It was a significant weekend. Polls confirmed the likelihood of Tory victory. David Cameron abandoned his support for extra state funding of political parties. The Tory leader also announced a hardline on bank bonuses. The biggest political news of all, however, was the defection of David Freud to the Conservatives. It was welcome for two main reasons: (1) it confirmed the increasing sense that the Conservatives are the government-in-waiting and (2) it reassures those who worried that the appointment of Theresa May was a sign that the Tory leadership was backsliding on welfare.
Welfare reform could not be more important to getting Britain back on track although an important post on the FT’s Westminster blog points to worrying performance shortfalls from the current Freud reforms. A recent CCHQ analysis concluded that there were just under five million Britons on out of work benefits. Since that data was published official unemployment has risen by a further 250,000. Real unemployment is therefore over five million. As a member of George Osborne’s team puts it: "They achieved precisely nothing on unemployment with a decade of growth."
Welfare reform is going to be one of the keys to solving Britain’s £100bn fiscal nightmare (see the Bankrupt Britain report we published yesterday). The Telegraph’s James Kirkup is expecting the Tories to opt for tax rises to reduce the borrowing. Significant tax rises risk flattening the recovery. There has also to be significant spending control.
The public out there get it. They know the UK economy is stuffed without significant austerity measures. Iain MacWhirter in The Herald lists the cuts he is expecting. I believe that David Cameron and George Osborne need to level with the British people
about the scale of what is going to be necessary. There’s something incredible
about saying that Labour has ruined the economy but pledging to
largely continue with the £219bn spending splurge of the last fifteen years. Tory strategists fear that voters will punish the party that gives them the bad news. I disagree. They’ll hate the necessary measures but they’ll respect the party that is honest with them if, if, if the pain of adjustment is fairly shared acoss the private, public and political sectors. That sharing of the pain of the recession is the central requirement.