this reality. The public are battered and bruised and are in no
mood that to find an incoming government, having just won, finds that
- Surprise, surprise !! - there’s no money in the kitty and things
are going to be mighty tough.
Since that is known now, NOW is the time to warn the electorate that
“whoever wins things will be tough but that at least we know where
we’re going and why. That’s the best we can offer you, but blame
Gordon Brown for creating the mess which we will have to clear up”
This strategy will, to a certain extent, defuse the anger that will
come, but there’s no other way but to deal with it NOW.
xxxxxxxxxxxxxxxx cs
===============================
THE TIMES 23.2.08
Election victory may not be worth winning
Gary Duncan: Economic View
In politics, as in economics, there is seldom such a thing as a “dead
cert”. Shocks and surprises, upsets and uncertainties are ever
present. Yet it is increasingly taken as a virtual certainty that the
Conservatives will oust Labour from power at the next election.
The growing presumption is that David Cameron will be a shoo-in as
the next prime minister, whenever Gordon Brown goes to the country.
The Tories are already 15 to 20 points ahead of Labour in the polls,
and we are probably only halfway through what looks destined to be
Britain's worst recession since the Second World War.
With the merest green shoot of recovery unlikely to be sighted before
winter, and already soaring unemployment set to climb to more than
three million by next year, Mr Cameron would have to be either
catastrophically incompetent or calamitously ill-starred not to win
the keys to Downing Street. He should be so lucky — for if there is
one fate far worse than losing the next election, it must surely be
winning it.
There are always good elections to win, and bad ones. It is the lot
of politicians to play the hand that destiny deals them. Too bad. Yet
it is hard to recall, or even to imagine, a more inauspicious set of
circumstances in which to take power than those that are likely to
greet Mr Cameron.
In 1997 a grinning Tony Blair was able to breeze into No10 on a glad,
confident June morning. Bliss it was in that dawn to be Labour. But
to be Mr Blair, heir to a more or less golden economic inheritance,
was very heaven. Alas for Mr Cameron, there is little that is
heavenly or blissful about the legacy to be left to him by Mr Brown.
Rather, it looks positively hellish. Not only is a new Conservative
administration set to be passed an economy in a likely state of semi-
stagnation but also, with the public finances also mired deep in the
red, its room for manoeuvre will be severely constrained.
Meanwhile, the inescapable task of restoring relative solvency to
government accounts is likely to require an unpalatable mixture of
tax rises and spending cuts on a bad-tempered electorate that already
feels battered and bruised. To some senior Tories, this looks scarily
like a one-way ticket to a first-term defeat. Older Tory hands recall
that Margaret Thatcher took power in 1979 in almost equally
unpromising circumstances and that the harsh economic medicine she
was obliged to administer meant that she would have been ousted in
the 1983 election were it not for the Falklands War.
The daunting scale of the challenges that Mr Cameron is likely to
confront can be seen from both the bleak medium-term prospects for
the economy and the intertwined issue of the greatly weakened state
of the national finances. The Tories' predicament is not merely that
they will inherit an economy that is struggling to revive itself from
a debilitating recession. As I suggested here last week, the more
profound problem is that the destructive toll from the present slump
on Britain's productive potential risks ensuring that the recovery is
lacklustre and the economy prone to relapse. The scarring effect of
this recession may leave the country's prospects enfeebled for a decade.
In turn, the anaemic recovery that seems to lie ahead will aggravate
the dire state of the Treasury's books when these are handed over to
the next Government.
As bleak January figures for the public finances confirmed last week,
the recession is badly eroding the tax receipts flowing into the
Treasury. Over the past three months, payments of VAT have dropped by
more than 14 per cent compared with a year ago; corporation tax
revenues have plunged by a quarter. These trends will get much worse
before they get better. The City is warning that net government
borrowing in the 2009-10 and 2010-11 financial years is likely to top
£200 billion, compared with the £118 billion and £105 billion
forecast by Alistair Darling.
The consequences are spelt out with grim clarity by the Institute for
Fiscal Studies (IFS) in its invaluable annual Green Budget. Since
economic damage from the recession is set to prove lasting, “much of
the increase in borrowing is expected to be persistent rather than to
disappear”. As a result, the national debt is set to swell to at
least 57 per cent of GDP, the highest since the early Seventies, by
2013-14. This marks a rise of more than 21 percentage points,
equivalent to £10,000 for every family in the UK, since 2007.
The only scant good news for an incoming government is that the IFS
concludes that — at least at the present relatively low levels of
interest rates faced by Western governments on their debts — this
burden looks like one that the country can shoulder, if only just.
The bad news is that to make this sustainable, a new administration
will have no option but to push ahead with a vicious squeeze on
public spending already pencilled in by the present Government, and
so far remarkably little understood.
On these existing plans, public spending from 2011 to 2014 is slated
to rise in real terms, after inflation, by a meagre 1.1 per cent a
year. This is drastically below the average rates of more than 4 per
cent in real terms during Labour's spending boom, and less than a
third of the average pace seen since 1997.
With what modest spending growth there is set to be absorbed by the
benefit bills from spiralling unemployment and the rising interest
bills on the national debt, this leaves little or no extra money for
the Tories' promised political priorities of health, education,
defence and fighting crime.
For Mr Cameron, then, a victory that looks to be in the bag could
quickly prove bittersweet, at best.
this reality. The public are battered and bruised and are in no
mood that to find an incoming government, having just won, finds that
- Surprise, surprise !! - there’s no money in the kitty and things
are going to be mighty tough.
