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

Fraser Nelson

Tuesday, 3rd June 2008

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

Since Labour’s fortunes changed, so has Mr Brown’s approach to fiscal management. The £2.7 billion tax cut he announced before the Crewe by-election was a genuine unfunded tax cut, the stuff of Mr Cameron’s nightmares and a tactic not seen since the days of the Heath government. The revolt over the paltry amounts raised by the abolition of the 10p starting rate of income tax demonstrates that the public will not tolerate any more tax rises. Mr Brown has vowed to keep his spending trajectory intact. So the only recourse will be borrowing.

By running up the bills, he ensures that Mr Cameron’s government will, for example, spend more on debt interest than defence. He can sign 30-year PFI contracts for huge hospitals and school buildings (in defiance of industry trends towards smaller, rented accommodation) thus protecting public service budgets. And this is even before he breaks his 40 per cent limit on net government debt.

There is every chance he will do so. He can plead exceptional economic circumstances and point to worse debtors. Going by the OECD’s numbers, Italy’s debt is 88 per cent of GDP, Japan’s is 92 per cent and even the United States clocks up 47 per cent thanks to the profligacy of the Bush administration. So Mr Brown can borrow an extra £46 billion and still claim that Britain’s debt levels are (just) below the average industrialised country. And what’s the worst that can happen: that he is voted out of power?

A Prime Minister who believes he has a serious chance of winning the next election would be minded to take the advice of Denis Macshane, the former Europe Minister: cut spending and taxes. In a time where families are struggling to pay the bills, there is no excuse for state profligacy. Just as Mr Brown tightened the corset when he became Chancellor, so he can do so again.

But as Prime Ministers approach the end of their tenure, they focus on their legacy. Unlike many of today’s identikit politicians, Mr Brown is a man of principle. Even his fiercest critics admit he is genuinely motivated by a desire to tackle poverty, in Britain and abroad. He believes the best vehicle for this is a large, high-spending state. His strategy of stealth taxes and debt concealment is explained by his acknowledgement that the public do not share this view.

But once people are hooked on state spending, it is difficult for any government to take it away. Unencumbered by the need to win an election, Mr Brown can spend these next two long years focusing on his legacy – health spending, education spending and international aid at the highest levels in British history. And, best of all, much of it slapped on a credit-card bill that will be posted to a Conservative government. There are not many good options left for Mr Brown. But this way, he can lose the election and still have the last laugh.

Fraser Nelson is political editor of The Spectator