road to Rio

18-year-old says this month’s Commonwealth Games are a key staging post in her career before time slips away
The true Gaza back-story that the Israelis aren’t telling this week

The true Gaza back-story that the Israelis aren’t telling this week

A future Palestine state will have no borders and be an enclave within Israel, surrounded on all sides by Israeli-held territory, says Robert Fisk
A History of the First World War in 100 Moments: The German people demand an end to the fighting

A History of the First World War in 100 Moments

The German people demand an end to the fighting
New play by Oscar Wilde's grandson reveals what the Irish wit said at his trials

New play reveals what Oscar Wilde said at trials

For a century, what Wilde actually said at his trials was a mystery. But the recent discovery of shorthand notes changed that. Now his grandson Merlin Holland has turned them into a play
Can scientists save the world's sea life from

Can scientists save our sea life?

By the end of the century, the only living things left in our oceans could be plankton and jellyfish. Alex Renton meets the scientists who are trying to turn the tide
Richard III, Trafalgar Studios, review: Martin Freeman gives highly intelligent performance

Richard III review

Martin Freeman’s psychotic monarch is big on mockery but wanting in malice