Doomsday Dossier Nightmare Scenario

There are nightmare scenarios, and then there are Nightmare Scenarios

According to the Sunday Times:

"Secret “doomsday” plans for 20% cuts in public spending are being prepared by senior civil servants, who fear politicians are failing to confront the scale of the budget black hole.

Whitehall mandarins have begun creating detailed dossiers containing reductions in expenditure that are far deeper than the more modest savings being proposed by Labour and Conservative politicians.

Senior civil servants have let it be known that they are sceptical about the claims made by both main parties on public spending. Mandarins, fearing a prolonged recession and a collapse in tax revenue, have begun planning for more severe cuts of up to 20%.

The dossiers will be handed to cabinet ministers the day after the next general election, whichever party wins."

Of course, the civil service always prepares secret plans for an incoming administration - Tyler himself was involved in just such an exercise at HMT ahead of the 1979 election. But usually the plans are based on each party's own announced policies and manifesto commitments.

In this case, the mandarins are having to work blind: Labour politicos ludicrously deny there's a need for any cuts, and the Tory leadership is still not facing up to anything like the full scale of the crisis (even the 10% cuts figure poor old Lansley blurted out is based on the official budget projections, which are far too optimistic - see previous blogs).

But 20% - that is a serious SERIOUS cut.

In cash terms, a 20% cut in 2010-11 would be £140bn, or around 10% of GDP. And even if it was phased in over say two or three years, it would still end up taking 10% out of our already weakened GDP.

And understand this - a 10% GDP whack is a huge amount. It's twice what we've lost so far in this slump.

Those green shoots that many commentators are currently bigging up would be exposed as the mirage they undoubtedly are. In reality, the only reason the economy is apparently levelling out now is that the government sector is taking the strain, both in terms of direct support and a much lower tax take. The mandarins know it is wholly unsustainable, and with 20% spending cuts, it goes into reverse quicker than a Gordo U-turn.

Ah, you say, that 20% figure will just be the mandarins' Worst Case Scenario. It will probably never happen.

Hmm.

The OECD reckons we'll be borrowing 14% of GDP next year, a banana republic style figure unprecedented in our peacetime history. International investors will demand it's addressed, and with tax revenues already out for the count, massive spending cuts are the only option available. And given the extent of that government borrowing (aka living beyond its means), a 20% cut is precisely the kind of magnitude required.

But there's worse.

As we all know by now, some elements of public spending cannot be cut.

Debt interest is one, and that is growing rapidly. Payments under PFI contracts is another.

Welfare payments - including unemployment benefits - could be cut, and almost certainly will be. But it will be very painful, and politicos will not relish being branded as Thatcherite grinders of poor faces.

Which means that the really savage cuts will be concentrated on our public services - the £400bn pa which comprises Departmental Expenditure Limits (DEL).

So let me see... a targeted £140bn cut from a spending base of £400bn... ahh... that's... er... well, bugger me! That's not a 20% cut... it's a 35% cut!

No wonder the mandarins are trying to bounce Darling into a public sector wage freeze (although possibly not for their good selves).

Triumphs Of The Commissariat

Where Commissars fear to tread

We really shouldn't keep knocking the Commissars. After all, they're only trying to give us A Better World. A world that is ordered, and fair, and peopled with... well, better people. It's entirely our fault that we keep letting them down.

Take schools. This morning we heard about another selfish parent attempting to circumvent the Gosplan allocation protocol for state school places. In this case, she used her mother's address in an attempt to get her son into a good school, and quite rightly, she was sent to a heavy labour gulag for intensive re-education prosecuted for fraud.

How many times must we be told? Everybody must know by now there are far too few good schools to go round, and it simply isn't acceptable for non-Commissariat parents to insist on priority for their own children.

Indeed, as Commissarette Fiona Miller told us this morning on the state broadcasting network, it's also unacceptable for petit-bourgeois elements to move house simply in order to get into the right school catchment area. She herself knows of a couple who moved in just down the road from the very dacha she shares with our ex-Information Commissar, specifically to gain access to the same excellent local school the young Miller-Campbells attend. Can you imagine such disgraceful behaviour!

