Cameron's economic problem
- 20 Oct 08, 08:38 AM
On the banking crisis, he can't say "I told you so" because he didn't.
He can't say "we had a better answer" because he didn't propose one and he's given his backing to the Brown plan.
On what looks like a looming recession, he won't say "let's cut taxes to stimulate the economy" - as the American and Australian governments have - because he's already declared that "the cupboard is bare" and that as a "fiscal conservative" he's not prepared to borrow to finance tax cuts.
Thus, he's limited to proposing small-scale policy responses - yesterday a VAT holiday for small businesses, today a short-term tax cut for them - or to saying, like the Irishman in the old joke, "I wouldn't have started here".
What's more, Gordon Brown, fresh from taking the plaudits for saving the world's financial system, is busy laying a new trap for the Tories. He's pledging to carry on spending and borrowing in the downturn as the old master John Maynard Keynes recommended. There are political as well as economic reasons for him doing this.
The government wants to sprinkle magic dust on the record borrowing and debt statistics which will be published soon so as to turn them from a negative story into a positive one - from evidence of past failure to a platform for future success.
In addition, the prime minister is addicted to his favourite electoral narrative - Labour investment versus Tory cuts - and sees the chance to run it again. Specifically, if - and it is a very big if - the government can bring forward its programme to re-build schools that would cut the money which the Tories have allocated for their "free schools" programme and allow ministers to ask "what would you cut to pay for your plans?"
This morning David Cameron warned against a government spending splurge which would keep interest rates high. However, he went on to say that if all ministers are planning is a re-ordering of their spending priorities he would back that.
Thus, the Conservative leader finds himself in the extraordinary position of facing a government presiding over a failing economy for the first time in 15 years and with relatively little he can say about it.
Now some suggest this is a turning point in politics. They point to the fact that the Tory poll lead is now down to single figures. They argue that the state and Gordon Brown are back in fashion and the Tories' inexperienced leaders find themselves on the wrong side of history.
This is massively premature. Let's remember a simple point. A government that was, in any case, vulnerable to the "time for a change" argument looks set to go through the long, slow political agony of a recession with the job cuts, housing losses and spending constraints that will accompany it.
What's changed, though, is the fact that the Tories can no longer make the political weather and will often be spectators as ministers return to centre stage. David Cameron believes that at times like these the key task he has is to avoid making blunders. That's why he refers to backing the Brown bank rescue plan as "a big call" and believes that he hasn't had enough credit for it. The next year is going to be a huge test of his and his party's nerve.
