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Tuesday, 27 June 2017

Not a squalid little deal!

Mrs May's agreement with the Northern Irish DUP has a 'headline' cost of £1billion in extra cash to be available for the Northern Ireland Executive to spend. But that is not even the beginning of the cost [and I refer to the cash cost, leaving aside the reputational damage that is being done to keep  this weak and wobbly government in office, but not truly in power]. Retaining the 'triple lock' on state pensions and retaining the free winter fuel for all will cost billions more, and the deal may well last for the five years for which the parliament could remain in being. Given that some demands from Scotland, Wales and English regions will have to be met if the Tories are to have any hope of winning future election, estimates of the ultimate total cost of the deal seem to be running upwards of fifty billion pounds in the next few years. This drives a coach and horses through the residue of Osborne's austerity which Philip Hammond's Treasury Team was seeking to maintain. Thus it will be necessary for the government to increase its borrowing while the Tories negotiate with the DUP on the possible increases in taxes that Mr Hammond already knows will be necessary. Since the DUP-Tory agreement is on the basis of 'confidence and supply' the DUP will have an effective veto on any tax increases: so the overwhelming probability is that state borrowing in the coming year will be several tens of billions of pounds more than had been foreshadowed in any of Mr Hammond's [actual or imagined] spreadsheets.

I am sure that Mrs May's grasp of economic reality is slight, and that she has not yet comprehended anything of the hydra-headed monster that she has attached to her government. Austerity was becoming intolerable to the electorate as its effects on policing, schools and hospitals became apparent. The departure on sea trials of HMS Queen Elizabeth - the biggest ship ever assembled in Britain - was accompanied by comment that she went without any aircraft, amid rows about how many 'planes could ever be afforded to fly from her. Almost all the other areas of the armed services are being robbed of funds to make some sort of show of fitting out Queen Elizabeth properly, which means that Britain's power of self defence is significantly diminished at a time when perceived threats are increasing. Mrs May's new monster, that she will not be able to control, is the myriad demands for more money that will come from every sector of the public services and every region of the country. Ryedale in North Yorkshire has been given press coverage as one of the two areas on England most deprived of reasonably-fast broadband, and that part of the country has a special plea that may become irresistible if Scotland and Wales are allocated extra money for communications: and so it will go on, inexorably, for longer that than Mrs May can hold on to power.

Should Mr Corbyn come into power, he would find that all the key-turning jobs have been done for him, by default. The military are virtually prostrated. Austerity is being overcome by sectoral and regional demands that will become irresistible. Government borrowing will be high, and Mr Corbyn and his clique would have no compunction in 'taxing the rich' to fund even more state spending. In those circumstances the stock market will collapse and the pound will decline rapidly in external exchange: so a radical government could claim justification for radical measures to establish control of a 'socialist' economy.

The Tories will remain desperate to prevent Corbyn having access to the electorate. So they will have to try to control the monster that they have released. How they do this will be fascinating to watch: or perhaps the Tories have finally lost that ruthless determination to survive that has sustained then for centuries?

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