And then there's the latest attempt by reactionary counter-revolutionaries to undermine the achivements of our glorious People's Health Service.

According to the so-called Commons Health Select Committee, one-in-ten NHS hospital patients is harmed as a result of the treatment received:

‘Tens of thousands of patients suffer unnecessary harm each year and there is a huge cost to the NHS in consequence... Government policy has too often given the impression that there are priorities, notably hitting targets, achieving financial balance and attaining Foundation Trust status, which are more important. This has undoubtedly, in a number of well-documented cases, been a contributory factor in making services unsafe.’

This is preposterous. Don't these idiots realise what a triumph the Commissariat targets have been? And when it comes to patient safety, you've only got to glance at the official chart to see how brilliantly things are going:

As everyone can surely see, in the last five years reported safety incidents at NHS hospitals have soared! It's a triumph of targeting, and a triumph of Commissariat planning.

Now why can't we all give credit where credit is due?

*****

So just how dangerous are our NHS hospitals?

As regular readers may recall, Tyler's Mum was a nurse in a pre-NHS flagship hospital (the Royal Devon and Exeter - now sadly down the NHS plughole). And as she always used to tell us, hospitals are dangerous places. The fact that people sometimes get harmed is not hugely surprising.

What we really need to know is whether things are getting worse or better - especially given all the cash government has been pumping into patient safety - and whether NHS hospitals are better or worse than industry norms?

And on those vital questions it seems we have absolutely no idea. As the Commons Health Committee says:

"55. The evidence... both in England and internationally, indicates that the extent of medical harm is substantial, even on a conservative estimate, and that much is avoidable. International studies suggest that about 10% of all patients who are admitted to hospital suffer some form of harm.

Judging how far patient safety policy has been successful requires more reliable data regarding how much harm is done to patients. Unfortunately, neither the NPSA nor the DH was able to provide us with that. Government estimates of avoidable harm and the attendant financial costs are extrapolations from old, very limited, data; and no attempt has been made to produce reliable up-to-date figures."

So there we have it. We are spending many tens - possibly hundreds - of millions on patient safety programmes and monitoring systems: the National Patient Safety Agency (NPSA) alone costs us £30m pa. Yet the reams of figures they produce are virtually useless.

It's yet another example of top-down tractor production management. Yes, there are always plenty of targets and numbers, but they are so distorted (in this case by self-reporting bias), they are meaningless and often downright counter-productive.

So how could we manage hospital safety?

Answer: copy the system we have with commercial airlines.

I know nothing about the technicalities of airline safety, or how it's delivered. But I do know that some airlines have been much safer than others. And those are the ones I fly with.

Once again, we need the good old market. Where the Commissars struggle, choice and competition would soon weed out any operators perceived to be dangerous. Yes, OK, we would also need some minimum safety regulation as well. But that could be achieved for far less cost than the massive and useless NHS "safety" bureaucracy we currently have in place.

Another one for George's List.

PS Tyler's flabbers were well and truly gasted by the tale of Tereza Tosbell (pic above):

"A patient was so disgusted at the "filthy" hospital ward she was being treated on that she forced herself out of bed and cleaned it while still attached to a drip. Tereza Tosbell, 48, who works as a cleaner, became angry as she watched hygiene staff at work and claims their brief visit left the room as dirty as they found it. So she tracked down cleaning materials and attacked the sink, radiator and curtain rail she said had not been wiped by the official cleaners in Colchester General Hospital. "It is shameful that the cleaners just wiped the basin with a paper towel and totally ignored the taps which are the most important part. The radiator was filthy, there were cobwebs on the curtain rail round my bed and you could write your name in the dust on the windowsill," said Miss Tosbell."

And what did Colchester General Hospital have to say for itself?

"We have had a number of unannounced hygiene and cleanliness inspections by the Healthcare Commission and all wards inspected have been found to have a good level of cleanliness and maintained in good general repair. In the annual health check ratings for 2007-2008 we scored maximum marks for safety and cleanliness."

