Papering over the cracks- these pledges are just for an election

The Labour machine is in overdrive to get out the message that things are getting better, and can only get better with more of the same. In practise, things are being arranged for May.

Interest rates have been kept artificially low by printing money. That has to stop for good sometime after the election. Interest rates will rise.

Tax revenues have been artificially boosted by the threat of higher taxes on incomes, leading to a surge of bonus and other payments whilst the rate remains at 40%. The banker bonus tax has also brought in extra revenue which is unlikely to be repeated. Companies and individuals are hurrying to book things to pay tax before the rates soar. Then tax revenue will fall again.

Unemployment has not risen as far and as fast as many forecast, thanks to continuing strong recruitment of extra people into the public sector. This will come to an abrupt halt after the election, whoever wins.

The growth rate was boosted by depressing the output for the third quarter of 2009 in the revisions, not by increasing the output for the fourth quarter. January was a difficult month given the snow and transport problems. The government has been bringing forward various spending commitments to try to boost output for the rest of the first quarter. The cuts come later.

Today Labour launches its latest five point pledge card. I still enjoy reading the 1997 version, which promised to “set tough rules for government spending and borrowing: ensure low inflaiton; strengthen the economy” and wonder when they might get round to doing those?

This year’s version apparently repeats the 2005 promise to raise living standards. This used to be automatic in any 4-5 year Parliament, given the usual growth of the economy. Over the last 5 years the economy has not grown. This morning on the radio Labour’s spokesman avoided offering confirmaiton that they had raised living standards as conventionally measured, knowing how thin the ice was around this pledge. The Bank of England recently warned that we should expect a further fall in living standards on current policies, which I fear is all too likely. What price this pledge? Can the government tell us how much living standards have fallen by since 2007, and by how much more they expect them to fall?

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37 Comments

  1. Posted March 27, 2010 at 10:23 am | Permalink

    John

    Sour grapes as ever… perhaps the Tories need to come up with some, erm, what are they called? Yes, that's it POLICIES.

    Much more appealling than some airbrushed oik ranting from the sidelines and leaping on any and every bandwagon that trundles past.

    Now there's a thought.

    • Posted March 27, 2010 at 2:14 pm | Permalink

      Andy

      Problem is you cannot make sensible policies if you do not know the true state of affairs with the Accounts.

      Labour have that knowledge at the moment, as they have the Treasury working for them, none of the other Parties do.

      The TRUE state of the accounts should be made public, so we can all see exactly how bad they are.

      Accounts should include all of the off balance sheet stuff, as well like cost of PFI projects, Civil service pensions etc.

      I guarantee you the True State of UK Finances will be more shocking than anyone expects.

      Policies built on false figures will always fail. and this Labour government has failed more than any other in History.

      • Posted March 27, 2010 at 10:54 pm | Permalink

        Alan Jutson: "Problem is you cannot make sensible policies if you do not know the true state of affairs with the Accounts."

        Disagree Alan.

        Cameron had a chance to set out principles to guide the Tory Party under his leadership. He failed to do that.

        It's already been established in Law that a manifesto pledge is worth 'jack'.

        Cameron could have come out to say our goal is to drive down taxes and shrink the state. If he had done that two years ago and weathered the storm of Labour catawalling, he would have been in pole position now as even the labour party is talking soto voce about CUTS.

        Cameron would have been able to say, we will fight the election on a platform of low tax and falling public spending. Then haveing won said: the situation is so bad we need to postpone our goals for the first term.

        Instead the fool is blathering on about 'Global Warming'' and 'Carbon' he refuses to confront the issue of the European Union, when he tried as with his 'CAST IRON floppy spongy thinggy' on Lisbon he made himself out to be a dithering untrustworthy character.

        We already have one of those, Gordon Brown, why would we want to replace one dithering untrustworthy fellow with another?

    • Posted March 27, 2010 at 8:10 pm | Permalink

      As we saw last week with the budget, Labour are quick to filch Tory policy when it suits them. Cameron is right to keep his powder dry until Brown finally summons up the guts to name the date for the election. For now the Conservative Party should be putting Labour's future plans for massive council tax rises and continued uncontrolled immigration in the spotlight.

