POLITICS

Why Gordon Brown might shortly be inviting Tony Blair to dinner

BRUCE ANDERSON

There is nothing intrinsically wrong with more public expenditure, as long as two conditions are met. It must not increase at a higher rate than the economy can sustain, and it must deliver what it promises. On Tuesday, Gordon Brown failed both of these tests, and had no interest in passing.

He told us about the many additional bil- lions which he was proposing to spend, without giving us any reason to believe that they will produce significantly better public services, or that he has solved the intellec- tual problem which has defeated all previ- ous governments: how to ensure that public expenditure provides value for money. In general terms, ethos-based public services work well: the armed forces, the higher civil service, plus — in the old days — the police and the NHS, which have now lost a lot of their ethos. But public servants who are employed as providers of goods and ser- vices do their work less efficiently than their private-sector equivalents.

Let us suppose that in 1960 the govern- ment had invited the great supermarket chains to take over the management of the health service on a competitive basis, but also announced that it was nationalising food. Does anyone doubt that we would now have a much better run health service delivering higher standards of patient care, and much worse food? As far as possible, the government should purchase goods and services rather than provide them, so as to accelerate the day when a pound spent by the public sector will be as effective as a pound spent in a grocer's shop.

But Mr Brown has no intention of addressing those problems. Back in 1997, the Labour manifesto stated that it was a `myth' to believe that higher public spend- ing would deliver better public services. That was true then and remains so. There has been only one change: in the govern- ment's political priorities. Tuesday's state- ment was neither a rational approach to public expenditure management nor an economic assessment. It was an electoral gamble.

The British economy has now been grow- ing steadily since 1992, yet Mr Brown seems to believe that it will expand by another 10 per cent over the next four years. A downturn in America or in Euroland; renewed inflation in the UK (there is little slack left in the labour market); even the re-emergence of the business cycle — a lot could go wrong, and many of the crucial factors are outside Mr Brown's control. It would be interesting to hear what Alan Greenspan thinks of Mr Brown's growth forecasts.

Given the uncertainties, a prudent chan- cellor would conclude that it would be unwise to spend up to the limits of his notional future bounty. But Mr Brown pro- poses to spend even more money than he expects growth to provide. Sooner or later, this will lead to tears.

There will be higher taxes or higher bor- rowing — or both. There could also be inflationary pressures, plus long-term dam- age to economic prospects. Pound for pound, private-sector spending creates more jobs and higher growth than public- sector spending does. So in the longer term, increases in public spending as a proportion of national output lead to higher unem- ployment and less output.

But we can forget Prudence; she was just for show. For a time, Mr Brown wanted us to believe that he had a long-term commit- ment to the lass, but that was fraudulent; he merely wanted a respectable girl on his arm for public display. His real inclinations were always very different. He never intended to marry Prudence; he wanted to seduce the parliamentary Labour party.

If John Smith had died in 1992, Gordon Brown would have won the Labour leader- ship; Tony Blair would not even have stood against him. Over the next two years, Mr Brown gradually forfeited the confidence of his parliamentary colleagues, while Mr Blair gained it. That is something which obsesses Gordon Brown in his continual broodings over past disappointments and in his gnawing ambition for the future. Hence Tuesday's statement, and it worked. Mr Brown has never been more popular with Labour parliamentarians. If he could run against Tony Blair in a secret ballot of Labour MPs, it would be an interesting and close contest. If Labour MPs had to vote on whom they respected more, the PM or the Chancellor, there would be no contest. Mr Brown's statement was bad economics and worse public expenditure management. But at least in Labour party terms, it was good politics.

So how will it play with the electorate? The Tories have now had advance notice of the government's strategy. Every time a Tory spokesman refuses to commit himself to matching one of Gordon's billions, he will be accused of cutting vital public ser- vices. If the voters came to believe that these cuts would fall on existing services rather than on Mr Brown's vague plans for the future, Labour would not complain. But it should not be impossible for the Tories to project an alternative message, offering sustainable levels of government spending plus an assurance that it will be used effectively. They also have the 'myth quote' to throw back at Labour spokesmen in every debate. There is• one other tactic which the opposition should employ. Dr Liam Fox, the Tories' health spokesman an able, promising fellow — has lots of detailed proposals to make the health ser- vice more efficient. They draw on his own experience as a doctor, they sound convinc- ing, and they can easily be grasped by a public which is bemused by all the Brown billions. We can expect a succession of announcements from Dr Fox over the next few weeks.

The Tories also have an education spokesman, Theresa May, a name well- known to the inner core of political cognoscenti. Thus far, her promise and abilities have been less apparent than Dr Fox's. But she, or her successor, ought to come up with the educational equivalent of the Fox measures: realistic ways of raising educational standards.

If the Tories could win the battle of practicalities, it would be easier for them to deride Brown's bogus billions. 'Labour say they will spend an extra £40 billion of your money,' the Tories could say, 'and do you know what you will get for it? Fifty new Domes.'

The Tories must also hope for more leaked memos to provide further evidence of the spin-deep nature of the Blair govern- ment and of the PM's manic narcissism. They can certainly expect further signs of tension between Nos 10 and 11 Downing Street.

On Tuesday, Gordon Brown sounded like a man who cannot wait to be Prime Minister. In 1994, he and Tony Blair met for dinner at the Granita restaurant in Isling- ton to hammer out a deal under which Mr Blair would run for the Labour leadership while Mr Brown would run the economy. Gordon Brown may shortly be proposing another dinner date.