Mrs Duffy got it right. The overriding challenge facing the next government is to make an early and decisive start on reducing, and eventually eliminating, this country's unprecedented and unsustainable fiscal deficit.
Any failure to do so would cause serious alarm in the financial markets which provide the funds to finance the deficit, and make the task even harder and more costly than it already is. And the markets are in a distinctly edgy state as it is over the problems of the high deficit members of the eurozone.
In advance of the election campaign, all the parties claimed to recognise this, with the Conservatives going furthest in promising a budget within 50 days, which would make a start on cutting back public spending this year.
During the campaign itself, however, a curious silence descended on the issue, with the parties evidently deciding that unpalatable news (even though it was not really news at all) would lose votes. That may well have been a major error by David Cameron, since it is incontestable that it is the gross mismanagement of the public finances by Gordon Brown that has caused the massive scale of the deficit, and Mr Cameron's decision to change the subject enabled Mr Brown to present himself as a safe pair of economic hands.
Be that as it may, there is no ducking the issue now, and it has to be tackled, despite the debilitating consequences and complexities of a hung parliament.
Precisely how it is done is very much a secondary issue: important, of course, but there is more than one way of skinning a cat. Clearly, the main emphasis should be on cutting back government spending, which over the past decade has risen more in the UK than in any other industrialised nation. Asked how they would do this before the election campaign, the political leaders responded by saying what they would not cut, thus making the task even harder.
This will have to be looked at again. It is absurd, for example, that all the parties have promised to increase overseas aid, despite studies which demonstrate that aid usually does more harm than good.
But in the short term, tax increases may have to play a part, too. Certainly, this is no time for any net reductions in taxation. My own credentials as a committed tax cutter are, I think, reasonably well-established; and indeed I would like to see the next government make lower tax rates a firm long-term objective. But that has to wait until fiscal consolidation has been secured.
At the time of writing, there is the prospect of some kind of Conservative-Liberal pact. Fine, if the pact is about the much-needed emergency budget and how the deficit is going to be reduced. Not fine if it is about anything else.
One area of agreement, we are told, is forging ahead with the achievement of a low-carbon economy. A low-carbon economy means a high energy-cost economy. I recognise that a case can be made for this (although I have explained elsewhere why I do not accept it) as part of a global agreement. But as the Copenhagen climate conference demonstrated, no such agreement is on the cards. For the UK to damage its economy unilaterally in this way would be foolish at any time, and positively irresponsible in the current economic predicament.
It is bizarre, too, when all the parties appear to believe that the UK economy has depended too much on the financial services sector, and that it would be desirable if manufacturing played a larger part, to embrace a policy that would be particularly harmful to Britain's manufacturing sector.
Meanwhile, it is worth recalling that most public-spending cuts do not require legislation, and so do not require a parliamentary majority.
This is not, of course, the first time in recent history that an incoming government has had to take urgent action to deal with an alarming fiscal deficit. It was one of the several political and economic challenges that faced the Thatcher government which took office in 1979 – the others including high and rising inflation and politically motivated trade unionism. But the challenge was met; and although for the first two years the government was so unpopular that most of the media doubted whether it could possibly carry through its programme, or even survive, public spending was successfully curbed, first during Geoffrey Howe's time as Chancellor and then during mine, until a budget surplus was secured.
The deficit then was not as big as it is today (although adjusting for the cycle the difference is not as great as it may seem), but the other challenges have largely disappeared. I say "largely", because if it takes, as it must, the uncomfortable steps needed to rein back the deficit and curb public spending, the new government must expect both to be as unpopular as the Thatcher government was during 1979-81 and to have to face down a number of major strikes by some of the public-sector unions, notably Unite.
But, to coin a phrase, there is no alternative. If, in our present alarming fiscal predicament, a new government is not seen to grasp the nettle of responsibility from the moment it takes office, if its policies appear dilatory and inadequate, confidence both at home and overseas will be shattered, with potentially disastrous consequences. What is required is iron resolve, and the courage to be hugely unpopular in the short term.
The good news is that what needs to be done has been done before, so we know that it can be done again. However, whether it can be done without a second bite at the electoral cherry, a further election in relatively short order designed to secure a government with the strength of an overall majority in the House of Commons, remains to be seen. At this time, the joys and delights of a hung parliament, the prospect of which so many were extolling not so long ago, are, to say the least, not immediately apparent.
Lord Lawson of Blaby was Chancellor of the Exchequer from 1983-1989.
Comments: 11
Why dont Labour just make a rag tag coilition and say ' We will be ruled by the voices of many not just an elite manority! We will work together to fashoin the will of the people with an eye to the present as well as the future'...'it is time Britan once more took a leading roll in global innovation and new technology as well as making harnessing renewable energy the priority for this century. Also They should note the mail 'leaking' the Lib Dems plan to open coffee shops and tax regulate and control the sale of canabis in licensed premeses was a clever ploy to get teh apathetic / stoner / pragmatist to throw Lib Dems a vote. I know personally many students voted Lib Dem over this issue. So why not legalise sale of pot in the Uk? It would decriminalise alot of people taht are otehrwise alwful. Could be Taxed Controlled and Regulated. With Licenses to retailers and Producers to sell to retailers. Like the choice between Home Brew or Premium Larger people go for Brands. TAX + TOURISM = PROFIT!
This morning has arrived. The Sun is shining birds are singing, markets are up, sterling hasn't fallen. What were you saying Nigel ?
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