Tuesday, November 18, 2008

The Return of Sound Money & Clear Blue Water

I'm delighted by David Cameron's announcement this morning that the pledge to match Labour's spending plans for 2010-11 has been abandoned. In his speech he annunciated very clearly that the Conservative approach to the financial crisis will be based on sound money, with no unaffordable spending or borrowing.

David Cameron will have some unpopular messages over the next few weeks, but they will all be based on sound money. He will make clear that you can't borrow and spend excessively and have £30 billion of tax cuts at the same time. In the end, there has to be a day of reckoning. He knows that a Conservative government will have to pick up the bill, and is trusting the British people to realise that it cannot have its cake and eat it.

Cameron's strategy, it seems to me, is to ensure that under a Conservative government outside investors would have confidence in our economy and that it would be run on a sound financial basis. If not, we won't get any growth because no one will put their money here and our currency will weaken even further. That's what lies behind this announcement.

So I applaud his speech today. It radiated prudence, competence and realism.

This speech signals the return of clear blue water between the Conservatives and the Labour Party. Since the war, every Labour government has ended having presided over a financial crisis - 1947, 1967, 1976 and now 2008. Every Labour government has ended with unemployment higher than when it came into office. This one will be no different.

Electorates always punish governments who lose their reputation for sound economic management. It happened to Harold Wilson in 1970, Edward Heath in 1974, Jim Callaghan in 1979 and John Major in 1997. I see no reason why the electorate will come to a different judgement this time and boot this lot of economic illiterates out. Unfortunately, by the time that happens they will have borrowed so much and spent so much money that they haven't got, that it may take years to undo the damage.


Letters From A Tory said...

Couldn't agree more. Cameron needs to show the voters that his plan is superior to Brown's and that Labour's promises will ultimately make things worse in the long run.

When the likes of Peter Mandelson admit that "structural adjustments" will need to be made next year to accommodate Brown's tax cuts, you know things are looking bad.

Anonymous said...

Well done on 5Live earlier Iain. Good points, well made. Very well made.

North Briton Hunter said...

But what would Cameron actually do? We still have no idea.

It's perfectly easy to say what you won't do, but the Conservatives are still to present a single coherent idea as to how they would deal with the credit crunch and the impending recession. Not one.

Anonymous said...

But it took a near world economic collapse to shift him.

Womble On Tour said...

This looks like the start of a return to common-sense economics - one I've been hoping for for some time. I'll want to see the detail but on the face of it this is what we need.

Mark Senior said...

The Conservative clear blue water route .... to 5 million unemployed

joe bonanno said...

woot woot *** cliche alert **** woot woot


an ordinary voter said...

The electorate need to be told some "home truths" even if they don't like it.

They have been encouraged over the past decade to borrow as much as they can(without any thought of how the amounts will be repaid or when) on their mortgage on the understanding that mortgage rates are low and property values are soaring "don't miss the chance to get rich"; to view a house as an investment not a place to live; to borrow as much as you can on credit cards to fund a celebrity lifestyle that most couldn't afford; put nothing aside as savings(the state will look after you).

Now is the reckoning(although Brown is trying to defer it because he's guilty of doing the same with the nation's finances).You can either continue your reckless spending and borrowing or start to live within your means,

The electorate may not like the message but it's one the politicians should have told them at least 2 or 3 years ago if not sooner

Chris Paul said...

Can you define "Sound Money" please Iain? What does this gibberish mean?

"We'll do things differently. We'll do things better. We're sound as a pound. Public services are in the bed pan." Is that it?

Peter Wilson said...

Re: Mark Senior, there's 5 million unemployed now, it's just most of them claim incapacity benefit instead.

trevorsden said...

"But what would Cameron actually do? We still have no idea."

The govt have not yet published their spending plans and they too will have to say where and how they will recoup the money for their tax and spend give-aways. If they do not - then expect a run on the pound.


There is nothing in the govts proposals that will help employment - only more imports more immigration more borrowing more debt.

curly15 said...

