Sunday, September 27, 2009

Losing The Will To Live

The set for next year's Labour conference


Listening to a sweaty Gordo blustering his way through this morning's session with Andy, it was easy to understand why Labour has lost the will to live. It would have been bad enough getting bludgeoned by Gord when they were all still on the winning side, but now they can hear the guns a few streets away it must be intolerable.

In fairness to Marr, he did have a go at asking a few questions. But as per, he wasn't much good at pinning down the answers. In particular, we could have done with a whole lot more clarity on the great question of the age - spending cuts.

As we understood it, Gord's argument goes like this:
  • because of his epoch-shaping prudence while at No 11, the UK entered the recession (which was incidentally caused entirely by those idiotic yanks) much better equipped than other countries;
  • compared to our profligate competitors, UK government debt was low, allowing him plenty of scope to support the economy via fiscal reflation - ie a package of tax cuts and more spending financed by borrowing;
  • every other government in the world has since followed his glorious reflationary lead;
  • only the Evil Tories would not have reflated as he did;
  • the Evil Ts want to slash spending - they will relish the opportunity to destroy frontline services and execute expensive old people;
  • in contrast, he will make the necessary Tough Choices via greater efficency
  • everything will come right - you'll see

Marr did have a go at parrying some of this guff, but he left a lot out. And since it's important to have the complete picture, for future reference here are the Key Facts (all blogged previously):

  1. While we entered the recession with relatively low official debt (47% of GDP compared to an OECD average of 74%), our massive current borrowing means that by the end of next year the gap will have virtually disappeared; moreover, our official debt excludes all those unfunded public sector pension liabilities (about 70% of GDP), and the bulk of our PFI debt (another 7-8%)
  2. According to the OECD, both this year and next, the UK government will be borrowing more (as a percentage of GDP) than any other government among the OECD's 30 member states. When it comes to government borrowing, the OECD's basket case is not Ireland or Iceland or Italy or Greece, but us.
  3. Brown's much hyped fiscal reflation package (mainly the temporary VAT cut) wasn't nearly as big as he likes to boast; indeed, it was actually one of the smallest among all the major economies; according to the definitive OECD analysis, for the period 2008-2010, it amounted to less than 1.5% of GDP, compared to an average 3.7% (the US package was worth 5.6% of GDP)
  4. By far the bulk of fiscal support in the UK has come not from Brown's discretionary policy measures, but from the operation of the so-called automatic stabilisers (ie lower tax revenues and higher unemployment benefits); Here's the OECD's picture:

  5. The fundamental reason our fiscal deficit is shot to buggery is not the recession, or Brown's reflationary package, but his reckless overspending while he was Chancellor; public sending was allowed to soar on the back of temporary and unsustainable tax revenues from the financial and property bubbles; which is why the OECD reckons our structural deficit (ie the bit that won't automatically disappear when the recession ends) is now in excess of 10% of GDP - a very scary position which implies public spending needs to be cut (or taxes increased) by a bowel-rending £140bn pa
  6. Hoping to save that kind of dosh through greater efficiency is entirely delusional: as we've blogged many times, even the famous multi-year Gershon programme only seems to have saved aroung £5bn, at most.

Those, I'm afraid, are the grim facts.

And those same facts must be painfully clear to Darling's boys as they count off their final hours huddled round the map tables down in the bunker.

Maybe they haven't plucked up courage to tell the F├╝hrer to his face.

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