Cameron-Osborne's bravest decision

It was Cameron-Osborne's biggest and loneliest decision: The decision to oppose Labour's plans to borrow and spend Britain's way out of recession.  When the Tory leadership team took the decision they were first big political party in the world to step away from the herd.

It's a decision that doesn't look so lonely today.  America's Republicans - albeit for mixed reasons - are opposing Barack Obama's stimulus.  As reported on ConservativeInternational, Australia's Liberals are now stimulus-sceptic too.  I think Angela Merkel and Stephen Harper would have been less willing to support a stimulus if they weren't leading minority governments.  Harper has certainly enraged his Canadian Conservative base for having done so.

When the Angry Right accuses David Cameron of leading Britain towards socialism they should reflect on this big Tory call.  It's true that we still need much, much tougher control of public spending from the Conservatives but their fiscally conservative instincts are strong.

Tim Montgomerie

10.15am: "Paris rejects 'Obama-style' stimulus program" (International Herald Tribune).

Comments

[Jiggy]

I don't see why republicans would disagree with Obama's bailout. Last time I checked, Bush was the one who proposed it. Then again, why would republicans agree with a political agenda as big as this? It all boils down to mindless opposition, all because the other side is expected to "oppose."

[GB£.com]

What are you talking about?

They fully supported the biggest waste of money, the bank bail-out, and even claimed credit for coming up with the idea.

That stupid decision alone will take decades to pay off.

[Steve Foley]

If Conservatism is nothing more than an Economic Philosophy then Tim may have a point.

Of course Cameron and Osborne, two poor little rich boys, have no fear of the spectres of Unemployment, Repossession etc. Typical alas of the modern Conservative Party these days Economically Hard but soft as putty on Social matters.

No wonder so many true Tories have gone to other parties.

[Sane Right]

"Angry Right" is putting it mildly. This is the "deranged, chewing the carpet Right" that has no place in today's Conservative Party.

[John Broughton]

The Cameron-Osborne decision not to borrow and spend was and remains both right and correct.

However to make it work it has to be coupled with restoring sanity to the public finances and making cuts. Local Authorities could for instance be obliged to provide only the core services. Proper local democracy needs to be restored with dependance on central funding reduced where high spending councils will then be voted from office.

The current approach to private sector finance whereby interest rates are being reduced to virtually zero penalises savers in favour of the profligate (goodness knows but the benefit system already does that). Base rate cuts are not going to save private enterprise - the + over is what matters. A lot of people used the interest on their savings to survive; give them back their income and they will spend rather than starve and freeze.

I'm looking for a more coherent financial plan.

[Susan Hill]

But when push comes to shove NO government of either side ever does cut public spending in the way every person in the street knows it should be cut - and knows exactly where and how too. They all chicken out. The above comment is correct... make local councils provide and provide well, ONLY core services...our recently appointed a Climate Change officer on 23k a year for heaven`s sake, to write patronising and ignorant leaflets and shove them through my door, at huge expense. And we all know that when there are cuts it is always the core frontline services that suffer first, whereas town hall jobs are secured.
But will the Conservatives under Cameron have the guts to cut deeply in the right areas ? No, of course they won`t.

[David Belchamber]

"I'm looking for a more coherent financial plan". John Broughton

I think we all are, John. As Brown and the conservatives were fully aware of what Sweden did successfully in the 1990s when faced with a similar problem, I am surprised that they do not seem to have debated the merits of creating a "bad bank" to take over the toxic assets from the the main banks.

I suggested that idea on ConHome back in November when it received nil interest but it is now being actively discussed by Germany, the USA and ourselves as a serious possibility.

The conservatives can muster quite a lot of economic firepower - several former chancellors, John Redwood, Michael Fallon, Peter Lilley (who correctly predicted in 1997 the problems that Brown's actions would cause in a downturn) and Howard Flight to name several. Did they have a think-in to come up with a better plan than Gordon Brown's and, if not, why not?