      • Posted March 28, 2010 at 6:05 pm | Permalink

        Rob Webster: "Cameron is right to keep his powder dry"

        No!

        If Labour filch Tory policies, isn't that Labour doing two desirable things?

        1. Giving the impression that the ' right' has the answers. Undermining the left cheerleaders in the BBC – A good thing.

        2. Thus allowing the Tory party to move further to the right.

        We get a more acceptable government in either case.

        If Labour cross the Rubicon where their voters refuse to follow – Good, we get a Tory government eventually.

        In the mean time, the Tory party gets to point to Labour and say, 'Look they are taking all our policies, because the policies of the left are bankrupt and have failed.

        Cameron refused to do that, because he is not interested in drawing the Labour party onto rightist policies. He is a SOCIALIST.

  2. Posted March 27, 2010 at 10:42 am | Permalink

    I am tiring of saying that the Conservatives need to give the voters a positive reason to vote for them other than relying on the negative one of voting out Brown. I'm still not sure that given the size of the problems facing any government the Conservatives have decided this would be a good one to lose. So far they have shown a lack of determination to win.

  3. Posted March 27, 2010 at 10:44 am | Permalink

    The Tories should be way ahead of Labour in the polls. How can people possibly believe that a Government led by Gordon Brown would be better on the economy than the Tories, when he has completely wrecked it.

    They need to explain fiscal/economic matters in language that joe public understands, and relate it to ordinary household finances. They are failing to do that. Keep it simple; keep it focussed on the individual and use Philip Hammond more. He expresses himself better than either Osborne or Clarke.

    The Tories may have the better ideas and policies, but they have succeeded in alienating a significant proportion of their core vote by transforming themselves into NuLabour-light and they are running an abysmal campaign.

    • Posted March 27, 2010 at 2:05 pm | Permalink

      Donna

      What they need to do is show that by cutting the deficite to a simple 50% from present over the next Parliament, the debt WILL INCREASE.

      I would suggest that George and Dave in their TV debates get Darling and Brown to confirm this, by quoting their own figures of total debt as outlined in the red book for 2014-15. which shows it almost doubling given the plan Labour have at the moment.

      Given the above it is then an obvious argument as to why the cuts need to happen earlier and be deeper, otherwise it will mean absolute savage cuts later.

      Yearly deficite is not the same as total debt and this needs to be hammered home.

      Its time we (The Government) tried to live within our means.

      • Posted March 27, 2010 at 6:52 pm | Permalink

        "Yearly deficite is not the same as total debt and this needs to be hammered home".

        You are quite right with this comment. You know this and so do I, but because the two words are often used in the same argument – and the meaning is deliberately obscured by Labour – the message isn't getting through.

        A large number of people simply don't believe that spending cuts are necessary. Fraser Nelson has been quite right in his comments about debt v deficit. Many people simply don't understand the difference. When Labour says they will halve the deficit, people think they mean halve the debt … in which case, what is there to worry about. If we can halve the debt in 4 yrs, things can't be so bad, can they.

        Even the less financially aware amongst the electorate understand the meaning of 'debt'. The Tories should stop saying 'deficit' and talk about the amount already owed (ie debt) and although monthly payments will be made, the debt will keep increasing because they're not paying it back quickly enough so interest is adding even more to the balance. Compare it to a credit card. That's what I mean about language 'joe public' understands. Ken Clarke can do this – but he stutters so much these days, he sounds like Arkwright from Open all Hours. Osborne is far too technical. Get Hammond to do it.

      • Posted March 27, 2010 at 7:45 pm | Permalink

        I think Labour are hanging on to a core vote because the core vote half-believes that everything will be all right without too much pain. The problem the Tories face is the unpopularity of telling them what they don't want to hear.
        Malcolm Muggeridge, returning disillusioned from Moscow in 1930, was derided by his socialist "colleagues" when he reported lies and famine. His comment: "People believe lies not because they are plausibly presented but because they want to believe them."

  4. Posted March 27, 2010 at 11:03 am | Permalink

    Quite right about public sector employment. A quick glance at the latest ONS figures shows that since the start of 2008, 985,000 jobs have gone in the private sector but 337,000 have been created in the public sector.