Maximum marks huh? Do we believe the Commissariat tractor stats or the customer? Tricky.

OECD Verdict On Labour

The OECD has just published its latest Economic Survey of the United Kingdom. And it's a pretty damning verdict on 12 years of Labour government.

To start with, the OECD reminds us exactly where Brown's, ahem, "economic miracle" came from - a huge government spending splurge, combined with easy credit.

On government spending, the following chart graphically illustrates how spending soared after Brown turned on the taps in 2000 (right hand panel). In the following 8 years, it rose by getting on for 10 percent of GDP, and that at a time when GDP itself was rising strongly:

So from being comfortably below the average of other G7 countries throughout the nineties, the UK's public spending burden overtook the average in 2005, and has not looked back.

And as the chart also shows (left hand panel), a large chunk of that extra spending was funded by increased borrowing. Again, Brown moved from borrowing roughly the same, or less, than other governments (as a percent of GDP), to borrowing more than the others - and that of course, is only the official debt, not including off-balance sheet Enron items.

Easy credit was not confined to the public sector. The OECD highlights the fact that the UK's private sector credit boom was allowed to become much more extreme than elsewhere, largely through our extraordinary house price/credit spiral:

"Although the credit cycle touched many assets and countries, the UK housing cycle was particularly intense: nominal house prices more than doubled in the ten years to their peak. The asset-price and credit boom was self-perpetuating for a time, as easy availability of credit stoked demand and raised asset prices, which in turn increased the value of collateral and engendered further borrowing. In the end, this proved unsustainable."

The following chart shows how our house prices spiralled way beyond even the excesses in the US, and have still not got back on track:

It's a right old Labour mess.

And where do we go now?

The OECD emphasises the vital importance of clear fiscal rules, setting out a clear path back to sanity. However, crucially, the new rules must deal with spending as well as borrowing, they must encompass Enron debt, and they must be honest about so-called fiscal drag:

"The original fiscal rules could be amended in a number of ways, rather than being reinstated. The reformulated rules should be forward looking, ensure medium-term spending discipline and account more explicitly for off balance sheet public liabilities. Finally, income tax thresholds and national insurance thresholds should be linked to wage, rather than price inflation so that fiscal drag is handled more transparently."

Spot on.

We have long called for such rules, and in current circs, they are more vital than ever.

We simply cannot leave things to unfettered political discretion. Not only would that consign us and our grandchildren to a life of low growth, high debt, and high taxes, but more immediately, it would expose us to a collapse of market confidence, even worse than we saw in the sixties and seventies (eg see this blog). And trust me - we really don't want to go there.

So let's have one more go.

George, if you're listening, please tell us you misspoke yourself in Birmingham last October (see this blog). Please tell us you do agree with the OECD, and that Britain does needs clear fiscal rules, including a spending rule. And please tell us what those rules are going to be.

Because I'll tell you this: if you don't set out a medium term fiscal strategy - backed up by clearly stated rules - you are going to have an even tougher time as Chancellor than everyone is now saying.

You are going to be making swingeing public spending cuts, but they will not be embedded in a bankable strategy, the kind of strategy the markets will demand. You are going to be facing down the howls of anguish all around you, without even getting the market credit you will need.

Indeed, the louder the howls, the more the markets will worry about a Heathite U-turn. You will stand in real danger of repeating the experience of the Wilson government - a whole series of hand-to-mouth emergency budgets, all of which cut spending (and raise taxes), but none of which get you on the front-foot with the markets.

Is that what you want?

Cos that's what you're going to get.

PS There are a number of other interesting charts in the OECD report. Here's an update of one we've posted before, which shows how - despite all the promises and all the plans and all the best intentions in the world - Britain is top of the OECD league in terms of social immobility. Specifically, the chart shows what's known as Intergenerational Earnings Elasticity - the extent to which your parents' income level determines your own - the higher the parameter, the higher is the persistence of earnings across generations and thus the lower is mobility:

So after 12 years of Labour's fairnessandoppportunityforallthemanynotthefew what are we to make of that? Speaking as someone who had the great good fortune to grow up on a council estate, and progress via state grammar school to Oxford University and a well rewarded career in the City, I have absolutely no idea. It's a complete mystery.

