Saviour's day

So here it is - Darling's day of reckoning. The day when we find out the brilliant plan our chancellor has devised to save our economy.

Except, of course, it isn't Darling's plan at all - the grubby fingerprints of the man who got us into this mess in the first place will be all over the thing. Gordon Brown will have told his puppet exactly what to do and how to do it.

Favourite with the bookies is a 2.5% cut in VAT. Personally, I don't think that will make a blind bit of difference. First of all, I don't believe businesses will pass that cut on to consumers and secondly I don't believe many people will spend any more money.

Being a conservative, you'd think I'd be in favour of tax cuts - and generally I am - but only if tax cuts are a viable long term proposition. Using them in the short term with the acknowledged certainty that taxes will have to rise in the long term to fund the shortfall is a big mistake that will have serious repercussions for our economy in the long run.

Think of it like an investor selling his shares at the bottom of the market - therefore cutting his income from dividends - improving his cash situation in the short term, but damaging it in the long term - with the expressed intention to re-purchase those shares when they are back at the top price. It's the sort of thing you would only do as a last, desperate measure.

Some might think that things are so bad it's the only thing to do, but we're not at that stage yet. As any family man will tell you, the first thing you look at when money gets tights is your spending - and that is what Brown and Darling should be doing. There is plenty of scope for cutting spending - without it impacting so-called "essential services". Any suggestion of cutting spending is usually met with howls from the lefties of "well, which schools and hospitals are you going to close down to pay for this?" - but you don't need to shut any (truth is, leftist governments have always shut down schools and hospitals which is why we have less of each than we did 50 years ago - but that's for another post).

Public spending is completely out of control and has been for decades. In the last 11 years the Labour administration has been recruiting into the public sector at an unprecedented rate and this has to stop.

All Brown and Darling need to do is to impose a public sector recruitment freeze and then announce a 20% cut in funding to quangos. This alone will save the nation some £30 billion (at least) in taxes which could then be used to offer proper tax cuts to those who will actually spend the money.

And where are the Tories in all this? Brown knows that he has outmaneuvered Cameron. Cameron knows that if he wins the next election he will have to put up taxes making his government very unpopular with the voters, but more than that, he believes that Cameron will have to campaign telling everyone that he will put up taxes - and that will make him very very unpopular and, more than this, very susceptible to Labour attacks.

Cameron is stuck because he has failed from the start to tackle the issue that needs to be tackled - public spending. Because he wanted to be thought of as a social liberal he supported the governments spending plans. He wanted to be seen as a "compassionate conservative" - portrayed by the media as the new face of a caring sensitive Tory party that won't swing the axe on public spending.

I've said all along that that was a crucial mistake and one that would come back to haunt Cameron. Now it has.