    This recruitment drive, cynically designed to allow Labour to say they kept unemployment lower than the Tories, has likely cost the taxpayer around £6-8bn (assuming an average wage around £20k).

  5. Posted March 27, 2010 at 11:11 am | Permalink

    If Cameron really wants to win the election I suggest he takes a lot of tips from Richard Littlejohn's article in today's Daily Mail – an absolute tour de force.

    • Posted March 27, 2010 at 8:37 pm | Permalink

      A Dot. Segwick Dot. Recommending Richard Littlejohn. Got to laugh.

      • Posted March 29, 2010 at 10:38 am | Permalink

        I recommend RL's offering today as well to Cameron and yourself.

  6. Posted March 27, 2010 at 11:29 am | Permalink

    Andy of course can do the other thing sideways, however he does bring up a good point the electorate are buying into Labour's spin and not the Conservatives. Policies and presentation may well be the problem (did I say may I mean are ). Policies not Tory or clear and presentation amateurish. I have faith though that CCHQ will get it right in time, they had better or we are all f****d.

  7. Posted March 27, 2010 at 11:30 am | Permalink

    John

    Hasn't the time come for you to express an opinion as to whether it would be better for your Party to be totally honest and up-front now about the scale of austerity which is coming? If you lose the election, you have the pledge card in your back-pocket, and if you win it because people like most of those posting on here actually turn out for your Party then fine. Either way your Party will be shown to have been as honest as you are here, rather than obfuscating and pontificating behind Labour.

    As it is, if the Tories scrape in it will be despite their campaign, not because of it. That is no mandate on which to be running the Country, and Cameron will be making a rod for his own back when the markets truly turn against us and austerity knocks on the door. Charles Moore in the DT this morning hits the nail on its head.

    Many, many people would back the Tories if just 2 things were promised and delivered. A referendum and a rebalancing of the public budget. I am certain that a number of Tory figures know this and are pushing for it behind the scenes. Perhaps the plan is to act at the last minute…. One can only be hopeful… But time is now very short.

    Reply: I agree that the Conservatives do need to be veyr clear about the extent of the measures needed to cut the deficit to a sensible level – we are told that is what Mr Osborne will shortly do. We also know that Mr Hague is not going to let us have a referendum unless and until there are other Treaty changes in prospect.

    • Posted March 27, 2010 at 7:49 pm | Permalink

      As above, I disagree. If the Tories tell the unvarnished truth, they will lose. People don't want to hear the truth. They want to believe it is all going quite well. Labour, unashamed opportunists, will happily lie and lie and obfuscate and misrepresent and lie until the cows come home.

      • Posted March 28, 2010 at 9:49 am | Permalink

        So you'd prefer the Tories to match Labour's dishonesty? It's no way to run a Country.

        • Posted March 28, 2010 at 6:41 pm | Permalink

          No, but it might win an election. Sad to say. The idea that the elecorate want to hear the truth is a myth.

      • Posted March 29, 2010 at 11:23 am | Permalink

        Jmaes Clover: "No, but it might win an election."

        Yea, and lose the next one as the unscrupulous Labour party machine will say, 'Look we warned you about Tory cuts, they said there wouldn't be any, but look what they did! You can't trust the Tories'

        Jmaes Clover: " Sad to say. The idea that the elecorate want to hear the truth is a myth."

        What the electorate want to hear and what they are increasingly coming to realize as truth are I agree, two different things.

        If the Tory Party had been making a consistent case of cutting public expeeditature and reigning in the size of Government over the past ten years, even while the Labour Party under Gordon Brown as Chancellor and latterly as PM were 'goosing' the economy to provide a false sense of prosperity, the Tories would now be approaching the coming election saying, we told you so, Labour are reckless with you livelihood and have been reckless with you jobs and have put the british economy in a precarious situation.

        The electorate who don't like to be told they may get poorer, like even less a lying opportunistic political elite, would recognise the glimmer of integerity and it might have swung the election in the Tories favour.

        Instead the engaged in a public orgy of self recrimination and trying to look fashionable. Utterly wasted the last thirteen years.