Not quite, we are only talking of reducing the size of expenditure increases, rather than actually reducing the size of expenditure.

Anonymous said...

Anonymous said...
But it took a near world economic collapse to shift him.

November 18, 2008 12:28 PM

What possibly makes you think this is over?

This is the beginning. I fear the end may be much, much worse than your worst nightmare.

Lola said...

It'll take 20 years to sort out this mess.

Mark Senior - you are right. There will be 5 Million unemployed because there already are.

On top of the unemployment rate New Labour has destroyed real wealth creating jobs and replaced them with benefit dependency and civil servants and quangocrats.

What the Tories will have to do is to make sure these non-jobs are scrapped and the people in them are given the freedom to seek more productive jobs in the real economy (world?) as well as sort out the unemployed.

New Labour - Old problems

Anonymous said...

Mark Senior said...
The Conservative clear blue water route .... to 5 million unemployed

November 18, 2008 12:31 PM

There is no option.

Brown will destroy the private sector. The public sector will consume eevrything in it's path until there is no longer any wealth produced.

Then there will be 15 million unemployed.

Green Diary said...

@mark senior - well the CBI reckons unemployment will reach 3 million over the next couple of years. That's under a Labour government and includes their endless list of 'initiatives' to get people to work such as the new deal.

On the main topic, I welcome the announcement. It's about time a party comes out and says that just chucking money at public services will not improve them. the money needs to be directed properly and wastage cut out. By my thinking we can probably freeze public service investment for a few years and still have no worse a system, in fact probably a better system if bueracracy is deleted and money directed to the right places.

Raedwald said...

Cameron has done well in explaining succinctly and convincingly why Labour's plans are little more than a base play for power by a bunch of crooks. Nor does he deny that the recession is going to be painful. Now he needs to broadcast a vision for a future Britain under the Conservatives that is more than just what we've got now but with lower public spending.

When the British people signed up to the pain and sacrifice needed to rid Europe of Nazi Germany, there was an implied price - and that price was change. As the rubble of the Blitz still lay in the streets, a popular expectation was born that the effort would be followed by radical change, and that ordinary people would gain real benefits.

This recession will be another such watershed. Yes, we'll take the pain - but the price will be real reform of our stagnant and dying political system, an end to Labour's intrusive State and a more inclusive and equitable society albeit one to which the turnstiles are closed to the world's spongers.

Without something worth winning, a vote for Cameron won't be worth chicken spit. No one will vote for pain without gain; the country will go with Cameron, but only if there's something radically different about a Conservative Britain at the other end.

People are heartily sick of the politicians who have got us here in the first place. Our democracy is sick. Where now is the Beveridge who will pledge radical reform?

Anonymous said...

Mark Senior should realise that when Labour further destroy the currency unemployment will be far more than when the Conservatives bring back sound money. Will Labour never learn from their continual failures?

Anonymous said...

Yes Iain, but he has to nail the lie every time "Tory cuts" are mentioned--whether it's in the House or in the pages of newspapers or on TV.
Strong language is called for.

By the way I was impressed by Philip Hammond on the Daily Politics and how he refuted Brillo's argument about other countries debts. But he was still too polite!

Lord Elvis said...


You were saying in a previous about the Conservatives needing a campaign song. After today's news, HERE's the song they should be using...

yarnesfromhorsham said...

And whats more they will all finish up in the HoL on index linked pensions. Seems a good deal to me. Mind you the rest of us will be struggle on

Anonymous said...

I guess Cameron is also departing from the 90s new Labour route of just saying the same as the governing party and hoping that the voters like you more. Nice to see that there's a proper fight on with a proper choice.

Newmania said...

Renta -Vote

For your party be a smarty and hire Renta-vote
If you want a bet , then increase debt , with Renta-vote
You can lower tax and your card max , all based on prayer and hope
Because we aim to shock, we hope you knees will knock, that's Renta-vote

We are extraordinary fellas here at Renta-vote
Treat facts like Uri Geller treated forks at renta vote
If the market starts to view the pound as a leper`s coat
Blame it on George Osbourne here at renta –vote

And when its time to pay you`ll find we fade away at


heheheh ha ha ha ha (maniacal shriek)

De Spencer said...