Not A Bad Dream

Aren't they supposed to be green?

After a week dependent on BBC World for his news, Tyler had begun to wonder if it had all been a bad dream. Surely the BBC wouldn't be focused exclusively on environmental issues, arts projects in Africa, and celebrity gossip, if the world was really in economic meltdown.

On the plane back, five minutes with the Daily Mail reassured him he hadn't been dreaming. If anything, things have got even worse.

So what have we missed?

First, those green shoots have been cruelly blasted by the heatwave. The CSO says that when last sighted, GDP was still spiralling down. It fell by a scary 2.4% in Q1 (9.3% annualised):

So in the first year of Brown's slump, GDP has fallen by 4.9%. That's three times worse than the 1.6% decline in the first year (1990-91) of Major's recession. And 50% worse than the 3.3% fall in the first year (1979-80) of Thatcher's recession.

In other words, nomoreboomandbust Brown has smashed our economy far more comprehensively than most of us have ever experienced in our entire lifetimes.

Worse, whereas Thatcher and Major could both argue they'd simply been the unfortunate inheritors of someone else's recession, this one is of Brown's own making (yes, yes, I realise there are also global factors at play - but there always are).

So what else?

Well, the "government" is continuing its policy of rule by porkie pie. They have decided to ditch their scheduled review of public spending (the Comprehensive Spending Review), claiming that nobody knows how the economy will be in 2011.

The real reason of course, is that this side of the election they do not want to admit to the savage public spending cuts any government will have to make. It fools nobody, but since they are going to lose the election anyway, they presumably intend to spin the inevitable cuts as Tory Cuts made by The Evil Tories specifically to Grind The Faces of The Poor. Labour would never have done it.

Just how dumb do they think we are?

Meanwhile, the row between the government and the Bank of England is bubbling up quite nicely. As we've blogged before, the Bank thinks the government needs to get real about the dire fiscal outlook. They know only too well what happens once the markets lose confidence in a government's commitment to living within its means (cf the lamentable performance of H Wislon).

They're also concerned that Brown still hasn't understood just how pants his tripartite system of financial regulation actually is. They want their pre-97 powers of bank regulation restored - as do most outside commentators - whereas Brown is mainly concerned to save his own face.

His latest face-saving wheeze is to sell the Crock to Tesco. Not only would that show that his period of temporary public ownership really is temporary, but it would actually raise some much-needed cash.

Ah, but hang on a cotton-pickin' minute... will Tesco be taking the whole shebang, warts and toxic loans and all?

Er, no. Tesco will take the good stuff - ie the retail customer base - and we'll get left with all the rubbish. Which is more or less the self-same deal Branson and others wanted to do last year. The deal that stuffs taxpayers with all the losses, and none of the potential upside from the good bits.

You know, I'm so relieved I wasn't dreaming any of this stuff out there by the pool.

More to follow once I've caught up.

White Heat Holidays

Everything is perfectly under control

Humongous deficits, sterling crises, emergency budgets, tax rises, strikes, and a weak divided government headed by a delusional Prime Minister with neither plan nor credibility.

It could well describe the coming winter. But it was actually the sick man of Europe swingin’ his way through sixties.

Poolside, Tyler has been reading Dominic Sandbrook’s White Heat, a lengthy but highly readable account of Britain under the hopeless Harold Wilson. And the parallels with Brown’s Britain leap off every page.

Particularly striking are the identical failures of leadership. Faced with huge economic challenges, Wilson shirked all the tough decisions until they were forced on him by events. Short-termist in the extreme, he never admitted his failures even when they were staring him – and everyone else – in the face.

Most notoriously, when - despite constant assurances to the contrary - he was finally forced to devalue the Pound in 1967, he went on TV and ludicrously asserted that the “Pound in your pocket” had somehow not been devalued.

