Scorched earth theories give Labour too much credit

Following the revelation in the FT last week that Treasury wonks are planning to revise Brown’s hallowed fiscal rules, theories have abound that this is the beginning of GB’s scorched earth policy. To quote one; “Like a retreating army, he doesn’t want the advancing Cameroons to have any advantage at all.”

To describe this as a deliberate ploy is, in my opinion, to give it and this Government more credit than they deserve. Brown has proven himself over the past year to be incapable of strategic planning, despite his laborious use of the mantra “making the right long-term decisions”. I suspect, for two reasons, that this is a panic move born out of necessity and character flaw rather than a malevolent plot to scotch any future Tory first term.

Firstly, the Treasury are re-visiting the rules because they know full well they’re about to be broken beyond any currently possible interpretation. The government now faces the biggest budget deficit since 1946 and a tax take that, despite Brown’s myriad stealthy schemes over the past ten years, is dwindling as the economy slows and the housing market tumbles. As Captain Darling belatedly acknowledged over the weekend, taxation cannot rise much higher, whilst cutting back spending would go against Labour’s raison d’etre. Greater borrowing is therefore the only option left to this tired administration, and since Brown is innately incapable of admitting error, his once vaunted fiscal rules must be re-drawn. Expect much protestation of having entered a new economic cycle over the coming months.

Secondly, despite his best efforts to convince us otherwise over the last 12 months, Brown is not a fool. He must surely realise that, to deliberately place the economy in jeopardy by ramping up the nation’s debt solely (or at least partly) to screw an incoming Tory Government, would electorally ruin Labour for a generation. Never again would the population give them the benefit of the doubt on economic competence. As an historian, Brown will be more conscious than most of posterity, and he will not want his legacy to be the destruction of the party he holds so dear.

So no, the re-writing of the fiscal rules does not signal the start of some deliberately vindictive stratagem to shackle the Tories once in power. It is, instead, the inevitable end-game of a tax-and-spend Labour government.