Lionel Zetter is an author and freelance public affairs consultant who is also a director of ComRes and of the Enterprise Forum. His most recent book is Blueprint: The Politics, Principles and Personalities of the New Conservative Government, which was published in October.
I have long argued that when Tony Blair finally resigned he shipped Gordon Brown a blatant hospital pass*. The New Labour brand was badly tarnished by the Iraq War, the party’s poll rating was slipping, and the economic storm clouds were gathering.
Having said all that, if Blair to Brown was a horrendous hospital pass, Brown to Cameron could turn out to be the ultimate hospital pass. In 1997 Labour inherited a strong economy, with growth stretching back to the UK’s ejection from the Exchange Rate Mechanism in September 1992. The legacy which David Cameron and George Osborne will inherit in 2010 could not be more different, and in many ways could not be any worse.
Just in raw statistical terms the numbers are terrifying. In his April 2009 Budget, Chancellor Alistair Darling estimated that government borrowing this year would reach £175 billion. For those who cannot get their heads around figures of that magnitude, that means that the Government is currently borrowing £6,000 a second. In July 2009 the Office of National Statistics announced that the National Debt stood at £799 billion, and it is edging ever closer to the £1 trillion mark.
On top of this unfunded public pension liabilities are already in excess of £1 trillion, and there is off balance sheet borrowing of over £200 billion under the Private Finance Initiative. Finally, there are the huge liabilities which the Government was forced to take on in order to prevent a collapse of the banking system last year. All in all it is not surprising that the Institute for Fiscal Studies estimates that we will still be paying off this debt in 2032.
Some of the current Government’s recent problems illustrate to some degree the problems the Tories will face if elected next year. When Mr Brown and Mr Darling try to save a few tens of millions of pounds by cutting the TA training budget or restricting the tax relief on Childcare Vouchers, they are howled down and forced to retreat. Because of the nervousness of their own backbenchers, and because there is a general election around the corner, the Pre-Budget Report next week is unlikely to contain any significant proposals for spending cuts or tax rises.
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