  8. Posted March 27, 2010 at 12:59 pm | Permalink

    Notice how Labour infect blogs everywhere. No doubt an expensive army of re-butters, probably paid for by us. I have blogged on an IFS document from 2005 pre-election studies. Fascinating how history repeats itself.

  9. Posted March 27, 2010 at 1:46 pm | Permalink

    "The growth rate was boosted by depressing the output for the third quarter of 2009 in the revisions, not by increasing the output for the fourth quarter. "

    John, I assume these are the ONS numbers? How open to political interference are the ONS data? I noticed some months back in 2009 that the BoE MPC was considering whether to call an end to the QE folly, and lo and behold, the GDP figured were worse than expected, so QE was extended. Later, the GDP numbers were revised upwards, so one inevitably wonders if the original data was massaged for socialist purposes? Now it seems that those number shave been revised down again so that it can appear that the socialists are engineering a miraculous recovery in 2010. Really, if this is so then it is just as bad as China. Not only are we bankrupt as a nation, but given the lies and deceit from the Treasury, and the smoke and mirrors from the ONS, nobody (except perhaps the Clown and his Darling) seems to know just how broke we are. How can a supposedly advanced economy function when its national statistics are either hidden or subject to political manipulation? No wonder the pound is worth merde, nobody can have
    confidence in anything in this utter mess.

  10. Posted March 27, 2010 at 1:57 pm | Permalink

    Any chance of these pledges being honoured? For that matter any chance of the last set being honoured?

    Of course if these were written into law that might help – like the Government commitment to reduce the deficit.

    What happens if they don't hit the target? Do they get hauled before judge and jury?

    I don't think so.

    Worthless rhetoric, then – and who is paying for this?

  11. Posted March 27, 2010 at 2:21 pm | Permalink

    I thought we had a pledge by Tony Blair to improve education.
    Perhaps it would be better to keep at least one of the existing pledges before thinking of new ones. Or have the previous pledges been abandoned?

    • Posted March 27, 2010 at 4:58 pm | Permalink

      Engish Pensioner

      We also had a pledge from Tony Blair to serve a full term this term, and look what happened.

      Promises, promises.

  12. Posted March 27, 2010 at 3:40 pm | Permalink

    I agree with the comments about putting the economic mess in terms people can understand. Throwing around figures of billions or trillions of pounds does no good. Who can really imagine what that sort of cash means?

    But bring it down to the "real" world, with what the impact actually is in terms of everyday items, and the argument becomes far clearer.

    • Posted March 27, 2010 at 7:39 pm | Permalink

      I'm actually of the opposite opinion. A lot of commentators here say that we should state the debt per household but I like the big number stuff. Saying £23k debt per household can be shrugged off as companies, etc. pay tax as well as individuals.

      I far prefer when politicians make statements along the lines of 'We are now paying more in interest than in Defense' or 'If we follow Labour's borrowing plans in 5 years we'll be paying more in interest than in Education and Policing combined'. That drives home to me what a shocking state we are in.

    • Posted March 27, 2010 at 7:51 pm | Permalink

      I repeat, telling the truth would be fatal to the Tories' chances.

  13. Posted March 27, 2010 at 3:58 pm | Permalink

    We are all in cloud cuckoo land and have no intention of leaving. Pass me the white cider please.

  14. Posted March 27, 2010 at 5:22 pm | Permalink

    As far as I can tell Labour want us to wipe out all memory of the last 13 years and take them on their word that they will do these things. I'd rather judge them on their record and confidently predict that if they do manage to get reelected we will see more of the same.

    Here's 5 pledges I'll trust them to fulfill:

    Huge increase in public sector jobs
    Massive increase in national debt
    Running every budget to a huge deficit
    Increasing number of people economically inactive (I prefer this to the fudged official unemployment figures)
    Increased personal and business taxes

  15. Posted March 27, 2010 at 5:49 pm | Permalink

    The big question is will the Bank of England let interest rates rise or will they print more money and trash the pound to inflate our way out. Mervyn has promised to print and the markets have reacted to it, soon he may have to put his money where his mouth is or the markets will see him for what he is…..

    Either the debtors are bailed out once again or the savers will be ruined. The next 6 months will dictate who wins and who loses.