[UKIP defector]

It looks like CCHQ is putting the heat on the Editors. Is there a threat to withdraw the puff pieces from frontbenchers?

This piece is sychophantic nonsense as Cameron has, in effect, declared his Conservatism to be a new form of Keynesianism.

I expected from the supposedly independent Conservative Home. Show some testicular fortitude guys!

[Tim Montgomerie]

We haven't been subject to any pressure or threats UKIP defector. Yesterday I questioned Tory environmental strategy. Last week I questioned the willingness of two shadow cabinet ministers to sign up to the 'Red Toryism board'. ConHome remains a proudly independent forum.

I do think the opposition to a stimulus was the right call. I don't think it was an easy decision at the time. I was certainly in two minds myself.

[James Maskell]

I thought the Tories were wedded to Labours spending plans and supported Labours policies regarding the recession until they realised it was a ridiculously unpopular policy which would lead to a loss of support. Their opposition was based upon the realisation that their stance at the time was unsustainable and that they had fallen into line at the start under the apparent pretence of national unity. It was only when they realised they were on the wrong side of the argument that they changed.

Recent comments by Cameron suggest that theres still a lot of smoke around regarding Tory economic policy.

[UKIP defector]

I accept the Editor's personal assurances and apologise for the rather intemperate remark above.

It's not much fun being snowed in, and unable to get to the office, for a third day in succession. You could say it's snow good.

[Chuck Berry]

I just wish the stimulus for the economy would centre around the building of new Public Conveniences. Healthmatic a great business (My Lord! I must declare an interest) would be delighted to put even more in to increase its already record installation performance. www.healthmatic.com someone has to do it!

Chuck

[Ther Bishop's loyal wife.]

It's appears to me that the far right has become even more disloyal than usual.

Steve Foley says " No wonder so many true Tories have gone to other parties." No "true" Tory would leave the party. A "true" Tory will bite his or her tongue, and buckle under in the interest of party unity and winning the next general election.
Those who cannot be loyal members of the party, should indeed go elsewhere.Please stop trying to justify their treason, and do not describe them as "true" Tories.

[david1]

An opposition can indulge in all sorts of,'brave decisions' its having the courage to impose them when in government that counts.

So will Mr Cameron/Osborne make it clear in the Conservative manifesto, that they will do a Howe/81, substantial rise in taxes and reduction of public spending during a recession: somehow I dont think so!

[Westminster Wolf]

France too:

"Prime Minister François Fillon on Monday rejected demands that the French government seek to stimulate consumer spending, rather than follow his plan to stimulate corporate and infrastructure investment, to lift France out of its economic slump.

"It would be irresponsible to chose another policy, which would increase our country's indebtedness without having more infrastructure and increased competitiveness in the end," Fillon said in a speech in Lyon."

http://www.iht.com/articles/2009/02/02/business/frecon.php

[GB£.com]

Tim wrote:
"When the Angry Right accuses David Cameron of leading Britain towards socialism "

Andrew Lilico wrote:
" I can hardly complain when our policy proposals are nakedly socialist"

So Tim, by your own definition, you are now insulting Andrew as "Angry Right".

[m dowding]

A "true" Tory will bite his or her tongue, and buckle under in the interest of party unity and winning the next general election...

--------------------
Well said. Toeing the line in opposition and being constuctively critical in power is the way to go.

[anne allan]

Talking of public spending cuts - now that a public sector employee earns more on average than his or her counterpart in private companies they should share the risks that a job in the productive part of the workforce entails.
Council planning departments all over the country are twiddling their thumbs. A few redundancies/natural wastage wouldn't come amiss.

[Ben Drown]

"10.15am: "Paris rejects 'Obama-style' stimulus program" (International Herald Tribune)."

Paris Hilton has come out against the Obama stimulus? This merits an article in its own right.

[Jack Iddon]

Oh dear Loyal Wife. Is disloyal to be dismayed when you see the party that you have worked and striven for most of your adult life lose it's way, change its identity, slowly slipping to the left and abandoning the true Conservative principals and standards for Blairite emulation and dithering indecision. Was it this that made the Conservatives such a great party?
Our callow leaders, Cameron and Osbourne are the greatest asset Browne has in his electoral armory. That is why some people have left. Despair not disloyalty has driven them out!