Iain Dale has it spot on here. The Tories are beginning to show some of the foresight and principle that could make them not only electable once more, but also a good government.

P.S. Daily political commentary at

Newmania said...

Oh yes I forgot to say well said that Dale , a fine post

Stan said...

It was always a stupid idea to tie the Tories into Labour's spending plans - buying into the myth that you can not cut public spending without effecting schools or hospitals. There is massive scope for public spending cuts - I would start by an immediate 20% funding reduction across the board for quangos. They alone account for some £140 billion per annum. That would save £28 billion which can be used to provide a real stimulus for the economy and help those who need it most. Follow that up with a 5% year on year cut for quango funding and divert the money where we really need it.

Notory said...

By the latest Mori opinion poll it looks like the public think Gordon is the one to solve all our problems. God help us all, or do bribes really work.

Dan said...

Who do you trust more on the economy? Vote at the Guardian's poll:


For some reason Brown is currently in the lead. Get voting!

David said...

"This speech signals the return of clear blue water between the Conservatives and the Labour Party. "

Oh well, as long as there is clear blue water. Who cares about actually winning.

Anonymous said...

Guess what: we are already making our 'Tories = cuts' placards and will be waving them at every passing Tory PPC from now til polling day. Cameron has given us a pre-Christmas gift.
and btw, tomorrow's IPSOS Mori poll has the Tories on 40, Labour on 37.

Don said...

For Chris Paul, someone one on Guido is casting aspertions that you are an unemployed scrounger. On this more sensible site would you care to put your side of the story.

James Barr said...

This sounds like the start of an intelligent Tory response though we need to see the detail. Liebour will present this as "Tory Cuts" but the electorate will see through that.

We are all heartily fed up with the spin and falsehoods of Gordy, Mandy, Mr Smiley, Ally et al. We need a new approach. The Nu Liebour project has been shown up for what it always was. A world of endless jam and honey, of never ending credit. It was never more than a utopia. None of the Liebour lot have ever had a real job in their life. What do they know about running a business? Well, we have the answer now. Nothing!

When you run a business the buck stops with you. Blaming it all on the Yanks as the Big Girls Blouse has done is not just wrong, it is pathetic. Much of our problems were made in the UK under the stewardship of Brown and Blair.

Zapatero, another economic incompetent, and cradle to grave politico, is blaming it all on the Americans. Oh yeah! Was Mr Bush responsible for the endemic corruption in Town Halls, the brown paper envelopes exchanged for building permits, poor productivity, kafkaesque bureaucracy, inflexible labour laws and monstrous waste? Of course he was not. These were all made in Spain.

Brown, like Zapatero, is incapable of recognizing his errors. Sadly for him the electorate is not so stupid.

If an individual is up to his ears in debt, more debt is not the solution. It's exactly the same for a country. You have to cut your cloth. Anyone who tells you otherwise is lying. When times are hard you tighten your belt, take the knocks and wait for better days. There is no magic cure.

Under Blair and Brown the UK has become a place where too many claim rights but absolve themselves of responsibility. Brown's response to the mess we are in mirrors this. He is living in a fantasy world where the parcel keeps on getting passed, the music never stops and excessive borrowing is prudent!

It's time to go Gordy!!!!!!!!!!!!!

evil g said...

The problem with this is that Cameron has an unpopular message of "the government can't do anything to help".

And John Major won in 1992 despite the recession of the early 1990s.

How about a return to supply-side economics.

Anonymous said...

Latest poll Mori Tory lead down to 3%

Goodbye George?

Anonymous said...

Well said Iain.

Low tax, lots of good honest private-sector jobs, high personal savings, strong stable pound, low public debt or ideally a surplus. That's what we want!

Labour is taking us in the opposite direction to this. I don't even think they want this type of society. They'd actually rather we were all instruments of the state, pushing pens in town halls, paying whopping tax rates and being told what to do.

