CHANCELLOR AT THE CROSSROADS

 

┬áTHE CHANCELLOR’S NOT FOR TURNING?

 

 

Ted Heath remains a hate figure for many Tories. Two reasons for this are well known. He took us into Europe and he conducted the longest sulk in political history when he was deposed by Margaret Thatcher. The third, less publicised reason, was the economic U turn he performed midway through his government in the early seventies.

 

In 1970 Heath came to power with a right wing agenda to deregulate and make a transfer from direct to indirect taxation. Rising unemployment knocked him off course and his Chancellor Anthony Barber reflated the economy. The resulting inflation was controlled by an incomes policy which led to the miners strike, the three day week and the Conservatives lost the 1974 election.

 

When Margaret Thatcher faced a similar economic crisis early in her premiership, she was not for turning and became a heroine of her party. Such a status is never likely to be available to David Cameron and George Osborne but next week they do face a similar situation. The cries to modify the austerity and borrow our way out are deafening. Labour point out that as the economy flat lines we are borrowing more anyway.

 

I don’t expect the Chancellor to ease up. The Budget is likely to include fuel duty relief and more spending on infrastructure but I expect a broadly neutral budget as ministers cross their fingers and hope that the economic course on which they are set, works.

 

There are economic indicators which support the Chancellor’s approach, the mortgage market is easing, business start ups are growing and unemployment is down.

 

It is worth reflecting on that last point. It is one of the outstanding features of this recession. In Heath and Thatcher’s time, unemployment rocketed up as the economy slumped. Why hasn’t it happened this time. It is partly because the figures mask the fact that a lot of people are part time or under employed. Workers have been prepared to suffer wage freezes and reduced hours to keep their jobs. The trade unions, once able to bring down governments, are whispering from the sidelines. Sad but true, strikes are not really an option in the 21st century.

 

HUHNE PAYS PRYCE, NICHOLSON DOES NOT.

 

One of the many reasons why people are turned off from politics is that the great and the good generally don’t pay with their jobs when things go wrong.

 

If a brickie builds a dodgy wall and it falls down he gets sacked. If a car mechanic does a shoddy job on your vehicle; same fate.

 

But when it comes to police officers failing to pick up on complaints about Jimmy Savile or health disasters like Mid Staffs, none of the people at the top lose their jobs.

 

The glaring example is Sir David Nicholson, head of the strategic health authority which covered Mid Staffs. Now head of the whole NHS for England, he has defied repeated calls to resign.

 

Just occasionally justice is served as we saw this week with Chris Huhne and Vicky Pryce, but this does not detract from the need for people who take high salaries to walk the plank if things go wrong.

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