  16. Posted March 27, 2010 at 6:47 pm | Permalink

    gordon knew he had to say something about immigration

    but all he said was annouce what is already in place

    points based system is already there, but in any case doesnt apply to many including intra company transfer visas allowing the outsoucers to flood the country with non EC workers, and the tens and tens of thousands already here on these visas are being allowed to "continue on the journey to settlement and indefinite leave to remain" as the border agency says

    we still have too many sham marriages

    we still have much abuse of student visas, folk failing exams on purpose to get extended for another year and so on

    sadly the conservatives have not given any detail on these points either

  17. Posted March 27, 2010 at 8:20 pm | Permalink

    Unbelievable pledges. Contradictory, vague, pre announced. All weaker than Tory pledges. The Tories ought to issue these pledges with greater adjectives.  

    "secure economic recovery, halving the current £167bn budget deficit"

    If this is to happen before the next election he will have to make massive cuts. The longer he waits the deeper the cuts. Labour say they will make cuts later, this will me they will make them deeper.   

    "to raise family living standards"

    If they are talking about measurable living standards, as you have pointed out real living standards have fallen and may continue to fall in the face of imported inflation, tax rises and global competition. 

    "build a hi-tech economy through support for businesses and industry"

    We are short of hi tech skills and long on high cost red tape. What Brown means by support is more interference and management. 

    "protect frontline investment in policing, schools, childcare and the NHSprotect frontline investment in policing, schools, childcare and the NHS"

    This policy has already shown to be untrue when the Telegraph showed at least 10% cuts in the NHS. 

    "strengthen fairness in communities through controlled immigration, guarantees of education,"

    Controlled immigration is meaningless it just means some controls but there is nothing to say how much. What about guarantees of education? This is already a legal obligation. Totally meaning less. 

  18. Posted March 27, 2010 at 8:49 pm | Permalink

    Conservative pub quiz.
    Who will benefit if the Tories are elected?
    Anyone working on average/ below/benefit wages or retired? Hmmm…
    Lets think on past performance.
    Errr! Hedge funds, the rich, and the City?
    All answers prove to be incorrect.

  19. Posted March 27, 2010 at 9:06 pm | Permalink

    I was speaking to a businessman friend today who runs a web design company with 15 or so employees. He has little interest in politics, probably just catches snippets on BBC news. But he'd been annoyed intensly by a Conservative on the radio saying this was "Brown's recession". My friend said this was ridiculous, as everybody knew that the recession came from America with Freddie Mac and Fanny Mae.
    It had been a long day, and I didn't want a long political discussion, but it made me think that getting the correct message over to the electorate is no easy thing to do. Dumb it down too much, and it can backfire.
    It also told me that if you don't have the national broadcaster on your side, you really have your work cut out.

  20. Posted March 27, 2010 at 10:49 pm | Permalink

    "Interest rates have been kept artificially low by printing money"

    How does this work then? I thought printing money was supposed to accelerate inflation AND interest rates?

  21. Posted March 29, 2010 at 3:51 am | Permalink

    Most people in most general elections choose their government on the basis of programme rather than record – look ahead, not behind.

    That being the case, the most fruitful campaigning by the Conservatives is likely to be demolishing Labour's economic prospectus. If Labour are elected, debt and interest on debt will nearly double by 2014/15 – on their own figures. The one item of government expenditure that is almost universally loathed is debt interest; when it equals the sum of the annual expenditure of two major spending departments, you have a real problem.

    Also, it is high time that we insisted that our view of the future is planned on the basis of the historic long term GDP growth rate (2.1% since 1979) rather than some pie-in-the sky figures in excess of 3%. Over 4 years, it makes quite a difference. If Labour are re-elected and stick to their spending plans, the lower and realistic GDP growth rate will mean lower tax receipts unless tax rates are raised. The choice would be between higher taxes or still more debt.

  • About John Redwood


    John Redwood won a free place at Kent College, Canterbury, and graduated from Magdalen College Oxford. He is a Distinguished fellow of All Souls, Oxford. A businessman by background, he has set up an investment management business, was both executive and non executive chairman of a quoted industrial PLC, and chaired a manufacturing company with factories in Birmingham, Chicago, India and China. He is the MP for Wokingham, first elected in 1987.

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