Mark Senior said...

Ok lets say this clear blue route would lead to 2 million more than following the current Brown stategy .
I can recall a little while after the 2005 GE debating economic policy with Conservatives on blogs and a good number of them argued that their party should pursue neocon Reaganesque unfunded tax cuts stating that they would " pay for themselves " .
Now we have Brown adopting these ( without saying they will pay for themselves ) . Conservatives ( some of whom were arguing the exact opposite a couple of years ago - You know who you are ) have turned themselves inside out and are now saying this policy is not prudent .
Let's just face it the Conservatives and Osborne/Cameron in particular have no clue whatsoever as to the correct policy to adopt to improve UK's economic position and have fallen back into opposing the government's proposals whatever they are .

Anonymous said...

Well done David C. However, I'm sick of the Beeb making the Tories the story. It's the Government who should be under scrutiny, not the Opposition. On the World at One, Martha Kearney said people were looking to the Tories for leadership. How about looking to our useless govt first!

Anonymous said...

A good first move. If he can somehow stop being an upperclass ponce I just might vote for him!
PS When will he come out definitively on Europe and immigration?

one of the few scientifically trained tory supporters said...

Iain - you can 'have your cake and eat it'.

What you can't do is 'have your cake, eat it, and still have your cake'. This what I think you meant anyway!

Why does tempting chavs to buy Chinese-made goods in our shops in any way help us our of this slump?? It is a darned good way of wasting Foreign exchange, does Brown really want a collapse of Sterling that much?.

Anonymous said...

Recently you posted about the anti-democratic proposal put forward in Cardiff that Welsh politicians should be replaced by a random selection of celebs.

Another giant step's now been made in Labour's march towards the disenfranchisement of voters - the unelected Blair is now going to start meddling in world's economic affairs. He'll no doubt be joined the unelected Brown and the unelected Mandelson.
Where are Muslim bombers when we need them?

Travis Bickle said...

North Briton Hunter

blah, blah, blah - funny in the aftermath of Black Wednesday the, then, opposition had nothing at all to say, mainly because they were fully signed up to ERM as much as the Tories. Since you Labour trolls are so fond of harping back to 1992 then why exactly do the opposition have to spell out their solution to everything today, when 16 years ago it was hunky dory for your lot to sit on their hands and keep their mouths firmly shut??

Meanwhile Brown's plan for this crisis is save your own neck at any cost and bugger the damage it will cost to the rest of us.

Bryan said...

David Cameron is a CON. We need REAL Conservatives Principles. The Conservative Party have been taking over by a bunch of Secular Liberals who are ruining the party. We need to follow the Republican Party by kicking out the Libertarians and Liberals, and Focusing on the Religious Right and Social Conservatives.We need to follow people like Ronald Reagan, Mike Huckabee, Sarah Palin,etc. Conservative Party is DEAD, we need a Republican Conservative Party here in the U.K AS WELL.

evil g said...

I am sympathetic to Bryan's thoughts on Ronald Reagan.

I dislike secularists, and am a social conservative, but think that libertarianism is preferable to authoritarianism.

And being openly Republican won't win any votes. Not in the US these days, and certainly not in the UK.

Paul Burgin said...

Iain every Conservative govt since the war has also presided over a financial crisis. 1956, 1964 (which Maudling thought he would leave for Labour to sort out), 1973 and 1992. And whilst 1956 can be tied with Suez, and the dangers in 64 were not too apparent, the rest you could argue tied in with the Conservatives being voted out of office.

Anonymous said...

The Tories idea of sound money:


Mr Angry said...

Too Little
Too Late
Too Bad..........

Anonymous said...

I just hope that the Tories are ready and prepared for the venomous full scale attak that Mandelson & Campbell will launch picturing the Tories as uncaring and ready to slash public sector budgets, because if Cameron et al are not ready for that then they will get slaughtered.

Blackacre said...

Dying to see what they will cut (as will Labour) - finally game on! Still not convinced that this fabled waste saving will amount to much.