It’s exactly how Brown would have played it – with the exception that Wilson was a rather more convincing liar. Plus, of course, Wilson had won two elections, and could therefore claim a legitimacy Brown has never had.

Elections or not, by 1968/69 Wilson was held in utter contempt. Not only the press and the electorate despised him, but his immediate colleagues thought him a waste of space. They spent years plotting behind his back, and after his abject failure to push though trade union reform (In Place of Strife), they very nearly summoned up the courage to knife him. Except of course they didn’t – just like today’s gutless cabinet, Jenkins et al never located the requisite balls.

But the real lesson from the 1964-70 Wilson government is not for Brown and Labour. It is for Dave and George when they take the helm next May.

Because Wilson’s biggest and most disastrous failure was not to grip the economic problems on Day One.

He’d inherited from the Tories an economy that was living well beyond its means, with a wholly unsustainable current account deficit. Yet instead of implementing the necessary deflation and fiscal discipline straight away, he tinkered around the edges, hoping the problem would somehow go away. Instead, the problems simply got worse, and the financial markets (or the Gnomes of Zurich, as Wilson unwisely dismissed them) took fright.

That loss of confidence compounded our problems hugely. It meant Wilson had to go cap in hand to the Americans for successive bailouts, and was ultimately forced to impose much bigger tax increases and spending cuts than would have been necessary had he acted straight off the bat.

Dave and George must not repeat that mistake. Everyone knows Britain is again living beyond its means. Everybody knows it cannot go on. And everybody is expecting decisive action after the election.

The financial markets will not be forgiving if there’s a Wilson-style wobble. And the price we will then have to pay for Brown’s economic fiasco will be even higher.

PS Well, it’s the end of June, and Mr and Mrs T are staying in a rather nice hotel looking out over the Med. Somebody’s got to do it, and normally at this time, such a hotel would be packed with affluent Germans. Not this year. Indeed, we reckon the hotel is only a quarter full. True, Peter Stringfellow is knocking around with a young lady who is presumably his grand-daughter, but there’s no disguising the general emptiness. The staff are putting a brave face on it, but we’re concerned: for them, the Spanish economy, and everyone else who has been living too high on the hog.

Holiday Ideas

You will need one of these

Having only just been castigated by one BOM reader for "laziness born of financial comfort" (see this post), I hesitate to mention the following: Mrs T and I are off on holiday for a week.

But while we're away, here are a couple of things that you might want to try.

First, do - please do - take a look at an excellent new website, Debt Bombshell. Not only does it tell you everything you never wanted to know about our ballooning National Debt, but it also features a scary graphic of the actual ticking debt bomb itself.

The site recommends we all write to our MPs to underline the seriousness of the situation, and demand they start pressing for action. We'll be doing exactly that on our return, and may we urge you to do likewise.

Second, please take a look at the Ministry of Truth campaign for a Prohibition of Deception Act. The idea is that any MP who makes a statement that he knows to be "misleading, false or deceptive in a material manner" gets sent down.

Now I know what you're thinking - how can we possibly have a law like that when the prisons are already full?

Not a problem - we'd simply establish a Sheriff Joe-style tent prison.

Or maybe you were wondering how we'd ever prove a politico knowingly made false statements?

Agreed, that is a little trickier: after all, even on those obviously non-existent Iraqi WMD, Bliar had probably convinced himself they did exist (because that's what salesmen do).

Which is why Tyler asked the organisers over at Minitruth how this law could ever work? They said there would be an "independent regulatory body" which would sit in judgement. Tyler immediately nominated himself and the Major as OffTruth's first permanent members.

Third, tomorrow night at 8pm you might want to tune in your cat's whisker to BBC R4. File on 4 is taking a close look at PFI, and whether by any stretch of the imagination it can possibly be giving taxpayers value for money. It should include testimony from The Bloke... assuming he hasn't been dumped on the cutting room floor of course.

