Downing Street was right to force Lord Young's resignation

Tim Montgomerie

What does a loaf of bread cost? How much is a pint of milk? What’s the current value of child benefit? It’s questions like these, asked by a TV interviewer, more than grand affairs of state, that strike most fear into a politician. Nick Clegg got the basic state pension badly wrong two years ago, when he was quizzed by a news channel. He said it was £30 when it was closer to £90.

Labour Party staff regularly prepared a cultural highlights video for Tony Blair so that the former Prime Minister always knew what was happening on Coronation Street or who had been evicted from Big Brother. George Bush Snr’s credentials were damaged when, after years of never shopping in a supermarket, the 41st US President was filmed inspecting a barcode scanner at a checkout as if it was an alien invention.

As David Cameron and George Osborne steer Britain through the next few years of economic difficulty they have many fears but one of their greatest fears is that they will look out of touch, removed from the suffering of ordinary families. They are both very conscious that they were born into privileged homes but are destined to be responsible for decisions that will mean tax rises for many ordinary, hard-pressed families and redundancy for many others.

So Lord Young’s “you’ve never had it so good” remarks of yesterday were the last thing they needed. The Prime Minister wants Britain’s voters to think that he’s a kinder, gentler Conservative than Margaret Thatcher. Yet here was one of the Iron Lady’s ex-ministers, appointed by David Cameron to end health and safety nonsenses, telling people that everything in the garden was actually pretty rosy. Presentationally, the images of the Tory peer in his bow tie only reinforced the sense of someone who had arrived from another planet and another time. He was right to resign.

Lord Young joins a long tradition of senior Tories who have said inappropriate things during tough economic times. There was John Major celebrating the fact that "if it's not hurting, it's not working" in the early 1990s. At the same time Norman Lamont said that unemployment was “a price worth paying” to bring inflation under control. Lamont was even reported to have been singing in his bath after Britain had been ejected from the Exchange Rate Mechanism in 1992. At the same time that he was splashing about with his rubber ducks many families’ homes were being repossessed.

Just as with Major and Lamont, Lord Young was speaking narrow truths. I’m probably one of the people he had in mind when he resurrected Harold Macmillan’s “you’ve never had it so good” phrase. I’ve been fortunate enough to have been in work during the last few years. My mortgage payments have tumbled. I’ve benefited from price cuts in the shops. My taxes haven’t gone up. There are millions of people like me but that’s not the point.

Like Harold Macmillan in the 1950s, David Young is a wealthy man who lacks streetwise credibility. Rather unkindly, Sky News called him a “doddery millionaire”. His words were insensitive and a gift to Labour and that is why Cameron was swift to rebuke him. My guess is that it was Downing Street who ordered him to resign. The fathers who have been made redundant don’t think they’ve never had it so good. Nor do the mums who have accepted wage freezes in order to keep their jobs. Then there’s gran and grandad who are hardly getting any interest on their savings. This has been a very tricky time for them and not, in Lord Young’s words, a “so-called recession”.

Gordon Brown performed extraordinary acts of economic contortion over the last two or three years. He plunged Britain into the red, pouring money, borrowed from China and the Middle East, into the British economy in an effort to hide the consequences of one of the longest and deepest recessions since the 1930s. For every private sector job that came to an end, Labour seemed determined to create a public sector non-job. The Labour government behaved like an unemployed man, pretending he still had a job and maintaining the same standard of living, but only by maxing out every credit card he owned. You can’t avoid a day of reckoning. You can only delay it and, finally, it has arrived. The bailiff is at the door and he wants his money. The “so-called recession” is about to become real for nearly all of us as Cameron, Clegg and Osborne clear up the mess they inherited.

In 1992 the Conservative Party ran posters all over the country that warned of a double whammy if Labour’s Neil Kinnock was elected Prime Minister. Printed on one of the boxing gloves on that poster was a warning about higher taxes. On the other red glove was a warning of higher prices. Britain, today, isn’t facing a double whammy but a quadruple whammy. Higher taxes. Higher prices. Higher mortgage rates. And cuts in public services.

1. The higher taxes really start to kick in on 1st January when VAT goes up to 20%. Voters say they support the Coalition’s austerity measures but they haven’t really been affected by them yet. It’s not just VAT that’s going up. Many family holidays are going to cost more, too, as taxes rise on air travel. Most also face increases in council tax despite the Government’s efforts to control local government costs.
2. The next boxing glove to land on the average family will be higher prices. We got a taste of the bruising to come when, last week, British Gas announced a 7% increase in prices. That equals £82 more per year for the average householder. More inflation is on the way. The Retail Prices Index is at 4.5%; well above the Bank of England’s target.
3. Boxing glove three is higher mortgage rates. The historically low interest rates that homeowners have enjoyed and savers have endured cannot continue forever. If they don’t start to climb upwards soon there’s a real danger that inflation will accelerate because of the all the extra banknotes that were printed as part of that euphemistically called “quantitative easing” programme.
4. And the fourth and final whammy are cuts in public services. Some of the cuts won’t hurt. The state got too fat during the Labour years. Public sector workers were being paid more money for working fewer hours than their private sector counterparts. Welfare payments ballooned out of control. Restoring some balance is a good thing. Getting rid of waste will also ensure taxpayers get better value for their money. But there will have to be some pain. We still see libraries closed, bypasses cancelled, hospital services merged. And, of course, many families will lose their child benefit.

The cuts are going to last a long time, too. George Osborne decided not to frontload the cuts but to spread them out, over four years. Just as we’re all exhausted by year three even more cuts will be coming in the final year, in the run up to the General Election. Worryingly for Cameron all the lowest hanging fruit will have been picked by then. Cuts in year four will be tougher to find.

Britain can get through this dark tunnel. Technology and the spread of wealth to emerging economies will create a richer world for all of us. It may even be possible, that if the eurozone avoids a meltdown, growth will pick up quickly and the Chancellor will never have to make all of those massive cuts. He may also be able to start promising lower taxes in the run up to the election - knowing that a true leader is, as Napoleon said, a dealer in hope.

By pointing us to the hopeful future, at the end of the tunnel, our political leaders will keep us all going. If we know the medicine will restore sick Britain to health, we’ll be all readier to swallow it.