[Mark]

LEVEES & LEVYS
Brave decision or not, there needs to be strong opposition to the prevailing political wind. The storm, to be faced at election time, will surely require plans of action to quell the resultant fires and to build defences against the rising tide - to construct levees which will protect UK interests whilst enabling trade to pass through.
Yet it is the levy that the unthinking Government is placing on future generations which needs to be the focus. Avoiding the pending and feared protectionism that appears to be developing worldwide is one thing. But we are actually talking about UK survival. Using Darwinian thinking, those who learn to best adapt survive.
The Conservatives must not only be brave - they must prove that they are adapting best to the climate we now face.
The sooner the election, the sonner the right corrective measures can be applied. This will take a lot of thinking through - but only the Conservatives have the right platform. This is the thinking man's platform.

[Michael Taylor]

It's the direction of travel that matters - we are now putting (dare I call it?) clear blue water between us and GB's leviathan state.

Calls for more pure conservatism to an understandably nervous electorate risks detachng us from our poll lead and condemning us to pure and virtuous opposition impotence - the prerogative of the eunuch through the ages.

Well done DC and GO on this one!

[The Bishop's Loyal Conservative Wife]

"Oh dear Loyal Wife. Is disloyal to be dismayed when you see the party that you have worked and striven for most of your adult life lose it's way, change its identity, slowly slipping to the left and abandoning the true Conservative principals and standards for Blairite emulation and dithering indecision. Was it this that made the Conservatives such a great party?"

It certainly wasn't constantly attempting to undermine the leadership that made this party great. I am dismayed by the selfish whining of those who believe they are the only custodians of "true" Conservative principles. For far to long the far right has held this party hostage. To win the election we need to take the Nation with us. After all these long wasted years of opposition you would think you people would be glad that finally we have a leader who connects with the public. Winning the general election is what is really important. We all share core beliefs. For now we should concentrate on what unites us, rather than harping endlessly on about very minor and irrelevant differences of opinion.

[resident leftie]

Tim, this is just sycophancy, and isn't worthy of this site.

Which bit of tax and spend have they disagreed with? The only thing I can think of which Osborne and Cameron haven't agreed with is the £12bn VAT reduction, but I haven't seen them pledge to reverse it. They've supported all other Labour fiscal stimulus measures, and haven't said they are going to reduce or even freeze expenditure.

Tax receipts are going to go down. If you are committed to increase (or even freeze!) public expenditure, you are committed to borrowing and spending.

In order not to be committed to borrowing and spending they need to do one or both of:

1. Increase taxes.
2. Reduce public expenditure.

So to which of these two measures have the brave lonely pair committed themselves?

[Victor, NW Kent]

In a world of change a political party needs to change. Keir Hardie could not run the modern Labour Party nor Lloyd George the LibDems. It is rather silly then to scorn Cameron because he is not Disraeli or Churchill.
It should be self evident that Brown's policy of increased borrowing and spending during the boom period cannot be a rational solution during a recession or else it was irrational during the boom.
Nobody has any clear idea of what effect zero interests rates will have as a benefice on the economy. We do know that prudent savers are penalised.
It now seems sure that low interest rates during the boom were ill advised and perhaps should never have dropped below, say, 6.5%.
It is a time to examine many sacred cow ideas about our economy and since Cameron, Osborne et al will have to sort out the debris from 2010 they will have to have new ideas. The fact that those will not mirror Brown's or Merkel's is immaterial. That will not be a battle of ideologies but a battle to survive and rebuild. A task far worse than Thatcher faced in 1979.

[Tristan Downing]

The Tories took their stance knowing that as people lost their jobs, they would turn against Brown and so they needed to present an alternative. As it happens, I agree with the Tory plan. But I wouldn't seek to support that view by reference to Republicans. The Republicans are a mix of fiscal conservatives and hard right, religious authoritarians, and they two factions are battling it out for a new dirrection for the party. If the moderates win the day then they are more like a party we can to business with, but if the zealots win then we should not look to align ourselves with them.