PS Holiday, eh? In his defence, Tyler wishes to state that this is his first holiday in 2009, and it's only for one week, and he's only going to Bognor. Or somewhere like that, anyway. Plus, he'll carry on posting poolside. Plus he'll mortify his flesh in some way. He'll maintain his integrity somehow. Promise.

And Another Thing...

No - you listen to me for a change

As we said right at the outset, Tyler started BOM because Mrs T got fed up with him shouting at the telly. Her view was - and is - that all blokes of a certain age get grey hair and glasses (plus maybe trousers that are an inch or two short), and then start pontificating loudly and uncontrollably to the extreme annoyance of those around them.

The traditional remedy was to shoot them. But post the Human Rights Act, you can't do that (well, not without written authorisation from the Secretary of State, anyway). Instead, you have to send them down the pub. Or a day centre. Or latterly, you can start them blogging. Anything to tidy them up out the way.

The above pic illustrates her point precisely. It shows three old gents arguing on a pavement in central London. They're obviously having a whale of a time, but it's quite clear that not one of them is listening to a word the others are saying.

The pic was taken in the mid-80s*, and the pavement in question is outside a day centre called the Insitute of Economic Affairs. The three gents were (L to R) Ralph "Lord Harris of High Cross" Harris, Arthur Seldon, and Prof Friedrich "Road to Serfdom" Hayek.

And those three were among the most influential free market/anti Big Government figures of the last half century.

Which just goes to show that batty old blokes with grey hair and glasses still have their uses.

But here's another thing...

In the final ghastly days of Labour, they keep telling us that at least they've (more or less) ended poverty. In his Gruaniad interview (blogged here), Gordo himself boasted:

"Poverty has fallen, and you'll see it continue to fall over the next year or so... Removing people from poverty must be our priority."

That is complete bunkum.

On any meaningful definition, Labour has not reduced poverty. Even if you accept their ridiculous definition of poverty as being measured relative to median income, real poverty has not fallen under Labour.

True, Brown has managed to reduce the proportion of those on less than 60% of median income (which is his entirely arbitrary definition of poverty), but the proportion in real poverty has not fallen one jot.

As we can see from the following IFS table (and see this blog), the proportion on less than 40% of median income has actually increased, and more than one-tenth of households are still on less than 50% of the median:

So when you're next watching Newsnight and some government minister goes on about Labour ending poverty, please feel free to shout at the telly.

Loudly.

*Footnote - that outstandingly posed pic is taken from a new biography of Arthur Seldon, one of the founders of the IEA. I haven't yet read it, but as a "member in good standing" (nice to know), I've just been sent a free copy by the good folk at the Institute. And no, I don't really think the IEA is a day centre - it continues to produce some excellent papers, several of which we've blogged in the past.

Walking Away

Gordons do not walk away

Many apologies for two days without posts. You're not interested in excuses - Tyler simply walked away from his duty. Or as this email puts it:

"Dear sir,

If you do not post at least once a day, please do try to convince me that your heart and soul are in this blog. You miss many opportunities to score points against our enemies and seem to display a laziness born of financial comfort which most of your followers cannot afford. Do your duty or else please stop imploring others to do theirs."

Thank you NS - I needed that. Admonishment duly received and understood.

As it happens, we know someone else who frets about his duty. A couple of weeks back, after a particularly gruelling run-in with the real world, he told us he would not walk away:

"I will get on with the job. I have faith in doing my duty ... I believe in never walking away in difficult times."

Admirable. The authentic fighting spirit of Gordon of Khartoum. He certainly didn't walk away: it's what made the Empire great.

Except that by yesterday, our modern day Gordon was reconsidering - maybe walking away wasn't such a bad option after all:

"To be honest, you could walk away from all of this tomorrow... I wouldn't worry if I never returned to all those places - Downing Street, Chequers ... And it would probably be good for my children."

To walk, or not to walk, that is the question. A classic struggle between duty and personal survival.

Ah, but what is this duty he's fretting about?

