Thursday, April 25, 2024
HomeNewsCerberus: It is suicidal for the Tories to junk sound money

Cerberus: It is suicidal for the Tories to junk sound money


In office but not in power. That best sums up the plight of Theresa May and her shell-shocked government in the wake of the election marked by shattered expectations and the startling emergence of sub-Marxist Corbynism as a credible political force.

The stuffing has been knocked out of a Conservative government that only three months ago was eagerly eyeing a three-figure majority and the obliteration of the Labour Party. But as Labour rocketed from 30 per cent of the vote to 40 per cent, the fact that the Tories climbed to 42 per cent (their best result since 1987) was of no comfort. Mrs May was seeking a clear mandate to help her drive a hard bargain in the Brexit talks and to push through some controversial changes at home. All of it has come to nothing, leaving us with a zombie administration propped up by the DUP and a Prime Minister whose personal authority has been shredded.

Privately, Tory MPs are in despair. “I have never been so fed up in all my political life, “ one long-standing political figure told me last week.

The party needs an inquest of monumental proportions but, unless some  determined outside benefactor steps in, it is unlikely to get it. Too many people at the top would rather forget the general election of 2017.

But some things are clear already. If the Conservatives are not prepared to trumpet the virtues of conservatism, they neither deserve to win – nor will they. Their manifesto of 2017 has already rightly been panned for its many foolish tactical errors – such as the so-called “dementia tax” and other assaults on the Tory-leaning pensioner vote – but strategically it was even more dire with its pious insistence that the Government would not “drift to the right” and its condemnation of “untrammelled free markets”.

The fruits of this cowardly and opportunistic repudiation of free-market Conservatism are already being felt. Jeremy Corbyn and his economically illiterate followers believe that public money can be conjured out of thin air – hence their insane belief that they can find an extra £50 billion of spending by racking up taxes on the wealthy and businesses. The Corbynistas have pronounced an end to austerity as if balancing the nation’s books and living within your means are some kind of optional extra to be magicked away at the flick of a wand.

The fact that the country is nearly £2 trillion in debt, that the debt to GDP ratio is nearing 90 per cent and that the deficit – which was meant to be eliminated in 2015 – is still £50 billion a year ought to be pause for thought even for Corbyn and Co. But far more alarmingly, the Conservatives, who only five minutes ago were denouncing Labour’s magic money tree, are also giving up on fiscal prudence.

‘Spreadsheet Phil’ may look like an accountant, but he is not acting like one with his observation that the country is “weary” of austerity after seven lean years. He now intends to balance the nation’s books by around 2025 – a full 10 years after the target set by his predecessor George Osborne. Whatever happened to the “long-term economic plan” that Osborne and Cameron trumpeted only two years ago? Has the Tory party succumbed to an economic strain of Alzheimer’s?

With top cat Phil signalling a further loosening of the purse-strings, all kinds of ministerial and backbench Tory mice are coming out to play, variously demanding more money for just about everything, from education to public sector pay. They have bought the Corbyn propaganda, ignorant of the fact that private sector pay today is on average 4 per cent lower than that in the public sector, where, of course, job security and perks such as pensions are far greater. As for austerity, as the Taxpayer’s Alliance reported last week, at £772.8 billion a year, total UK public spending is just 0.2 per cent lower than it was in 2009/10, just after the crash. Some austerity! Go to Greece, Ireland and Spain if you want to see what real austerity looks like with big cuts in pensions, benefits and the pay of public servants – with job losses to boot.

Forget about a drift to the right. Under May, the Tories are swerving left, turning their backs on the principles of sound money that Mrs Thatcher laid down nearly 40 years ago.

Politically, as Corbyn has already demonstrated, this is suicidal. In a bidding war over who can increase public spending furthest and fastest, the Tories cannot win. No one is going to vote Conservative for higher wages for nurses and teachers and higher spending on hospitals and schools. The challenge for this Government is to remind the public that Labour always runs out of other people’s money. As the Labour Chief Secretary to the Treasury, Liam Byrne, put it in his famous letter to his successor in 2010 – “I am afraid there is no money.”

This eternal challenge was criminally ducked in the election campaign when the Tories, wedded to the inherently implausible notion that Mrs May walked on water, managed to go through a seven-week battle without hardly mentioning the economy, their strongest card today as it has always been. Now they are in danger of compounding that error, tearing up their reputation for sound economic management in the hope they can curry favour with a public sector workforce who mostly vote Labour anyway.

Keep this up and Mr Corbyn will soon be weighing up his chances of transferring his allotment to the Downing Street rose garden.

(Image: FCO)

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Cerberus writes a blog every Monday on the state of modern Britain.

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