Gordon Brown’s detractors have long argued that he deserves to be ranked not among Scotland’s economic geniuses but alongside its most notorious confidence tricksters. His great achievement as Chancellor was not to build a great economy, but to create the unshakeable impression that he had done so. He has succeeded, brilliantly, in claiming credit for the economic growth and lower interest rates which — in fact — were common to most developed economies over the same period. Yet he is no more directly responsible for these economic blessings than the conman Arthur Ferguson was for Big Ben (which he ‘sold’ for £1,000 in 1924).
This is not necessarily a bad thing. The capacity to boost confidence is the key attribute for any Chancellor and Mr Brown left the Treasury as perhaps the greatest master of this particular art. And the intricate Potemkin Village he has carefully erected has indeed survived Labour’s decade in power. Yet now it is starting to disintegrate and there is every chance that it will collapse during 2008. On most Hogmanays, Mr Brown has been able to look ahead to a relatively clear horizon. Now, he sees a sky black with chickens coming home to roost.
The problem was outlined best — as so many problems are these days — by Vince Cable, the acting leader of the Liberal Democrats. The UK economy ‘may not be built on sand,’ he said, ‘but it has been built on a floodplain.’ The reason is our massive exposure to debt. The average British household has spent almost all of its earnings since 1997; only house prices are making people richer. In the event of a house price crash, much of this assumed wealth would vanish. When property prices fall, governments usually follow.
Brute facts are piling high to contradict Mr Brown’s claims of growth. It will be hard to boast about low mortgage rates when 1.4 million are next year renegotiating their mortgage and many finding they are unable to do so at an affordable rate. This week we had the truly extraordinary revelation from the Statistics Commission that four in every five jobs created since Labour came to power have gone to (or been created by) immigrants. This explains why a quarter of the population of Liverpool, Middlesbrough and Glasgow are dependent on benefits in this supposedly booming country.
The truth lurking behind Mr Brown’s daft claim that he can deliver ‘British jobs for British people’ is that he owes an embarrassing amount to immigrants. Their rate of arrival has more than doubled to 1,400 a day during the Labour years — and they have patched over many problems. Without immigrants, this year would be the first in recorded British history during which most children were born outside marriage. Without immigrants, London’s birth rate would halve. Without immigrants, Brown’s record on job creation would be worse than Thatcher’s.
This, the true record of the last decade, is becoming clearer by the day. Instead of an economic miracle, Mr Brown has slowly squandered the golden legacy he inherited in 1997. Just as good economic work takes years to dismantle, so profligacy and waste will take years to repair. The Brown inheritance has already destroyed Alistair Darling’s reputation as Chancellor. The pitiful Mr Darling had kept so quiet during the last decade that the first the public heard of him was his stuttering explanations as to why £30 billion of taxpayers’ money has been loaned to Northern Rock.
George Osborne may very well be next to drink from this chalice. He is mindful that oppositions do not always benefit from economic malaise (witness Neil Kinnock in 1992) and until recently David Cameron suspected the same would be true for the Conservatives. One of Mr Brown’s infuriating accomplishments was to be perceived by the public as the man one would trust in an economic downturn. The Tories could swear and spit, but in the summer the polls were unequivocal: Mr Brown’s reward for sending the economy south would be re-election so that he could fix it.
Those days are over. For the first sustained period since Black Wednesday, Labour has lost its lead over the Conservatives for economic competence — a measure which is normally key to winning an election. Yet the Tory leader’s strategy has been to match Mr Brown’s spending plans, and to offer the electorate the same ideas without Mr Brown himself. The question facing Mr Cameron this Christmas recess is whether this is wise — given that Mr Brown’s policies are manifestly failing.
Mr Osborne’s instincts remain to stress ‘stability’ rather than tax cuts (this is in order of emphasis — he has, at long last, given up pretending there is a contradiction between the two). For now, his priority is winning over the business world and persuading the City that the Northern Rock debacle would not have happened under the Tories. He is betting that events will continue to conspire against Mr Brown’s reputation as the custodian of ‘stability’, and that the Tories’ best chance is to pose as the safer bet.
Mr Osborne believes that Mr Brown’s hardy perennial line — ‘Tory cuts’ versus ‘Labour investment’ — will lose its potency this time. Yet the shadow Chancellor is not minded to amend his proposal to outspend Labour on the public services. This would, at any rate, put rocket boosters under Tory education policy — enabling the Cameroons to offer £6,000 per pupil to any body that would open up a new school in the state sector. As for defence, it is likely to have an even smaller slice of the Conservative pie than its ever-shrinking share of Mr Brown’s budgets.
All Tory roads lead towards a May 2010 election (the date which is now becoming orthodox in Westminster). Mr Cameron’s plan is to spend next year wooing business, and look at personal tax only in 2009. This underscores the safety-first approach to Tory policy (save for radical education and welfare plans, to be outlined next month). The guiding principle is to look mature and ready for government, and do nothing that would help Mr Brown portray the Tories as a risk.
For most of his time in No. 11, Mr Brown regurgitated the joke that there are two types of Chancellors: those who fail, and those who get out in time. Yet he has hardly escaped by moving next door to No. 10 Downing Street: there is no one else to blame for a Britain which today suffers the highest inflation and worst deficit in western Europe. Mr Cameron and Mr Osborne calculate that this is not their battle. That if the roof does indeed fall in on the British economy next year, it will be a personal matter between Mr Brown and the British public — and that the best thing the Tories can do is stand well back.