Clearly, it can't be duty to country. We never voted for him, he's taking us into a fiscal and economic abyss, and he's got the lowest poll ratings since the Sheriff of Nottingham. Virtually everyone agrees he should go now, and we'd all thank him for it.

So that can't be the duty he's worried about.

And it can't be his duty to the Labour Party, either. On BOM, we have no interest in Labour's survival, but it's pretty obvious Gordo's driving them to destruction. As the excellent Daniel Hannan puts it this morning:

"You don't have to be a spin doctor to see what Gordon Brown is doing to his party's popularity. He has taken Labour to a share of the popular vote it has not registered since before universal male suffrage, when it was a tiny band of trade-union-sponsored candidates. Anyone – anyone – would make a more electable leader, even Michael Foot, if the old boy could be persuaded to come out of retirement.

By hanging on, the party is repeating the mistake of John Major's Tories in the mid-1990s, trying the patience of an angry electorate, purchasing each day now at the cost of a week in eventual Opposition.

So why would Gordo want to destroy the Labour Party? Hannan reckons it's all a plot by Mandy and others to keep Gordo there just long enough for the Irish to ratify the EU constitution.

But there's a much simpler explanation - like so many driven control freaks, Gordo simply cannot accept that he has failed.

The duty he frets about is the duty to his own self-image as someone who never fails.

Of course, given the manifest failure all round, he can only sustain that self-image by persuading himself that things are somehow going to get better. Which is why he's spun that little world for himself that bears no relation to the one the rest of us inhabit.

Take this statement of his in yesterday's Grauniad interview:

"The Tories have made, for them, a cardinal mistake in that they admitted the truth - that if you take 10% off the health service or schools or policing, you've cut into the jobs, the services, the expectations. The Conservatives' mask has slipped. They cannot be a centre ground party any more, they can't talk about being mainstream. The choice has become a lot clearer."

Which must be a great comfort to him. Except of course, the Tories have specifically promised not to cut health spending (a serious error on our view - see previous posts). Gordo has chosen not to notice.

Neither has he chosen to notice that his own government is also planning to slash public spending after the election. According to him, they won't need to cut:

"No. It's a myth. Public spending will continue to rise. It's in our figures. We've costed it, and you're paying more in top rate tax to pay for it."

A myth? The guy's either the biggest liar since Doc Goebbels, or he's lost the plot.

As everyone else knows by now (and as we blogged here), under his published plans, public spending is set to fall after the election (ie after stripping out inflation). And spending on public services (health, schools, policing etc) is set to fall especially sharply (by 2.3% pa in real terms, according to the IFS). His tax increase for the undeserving rich comes nowhere near enough to fund continued spending growth.

From Hitler to the boss of Northern Rock, the heads of big organisations often get into situations like Gordo. They have failed, but they cannot bring themselves to recognise and accept that failure. So they cling on, despite the fact that virtually everybody wants them to go, and the stress is taking a terrible toll on their own health.

A few weeks ago there was a rather upsetting interview with Sir Stuart Rose, the beleaguered head of Marks and Sparks. He's always been a much more convincing presenter than Gordo, he has achieved much more than Gordo, and unlike Gordo, he was actually elected to his current post (by shareholders). But despite that, since the recession took hold, he's gone from hero to zero, and he's facing exactly the same kinds of pressure:

"It was a terrible year, you've no idea... it was the worst year of my life... but I believe I've come out and I'm stronger for it... Recently I've been looking at my garden, watching it grow. I've been standing there for two or three weekends in a row, looking at the buds... I now just live on my own and I don't have a relationship with anybody... you do feel a little bit of a vacuum in your life...

I said to myself this Christmas, I want to start doing more things for myself... M& S has completely eaten up my life... There have been times when it has been more than I wanted, but what can you do? When you're in, you're in."

It's that duty thing again, and you can feel the pressure crushing down on him.

But at least Rose knows his time's up, and he's got to go.

The really alarming thing about Gordo is that he simply doesn't understand that. And instead of accepting reality, he's now attempting to govern Britain on the basis of the fantasy that exists only inside his own head.

Scary.