Since that is known now, NOW is the time to warn the electorate that
“whoever wins things will be tough but that at least we know where
we’re going and why. That’s the best we can offer you, but blame
Gordon Brown for creating the mess which we will have to clear up”
This strategy will, to a certain extent, defuse the anger that will
come, but there’s no other way but to deal with it NOW.
Christina
===============================
THE TIMES 23.2.08
Election victory may not be worth winning
Gary Duncan: Economic View
In politics, as in economics, there is seldom such a thing as a “dead
cert”. Shocks and surprises, upsets and uncertainties are ever
present. Yet it is increasingly taken as a virtual certainty that the
Conservatives will oust Labour from power at the next election.
The growing presumption is that David Cameron will be a shoo-in as
the next prime minister, whenever Gordon Brown goes to the country.
The Tories are already 15 to 20 points ahead of Labour in the polls,
and we are probably only halfway through what looks destined to be
Britain's worst recession since the Second World War.
With the merest green shoot of recovery unlikely to be sighted before
winter, and already soaring unemployment set to climb to more than
three million by next year, Mr Cameron would have to be either
catastrophically incompetent or calamitously ill-starred not to win
the keys to Downing Street. He should be so lucky — for if there is
one fate far worse than losing the next election, it must surely be
winning it.
There are always good elections to win, and bad ones. It is the lot
of politicians to play the hand that destiny deals them. Too bad. Yet
it is hard to recall, or even to imagine, a more inauspicious set of
circumstances in which to take power than those that are likely to
greet Mr Cameron.
In 1997 a grinning Tony Blair was able to breeze into No10 on a glad,
confident June morning. Bliss it was in that dawn to be Labour. But
to be Mr Blair, heir to a more or less golden economic inheritance,
was very heaven. Alas for Mr Cameron, there is little that is
heavenly or blissful about the legacy to be left to him by Mr Brown.
Rather, it looks positively hellish. Not only is a new Conservative
administration set to be passed an economy in a likely state of semi-
stagnation but also, with the public finances also mired deep in the
red, its room for manoeuvre will be severely constrained.
Meanwhile, the inescapable task of restoring relative solvency to
government accounts is likely to require an unpalatable mixture of
tax rises and spending cuts on a bad-tempered electorate that already
feels battered and bruised. To some senior Tories, this looks scarily
like a one-way ticket to a first-term defeat. Older Tory hands recall
that Margaret Thatcher took power in 1979 in almost equally
unpromising circumstances and that the harsh economic medicine she
was obliged to administer meant that she would have been ousted in
the 1983 election were it not for the Falklands War.
The daunting scale of the challenges that Mr Cameron is likely to
confront can be seen from both the bleak medium-term prospects for
the economy and the intertwined issue of the greatly weakened state
of the national finances. The Tories' predicament is not merely that
they will inherit an economy that is struggling to revive itself from
a debilitating recession. As I suggested here last week, the more
profound problem is that the destructive toll from the present slump
on Britain's productive potential risks ensuring that the recovery is
lacklustre and the economy prone to relapse. The scarring effect of
this recession may leave the country's prospects enfeebled for a decade.
In turn, the anaemic recovery that seems to lie ahead will aggravate
the dire state of the Treasury's books when these are handed over to
the next Government.
As bleak January figures for the public finances confirmed last week,
the recession is badly eroding the tax receipts flowing into the
Treasury. Over the past three months, payments of VAT have dropped by
more than 14 per cent compared with a year ago; corporation tax
revenues have plunged by a quarter. These trends will get much worse
before they get better. The City is warning that net government
borrowing in the 2009-10 and 2010-11 financial years is likely to top
£200 billion, compared with the £118 billion and £105 billion
forecast by Alistair Darling.
The consequences are spelt out with grim clarity by the Institute for
Fiscal Studies (IFS) in its invaluable annual Green Budget. Since
economic damage from the recession is set to prove lasting, “much of
the increase in borrowing is expected to be persistent rather than to
disappear”. As a result, the national debt is set to swell to at
least 57 per cent of GDP, the highest since the early Seventies, by
2013-14. This marks a rise of more than 21 percentage points,
equivalent to £10,000 for every family in the UK, since 2007.
The only scant good news for an incoming government is that the IFS
concludes that — at least at the present relatively low levels of
interest rates faced by Western governments on their debts — this
burden looks like one that the country can shoulder, if only just.
The bad news is that to make this sustainable, a new administration
will have no option but to push ahead with a vicious squeeze on
public spending already pencilled in by the present Government, and
so far remarkably little understood.
On these existing plans, public spending from 2011 to 2014 is slated
to rise in real terms, after inflation, by a meagre 1.1 per cent a
year. This is drastically below the average rates of more than 4 per
cent in real terms during Labour's spending boom, and less than a
third of the average pace seen since 1997.
With what modest spending growth there is set to be absorbed by the
benefit bills from spiralling unemployment and the rising interest
bills on the national debt, this leaves little or no extra money for
the Tories' promised political priorities of health, education,
defence and fighting crime.
For Mr Cameron, then, a victory that looks to be in the bag could
quickly prove bittersweet, at best.
Monday, 23 February 2009
The Tories don’t seem to have adapted their electoral strategies to
The Tories don’t seem to have adapted their electoral strategies to
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