Bruce Anderson: Tories may wobble but Brown remains their strongest asset

The party needs an attack dog to take on Mandelson. That's not Cameron's role

Monday 08 February 2010 01:00 GMT

There is one conclusion to be drawn from the past month. The Brownites are better at playing politics than the Cameroons. Now that Peter Mandelson is in charge, every aspect of government has been sublimated into politics, and to Tory-bashing. Gordon Brown is desperate to deflect attention from the size of the Budget deficit, the need for large-scale cuts to reduce it, and his twelve year record of overspending and waste. He wants to fight the next election on the fifty per cent tax rate, Michael Ashcroft's tax status and the Tories' plans to destroy the NHS. This is a strategy which has no basis in reality or truth, yet it is still afloat.

Lord Mandelson deserves much of the credit. But the Tories have assisted him. They have been too high-minded and insufficiently intellectually rigorous. As a result, their plans for public spending have come under far closer scrutiny than that of the government – as if they were in charge already. Public expenditure cuts are a highly complex matter. Anyone who thinks that there is an easy answer has not begun to understand the question. On the one hand, the deficit is far too high and must be reduced. On the other hand, economic activity must be maintained. To some extent, we will have to grow our way out of the deficit. That would not be possible if there were an economic implosion caused by over-hasty reductions in government spending.

As these circumstances are unprecedented, there are no easy formulas. Nor is there a consensus among the experts. Some forecasters believe that the economy could grow by as much as ten per cent between now and the end of 2013. That would generate around £50 billion in additional tax revenue: a useful sum. If we added £50 billion of spending cuts and £20 billion from higher VAT and carbon taxes, the crisis would be over, even though – and this is alarming – the deficit would still be too large, despite all those billions.

But other forecasters cannot see where the growth would come from. They think £20bn to £25bn is more realistic. That would leave a dangerous gap. So who is right, and whom will the markets believe? We will only find that out with the passage of time. This will be of little comfort to an incoming Chancellor, under pressure to take quick decisions: under the scrutiny of nervous markets. The markets are nervous. Though they will not necessarily want quick action, they will want a guarantee of decisive action. These are not areas which admit of certainty, but there is one confident prediction. Assuming a Tory government, with the promise of an early budget and an expenditure plan, the markets would be in a mood of wary expectancy. If there were to be a hung Parliament, there would be the mother of all sterling crises.

Not that the deficit is the only problem. In order to prevent deflation and a depression, it was necessary to throw money at the economy. But will it be possible to manage a recovery without that money turning into inflation? How quickly will it be safe to bring an end to quantitative easing and restore interest rates to normal levels, in time to curtail inflation without aborting the recovery?

Again, no one knows, and there is an exciting range of possibilities. On the high growth and steady cuts scenario, everything would be under control by 2014. Though we had gone through an inflationary blip, which had reached three per cent, that had been dampened down. In 2010-11, there had been a succession of public sector strikes, but picketing social workers had never seemed as threatening as Arthur Scargill's miners. At around four per cent of GDP, the budget deficit was still too high, but with growth set fair and the government's plans to reduce the borrowing requirement to zero over the next five years, there was no pressure on sterling. On the contrary, travellers on the continent were enjoying the pound/euro rate – even if exporters were complaining. As the election approached, the Tories were resurrecting a phrase from the previous decade: "sharing the proceeds of growth". There was now scope for modest tax cuts and spending increases.

For four years, the Leader of the Opposition, Miss Harman, had been predicting disaster, abetted by her shadow Chancellor, Mr Balls. The voters were less inclined than ever to believe them.

Then there is the low growth-high inflation scenario. By 2012, the markets had lost patience with the UK and the government was forced to call in the International Monetary Fund. The resulting cuts had led to widespread unrest and the country was still stuck in stagflation. In response, the Tory Parliamentary party had become ungovernable: "worse than in John Major's day" as one veteran put it. The leadership had tried to reassure itself that the voters would never elect Harman-Balls. Tory MPs were beginning to fear that the 101-year-old Michael Foot could have won this election.

Although it is unlikely that either extreme will occur, a plausible case could be made out for both of them. The science of economics – if science it be – is still in its infancy. It may be that as a result of the recent degringolade, we will have a better idea of how to control the growth of credit, so that it remains a stimulus and never becomes a tsunami. It may also be that every few decades, the human race will succumb to the temptations of irrational exuberance. Above all, to paraphrase Willie Whitelaw, it is hard enough to predict the past without starting on the future.

That does not excuse the Tories' failure to establish their intellectual position. David Cameron ought to have delivered a major speech to a serious audience, outlining his thinking on the deficit and, in broad terms, the measures which his government would adopt. He could have made the reasonable – indeed, irrefutable – point that oppositions cannot plan in detail, because they can neither see all the papers nor sit down for shirt-sleeve discussions with middle-ranking civil servants. He could also have stressed the need for a carefully planned and sustainable programme rather than panic measures. But he should have insisted that planning was not a synonym for procrastination.

All members of the shadow cabinet should have been instructed to read, mark and learn the text. Having done so, they should not have departed from it by the scuitilla of a nuance, on pain of career-jeopardising displeasure. If commentators and other irrelevant persons had asked questions, they too could have been referred to the big speech. The high ground would have been secure.

Leaving the way open for an onslaught on the low ground. The Tories need an attack dog to take on Lord Mandelson. This should not be Mr Cameron's role; he should leave negative campaigning to others. But low blows are an essential part of the electoral process, if pale Ebenezer's fate is to be avoided. "Pale Ebenezer thought it wrong to fight. Roaring Bill, who killed him, though it right".

It is not as if Roaring Mandy is invincible. He is sharp and quick, but there is one recurrent defect: his lost contact with the moral high ground in politics. He has never learned to fake sincerity.

Lord Mandelson has another difficulty. The other day, a Cabinet minister had lunch with a journalist. "What happens if you win?" enquired the hack. The minister looked astonished. It was clear that this possibility had not occurred to him. Having regained the power of speech, he replied: "There'd be an immediate leadership challenge". Mandelson may be running the election campaign, but Gordon Brown will be leading it. That is a challenge beyond even Lord Mandy's powers.

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