Brown’s scorched-earth policy will cost his successors dear

Unencumbered by any expectations that he will win the next election, the Prime Minister can focus on his legacy – health, education and international aid – and leave David Cameron with the bill

Not that David Cameron is crying out to do so. Take his mantra ‘stability before tax cuts’ – which many, including previous Tory chancellors, regard as a non sequitur. The economic rationale behind this is to rebut (imagined) calls for ‘unfunded tax cuts’ – those financed by debt. The idea that one might cut spending at the same time as taxes is, strikingly, not entertained by the Conservatives (itself testimony to Mr Brown’s intellectual achievement). The main evil identified by the Tories is excessive borrowing, which they fear would weaken the pound.

The damage is already done, and not just by the Black Wednesday-scale collapse in the value of sterling. When Tony Blair entered 10 Downing Street, John Major left him a bottle of champagne with a note saying ‘It’s a great job, enjoy it.’ Baroness Thatcher, by contrast, left John Major with debt at 13 per cent of GDP – an even better present. Assuming a June 2010 election (the date used universally at Westminster) Mr Brown’s welcome present to Mr Cameron will be a government debt of £666 billion according to the Treasury – a wonderfully inauspicious figure. At 39.8 per cent of GDP, it is pretty much what Mr Brown inherited. He has nothing to show for the boom years in which prudent governments (like Clinton’s and Thatcher’s) are supposed to cut debt.

And this is only declared debt. The key trait of Mr Brown’s fiscal management has been his approach to debt and his Enron-style enthusiasm for concealing it. His love affair with Private Finance Initiative contracts is explained by their ability to hide debt off-balance sheet. His so-called International Finance Facility scheme is set up to exploit a Eurostat loophole that if a debt is shared by many countries, it appears on no-one’s books. The OECD believes true UK government debt will be 41.8 per cent next year, way over Mr Brown’s self-imposed limit of 40 per cent.

All this was planned in the days where Labour was expected to win the next election. The prospect of high state spending to finance borrowing does not trouble Mr Brown too much: his aim is to shift Britain away from America’s low-tax model towards a European model where people expect more (and give more) to the state. Debt, of course, is far easier to run up than pay off. So the Conservatives would find it far harder to cut taxes and put money back into the economy.