[Jack Stone]

It is easy to oppose solutions but far harder to propose them.
Cameron and Osborne have no answers to the economic problems this country faces.
They have no answers to save jobs and create new ones , they have no answers to how you can get people spending once more.
They try so hard to please everyone they will end up pleasing no one.
If there policy is to make sense they must tell us where the spending and tax increases are going to be made as they will have to do both should they be elected.
Cameron and Osborne act like two silly boys trying to be grown up politicans!!!
They are not brave they just didn`t have the guts to agree with the government.

[Jake]

"It was Cameron-Osborne's biggest and loneliest decision: The decision to oppose Labour's plans to borrow and spend Britain's way out of recession. When the Tory leadership team took the decision they were first big political party in the world to step away from the herd."

In theory they are correct.In a comparable situation, US President Herbert Hoover 1929-33 did just what Brown/Darling are doing now ie he ran around busily announcing new initiatives galore,pumped huge amounts of money into the economy, supported failing banks and businesses and generally tried to stop the economic collapse with ernest good intentions. The collapse happened anyway,nadir was 1933, rather delayed by US government policy and instead of being V shaped it was an extended U shaped.

The next president,FDR, largely continued the same policy with better public relations and more noisily. Hitler effectively got them out of it in 1941.

Japan in the 1990's to today is another example.

In practice, as also with the absurd posturing about free trade by some leading Conservative politicians who should know better, one has to tread very carefully here, bearing in mind that one wants to get elected.
The approach needs to be highly pragmatic and whilst bearing in mind economic theory it must not be overtly doctrinaire. The immediate impact of recession/depression on people's lives is intensely threatening. They will not respond well to being told bankruptcy is better for them.

Being the Opposition, one has the luxury of not actually having to put forward too detailed proposals. Let the government take the flak. Opportunistic proposals only. Among other things the mix should include enlightened protectionism which , so far, is a missed opportunity for the Conservatives.

[SWIVEL EYED CAMERLOON]

A decision it may be but BRAVE?

[Marjorie Baylis]

Gordon Brown is throwing himself into this frenzy of spending because he is worried about the magical 3 million unemploymwnt figure that was prevalent in the early 90's, courtesey of another set of external pressures (i.e. George Soros, the run on the pound and the ERM)

However, from the way the unemployment figures are coming at us, thick and fast, it would seem that this will be a pipe dream. There will be a load of unemployment in the next 18 months that can not be avoided.

If the figure is unavoidable, one has to wonder about the future borrowing, because it is just going to take so much longer to get the economy on something approaching a half decent equilibrium and unemployment down again.

Hell, Gordon wont be a player then, what does he care?

[Aless Bieri]

If Australians are opposing it then that really is significant, considering Australia has a national surplus

[The Bishop Swine]

"If Australians are opposing it then that really is significant, considering Australia has a national surplus"

A good point. Brown is not doing even what Kaynes suggested. As he didn't build up a surplus during the good times to draw on during the bad times. Oz is right, you don't throw good money after bad.

[Andrew S]

""Angry Right" is putting it mildly. This is the "deranged, chewing the carpet Right" that has no place in today's Conservative Party."
And hopefully no place in tomorrow's society

[B.Garvie]

D.C and G.O's decision is the correct one. Borrowing more to stimulate an already ailing economy on top of the biggest debt in history, defies economic logic.

Brown is hoping, indeed praying other countries will follow his lead so as to vindicate his position as the 'superman' image he tries to portray. He keeps saying this 'is a global crisis' and hopes to again vindicate his position by repeating this boring mantra over and over again. However, he will find that after due diligence, other countries will back away from his 'grand design' to salvage the World.

