Archives for June 2010

A bit like the same old same old

Andrew Neil | 10:24 UK time, Tuesday, 8 June 2010


david_cameron.jpgJust over a month into the "new" politics and it's already beginning to sound a bit like the same old same old. Before the election I used to joke that if the Tories got into government you'd soon hear the mantra from ministers that

"We've seen the books -- and it's much worse than we thought".

As if on cue, that's exactly what David Cameron said yesterday.

Britain's fiscal position is certainly bad, perhaps even dire. But is it really any worse than we knew? The Prime Minister seems just to have discovered that national debt interest is heading towards £70 billion a year by 2014-15. But we've known that was the figure, on current deficit projections, for some time: the Institute for Fiscal Studies worked it out using Treasury figures, the Treasury quietly acknowledged the efficacy of the IFS sums and several economic commentators, including the Telegraph's excellent Edmund Conway, even wrote about it (Mr Conway placed the annual debt bill at £74 billion way back in March).

Of course this level of debt interest (which would see £1 in £10 of government spending going on servicing the national debt) will be seen by many as bolstering the Tory desire to take an axe to public spending asap. Indeed they seem to be winning the arguments for doing that, with not just the Lib Dems now supporting that strategy on the home front, but even last weekend's meeting of the G20 finance ministers dropping its previous commitment to open-ended Keynesianism and agreeing that heavily-indebted countries now need to start balancing their books (as many, from Greece to Spain to even Germany are now doing). But it will seem to some a little disingenuous of the Prime Minister to feign surprise at a debt servicing level which has been known for some time.

Indeed in some respects our deficit position is less dire than we thought. The election was fought on the Treasury forecast that the deficit for 2009/10 would be £163 billion -- or a Greece-style 12% of GDP. But a few weeks ago the Office for National Statistics slipped out that the actual turnout was £145 billion, or 10% of GDP. Still rather high, to be sure, at a time of mounting global concern about sovereign debt and, many will think, no reason for blunting the axe. But a reduction of £18 billion in our national debt when politicians were squabbling during the campaign over a mere £6 billion doesn't quite live up to the "it's much worse than we thought" mantra.

edballs.jpgThen there's Ed Balls. This former second brain of one G Brown and now contender for his mentor's old job has concluded, along with all the other major candidates for the Labour leadership, that failing to face up to concerns about immigration lost Labour the election. Ah hae ma doots, as they say north of the border, but let's leave why Labour lost for another day.

For now, note how seamlessly Mr Balls has moved into opposition mode. For his solution to immigration is to stop the free movement of peoples within the EU -- and that's the sort of thing politicians only say in opposition. It may or may not be a good idea but let's be clear: it is never going to happen (at least not as long as we remain fully paid up members of the EU).

The free movement of people within the EU is enshrined in the Treaty of Rome and reinforced by the Treaty of Lisbon. Even some Eurosceptics, so critical of so many aspects of the EU, regard the free movement of people (and capital) as one of the "good things" about the EU. It would take a major treaty amendment for Mr Balls to get his way -- and nobody elsewhere in Europe is up for that. But such realities do not stop Mr Balls propounding something in opposition that he must know he could never do in government. Government is preferable to opposition if you're a politician -- but opposition clearly has its compensations.

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