Ken Clarke: Labour“s economic incompetence
Ken Clarke, 02/03/2010
Category: Economic Policy
Speaking at Thomson Reuters with David Cameron & George Osborne,Shadow Business Secretary Ken Clarke said:
“It's a pleasure to follow George Osborne on the platform today. This weekend showed very vividly why we can“t afford five more years of Gordon Brown. There's a choice to be made, and the choice of Gordon Brown is a very expensive choice indeed.
We have been arguing for months that it is only the prospect of a Conservative victory that has been holding down interest rates and holding up sterling. This has been a very fragile position.
Yesterday“s and today“s market movements show how nervous our foreign creditors and investors are about the prospects of a Gordon Brown victory or a hung parliament.
The argument from a British point of view is if investors do not believe the new British Government has the political will to deal with the deficit and pay down some debt they will demand much higher interest rates before they will lend us any more money. It's a perfectly straighforward argument.
George Osborne first warned that a devalued pound could push up long-term interest rates in November of 2008. George said then: “The more you borrow as a government, the more you have to sell that debt - And the less attractive your currency seems.“
The government accused him of talking down the pound, sent out the usual attack dogs to sow confusion about the meaning of this accurate and sensible warning. The Government was then still denying that we faced any serious economic problems. Sixteen months on, as we watch the cost of borrowing soar, and the pound fall, we can see clearly that we are in a crisis still and cannot complacently assume that we are getting out of it.
This is not because of plain speaking from the Opposition, but because the markets could take fright over the prospect of the irresponsible, profligate Gordon Brown government somehow hanging onto office for another five years.
Last thing I want is the Government of this country to be at the mercy of the bond markets or international finance. That's the position Gordon Brown has put us in. We run that risk because Gordon Brown has left our country with the biggest budget deficit in peacetime history, borrowing one pound for every four we spend. I want to live in a democracy which elects a Government that regains control of events and has the mandate from the electorate to take the tough and necessary decisions. Voters must not elect themselves into a financial crisis.
In plain terms, no one should doubt that a Cameron Government will cut wasteful public spending, keep taxes as low as possible and get rid of the bulk of the structural public deficit in the lifetime of the next Parliament. George Osborne has demonstrated our political will by giving bold examples of decisions on public sector pay, pensions for higher ranking civil servants and child tax credits for the better off.
All Gordon Brown had to say from Opposition in the election of 1997 was that he was sticking to my figures, which he had committed himself to for the first three years.
Back in 1997 the Labour Party actually made much of that promise in the general election. My tax figures were adhered to by the new Government. My spending figures were adhered to by the new Government. The Opposition waiting to take power accepted my fiscal judgement.
There is an extraordinary contrast between today and 1997. Back then I had fixed tax plans and fixed spending plans and I made a firm judgement which the Labour Party as Opposition and Gordon Brown as Shadow Chancellor agreed to continue with. That was from a healthy fiscal position.
Contrast that with today. In 2010, from a crisis situation, the Labour Government have no clear plans whatsoever. They are unable to commit to any realistic strategy to tackle the deficit. I can“t think of a greater contrast. There is no fiscal judgement. We don“t have any spending forecasts supposedly because of the uncertainty: but really because they are paralysed into inactivity by the approach of an election. They do not have any credible medium term figures for George or me or anyone to agree with.
Dealing with the deficit is not an alternative to recovery: it is crucial for recovery.
This weekend, a hint of a hung parliament in the polls, has seen sterling fall to a ten month low, and those who are lending us the massive quantities Gordon Brown is borrowing have put up the interest rates on that debt.
The cost of borrowing money for the long term has risen to over 4.5% - up half a percent since November - while Germans can borrow at less than 4%.
Sterling has fallen over 8% since Brown blocked Darling from delivering a sensible PBR that the country needed.
That“s the impact of one opinion poll. Imagine the impact of a Labour victory:
The UK“s credit rating would be seriously put at risk.
Interest rate rises would hit the government, the taxpayer and business while choking off a feeble recovery.
Mortgage rates would rise sharply for millions of families across the country.
The impact of five more years of Gordon Brown, lacking a credible plan to get to grips with the deficit, would be interest rates forced up and the pound sent on a downward spiral.
Now I know how important it is to have a united team at the top. Working with David and George fills me with confidence, they are not just a formidible political team but they are also a formidable economic team.
Dealing with a problem of this size requires a team who trust each other, want to work together, and put the national interest first ahead of narrow sectional Party interest. The current cabinet is full of people who just don“t get on. Can“t work with each other. Want each other“s jobs. Is Alistair Darling even on speaking terms with Ed Balls?
This is no way to run a government at a time of crisis.
We need someone on the bridge with a credible plan. This is not some Westminster soap-opera. You need to bring people with you and show that you are all in this together. That is exactly what the Conservatives offer under David and George“s leadership.
Only by dealing with the debts we can provide confidence to businessmen and families up and down the country that they can plan ahead with confidence, that we can get a grip on our debts, and that with interest rates lower for longer, and we can unleash the forces of enterprise to show Britain is open for business again.
The Conservatives have done that in the past. We turned around an economy left in tatters by Labour, got Britain growing, and left Gordon Brown with a golden economic legacy.
Now we need to do it again.“