He is desperate to run from the charge that it was he that removed the regulatory powers from the Bank of England and replacing it with the incompetent FSA. Thus banks were able to abuse their positions over collateralised loan obligations involving sub-prime markets. These subsequently ran out of control and the crisis escalated. He cannot escape culpability for this and must admit his responsibility; but remains in denial.
He was instrumental and is architect of the domestic problems resulting from our severly fractured economy.The electorate know he claimed to be the world's most successful chancellor. But in fact, he is the world's most successful burglar.

For too long the British people have been held hostage to fortune, with pensions robbed, savings robbed and jobs lost. Brown & Darling spending billions of our taxes and increasing the national debt is untenable. It is now at the staggering point where it will take the next two generations to pay it off. All this so he can stay in power a little longer.This crass stupidity must stop.

The time is now approaching with unrest growing and an angry electorate watching helplessly as he fails to tackle these problems.This discredited Government must be encouraged to resign.

Millions are glad D.C and G.O have stuck to their guns and not supported Brown on his madcap spree. Brown has destroyed our standards of living and has begun to believe in his own publicity; very sad and dangerous.

There is no confidence left in Brown or his Government and the country knows it will take a professionally responsible Tory Government to salvage what is left of our devastated economy and bring confidence back to the British people.

[David Belchamber]

I am very much with B.Garvie at 15.37 who says:
"He (i.e. Brown) is desperate to run from the charge that it was he that removed the regulatory powers from the Bank of England and replacing it with the incompetent FSA".

And also:
"Brown & Darling spending billions of our taxes and increasing the national debt is untenable. It is now at the staggering point where it will take the next two generations to pay it off".

If he really wants to ensure the lowest possible vote for Brown at the next election, the conservatives need to repeat these two points together and ad nauseam.

Brown caused a major credit boom, followed by bust. This should be stated as a fact that needs no further argument.

As a matter of interest, can anyone explain why the BoE said nothing after Brown changed the cost of living index from the RPI to the CPI? The Monetary Policy Committee seemed happy to control an artificially low rate of inflation. If they knew this, why didn't the BoE say something?

[Mr Angry]

One swallow does not a summer make.

[Patsy Sergeant]

The really evil aspect of the man at the top of this government is his hubris! He might just as well have had a list of possible actions to take, originally, and just stuck a pin in it!

He has demonstrated more than once that his priority - both before and since he has become PM - is to micro-manage everything that he can get his hands on, hence his disastrous decision to set up the FSA, and hamstring the Governor of the BoE! The trouble is that this is a habit now, and there is no way that he can change!

This particular aspect of Mr. Brown's hubris, is what leads him to be so vicious in his attitude to David Cameron, (it would have been interesting to see how Brown would have coped, if some older politician in the Conservative Party had persued such a relentlessly vicious attitude towards him, when he was younger and 'coming up').

I am afraid that with his charming helpers he is going to get more vicious yet, and encourage the rest of his MP's to do likewise!

It wouldn't surprise me at all, if he chose to spend his way (or try to) out of the recession, because he thought it would appeal to his 'core voters', and for no other reason! He plainly thinks that they are all too stupid to work understand WHY, the country is in a mess - and he doesn't propose to enlighten them!

BUT even he blunders and the insecurity and disquiet that 'British jobs for British workers' has unleashed, is NOT going to go away! AND he 'lost face' in front of the Chinese Premier, that was plain to see on the news reports.

I cannot see him 'going to the country' early, he won't relinquish power until he absolutely has to!

[Paul Marks]

At first the vast majority of Republicans in the House of Representatives supported the banking bailout - but then they were worked on (by Bush and others) and some joined the Democrats (although a minority of Democrats opposed the bailout).

The Obama "Stimulus Plan" is ON TOP OF the vast ammounts of money that have already been thrown away.

Not a single Republican voted for the Obama Plan - and 11 brave Democrats joined them in opposing the madness of spending almost another TRILLION Dollars on top of the vast sums already wasted.

The Senate will (sadly) most likely pass something close to the Obama/Pelosi plan.

So the United States economy is doomed - and it will drag us down with it, even if we were following sensible policies (which we are not).