She’s caught Corbynitis — and we’re all going to pay
All eyes in Birmingham this week were on the battle for Brexit between Boris Johnson and Theresa May, culminating in the Prime Minister’s triumphant party conference speech.
But over the long term, I predict that Mrs May’s admired oratory will be remembered for an entirely different reason. For the most important thing the Prime Minister said — overlooked by many — was that the era of austerity, inaugurated by David Cameron and George osborne in 2010, is over.
From now on, according to Mrs May, Britain is returning to the sunlit uplands of lavish government spending. What a disaster! Mrs May’s cheery announcement — undoubtedly music to the ears of millions of voters — was clever politics, because it distracted attention from the vicious internecine Tory struggle on display at the Conservative conference.
But I believe that in making this statement, the PM has betrayed Conservative values and — even worse — made a strategic mistake she will soon come to regret.
Her announcement is, first and foremost, an abject intellectual and moral surrender to Jeremy Corbyn and John McDonnell’s labour Party. No wonder labour is exultant. Mrs May is in effect admitting that Jeremy Corbyn was right to call for more public spending, and conversely that Chancellor Philip Hammond — and his predecessors at No. 11 — has been wrong to keep a tight grip on national finances.
How incredible that a Tory leader should prefer the philosophy of her far left labour opponent to that of her own Tory Chancellor. As far as Mr Hammond is concerned, Mrs May’s party conference speech amounts to an act of calculated financial sabotage.
Remember that his Budget speech on october 29 is only three weeks away. Mrs May has tied his hands, and the timing could not be worse.
L.ET’S remember that only recently Mrs May unveiled an extra £20 billion a year for the NHS in what was cynically called a ‘Brexit health dividend’. As for her decision to allow local councils to borrow extra money to fund social housing, this is madness.
Yes, we need to build more houses. But to encourage councils to borrow the many billions of pounds that would be needed is not the right answer. Councils hardly have an unblemished record for fiscal prudence, or for the quality of the houses and flats they build. Just think of Grenfell Tower. I fear that Mrs May’s breezy conference rhetoric will in fact unleash a flood of spending decisions which local councils lack the wherewithal to monitor properly, and for that reason could even lead to some form of financial crisis in the medium term.
The Prime Minister’s announcement of the end of austerity has already led to a Whitehall battle over the spoils. let’s take defence.
Before Mrs May’s speech, Philip Hammond — I am reliably informed — had laid down the law to Defence Secretary Gavin Williamson that in the current spending round not a penny extra was available to add to the £37 billion defence budget.
Now Mr Williamson will ask why on earth the British armed forces can’t get their own end-of-austerity dividend, amid renewed talk of a return to Cold War with Russia.
As for the Prime Minister’s votewinning freeze on fuel duty, that will add tens of billions to the debt if kept going over three years. Most significant of all, Mrs May’s call for an end to austerity will unleash furious claims for extra money from public sector workers who believe they have been victims of miserly pay awards over the past ten years.
The trade unions will see Mrs May’s speech as a green light for a new round of pay awards which will cost the exchequer a fortune.
No wonder Treasury officials were aghast as they clustered round their Tv screens in Whitehall to watch Mrs May’s speech.
Jeremy Corbyn might as well have delivered parts of it. Certainly it was ill-advised to talk about ‘austerity’ at all, for that is the word labour uses for an approach to economics that Conservatives call good housekeeping and sensible finances.
So why did Mrs May use the language of the labour Party propaganda machine? Baffling.
And bonkers. out here in the real world, it’s time to recognise that Britain has not really undergone austerity at all. Anyone who doubts this should take a look at our neighbours.
In Ireland, government spending as a percentage of gross domestic product contracted from a whopping 65.1 pc in 2010 to 27.1 pc in 2016. In Britain, it fell from more than 43 pc to 40 pc over the same period. That means in real terms, taking inflation into account, it actually rose!
left-wingers who say Britain has been scoured by ‘savage Tory cuts’ are in dreamland. They never mention the fact that British government debt has exploded from 40 pc of the gross domestic product in 2007 to an unsustainable 86 pc today. Total debt will soon surge over the once unimaginable sum of two trillion pounds.
Jeremy Corbyn and his shadow chancellor John McDonnell couldn’t care less, of course. For them, blind political ideology has long trumped fiscal rectitude. But a Tory leader like Mrs May ought to mind desperately.
WHILE manageable during a period of economic growth like today’s, it makes Britain vulnerable to a sudden recession or financial crisis.
At this stage of the economic cycle, Britain should be running a fiscal surplus. Theresa May is now threatening to wreck that.
Nevertheless, I can understand why she did what she did. All governments want to be popular. It is no good being financially prudent but out of power. But her crowd-pleasing move raises a very serious question which she did not even attempt to answer.
Where is the money coming from? There are only two choices, and hapless Chancellor Hammond will have to decide which it is to be in his budget, caught as he is between the Scylla of higher taxation and the Charybdis of more borrowing.
I predict that he will end up going for more government borrowing, and that he’ll be forced to follow the example of his predecessor George osborne and abandon all hope of ever bringing the national deficit into balance.
The trouble is there’s an infectious illness going round Westminster. victims suffer from a desire to put up taxes and spend large sums of public money.
The consequences can be very severe, and in exceptional cases national bankruptcy can result.
Doctors have an official term for this illness: they call it ‘Corbynitis’. It is well known the leader of the labour Party has suffered from this problem since the Seventies.
We now learn he has passed on his debilitating illness to Mrs May. And over the years to come, all of us will have to pay the price.