All recessions change the political balance. But this one looks set to go further – and change the way we view the role of the state. This week's revelation from the Governor of the Bank of England of £60 billion of secret government support for HBOS and RBS will only add to the impression that this is a pivotal moment, not to mention the confirmation yesterday (as if there were any doubt) that we are still in recession; the longest and deepest ever.
Labour's most recent line of attack on our economic policy seeks to embed government intervention in the economy, and to foster the view that somehow an interventionist, expansionist state is key to driving economic growth.
That's a strange view, and it one with which I would certainly disagree. But in the current climate, it's one that I could see sticking.
With the banks having brought us so close to disaster, there is a natural and worrying backlash against the free market. If we do not make the case that actually an overblown state impedes economic growth rather than accelerates it, then we will end up with a re-run of the 1960s/1970s attitude to economic management. Now, as much as I might enjoy Life on Mars, or repeats of The Good Life, none of us seriously wants to return to the days of civil servants and Ministers – normally with zero private sector expertise between them – somehow 'backing winners' with taxpayers' cash.
That is why we need urgently to embrace this political challenge, and to take head-on Labour's argument. David Cameron is right to make clear that one of our first acts as a Government would be to cut corporation tax, and make it easier for businesses to back their judgment and invest in their own success. The Labour argument that somehow higher business taxes will stimulate growth is plainly crazy – but I'm sure there are plenty of people on the Labour benches who believe it nonetheless.
But it is not just about tax, it is also about creating the right conditions for new businesses to start up, and existing ones thrive again. One of the critical arguments that needs addressing is that of regulation.
Running a small business myself, I know quite how destructive government bureaucracy is. It reduces profit; restrains business growth and in my view quite perversely stops job creation. In times of plenty, its effects go almost unseen. And growth – albeit at a lower rate – happens despite the government's dead hand. But in a recession, the full impact of intervention becomes clear.
What we will need to show is that the failure of Labour's tripartite banking regulatory system does not make the case for a greater regulatory burden overall.
For the past twelve years, this Government has been ready and willing to take any excuse to justify greater intrusion into our lives – ID cards and the vetting of parents helping each other out being just two examples. We should be willing to make the counter case and make it loudly. Because none of us wants a return to the 1970s…