The election is now as good as lost

The Tory pundits, stuck in the battles of the 1980s and 90s, think the proposed 50p tax rate will lose Labour the next general election, but that's really not the issue now, and there are plenty of other good reasons why the Brown Government is almost certainly doomed. Here's today's Journal column.

---

It is a measure of how much the recession has changed the nature of political debate in Britain that this year’s Budget headlines focused on the kind of issues which once left most people bemused.

Thirty years ago, the Budget was all about the price of booze, fags and petrol. More recently, the main interest has lain in whether rates of personal taxation were going up or down.

This year, though, people seem to care more about the public sector borrowing requirement and the ratio of debt to GDP than whether they will be a couple of hundred pounds a year better or worse off.

Is it down to our increasing economic literacy as a nation? Or simply a reflection of the astronomical sums of money being thrown around as Chancellor Alistair Darling tries to rescue the stricken economy?

The days when Gordon Brown as Chancellor concluded his Budget speeches with a rabbit-out-of-the-hat designed to send Labour backbenchers into paeans of ecstasy already seem very far away.

Those naïve enough to be looking to Mr Darling to produce such a rabbit on Wednesday will no doubt have been sorely disappointed.

For one, he does not have the room for manoeuvre needed in order to procure a last-minute crowd-pleaser, and in any case, he is not that sort of character.

Mr Darling’s low-key, calm authority is one of the few political assets Labour still possesses in this otherwise dire situation. He was surely right not to try to play the showman.

The nearest thing to a surprise in the Budget was the car scrappage scheme to give people an incentive to buy new motors and so help the car industry out of the doldrums.

No doubt it will encourage some to trade in their old bangers for shiny new models, thought the main obstacle to this remains the reluctance of the banks to provide credit.

Elsewhere, the £500m to kick-start stalled housing projects will be a welcome boost to the construction industry at a time when the market has gone flat, although there have been signs that it is reviving of its own accord.

Much of Wednesday’s package though – for instance raising statutory redundancy pay by £30 a week – seemed like pretty small potatoes in view of the extent of the crisis.

Much attention inevitably focused on the decision to introduce a 50p top rate of tax from next April, but I cannot believe this is the defining issue which many Conservative commentators have made it out to be.

The recent row over MPs’ expenses and the backlash against bankers’ bonuses seem to me to be indicative of a new mood in the country that is now ready to see the rich pay more.

The 50p top rate will affect just 1pc of the population, the great majority of whom are based in London and the South, while the amount of money raised - £3.3bn over the next three years – is hardly going to repay the national debt.

Freezing the top rate of tax at 40p doubtless helped win over the “aspirational” middle classes to Labour in 1997. But times change, and even policies as iconic as this one ultimately have to change with them.

The tax pledge was a direct response to the fact that Labour’s old tax-and-spend reputation had lost it the 1992 general election. But the 2010 election will be decided on very different issues.

What will almost certainly lose Labour that election is not its taxation policies but the dire state of the public finances, with borrowing levels for the next five years set to be £175bn, £173bn, £140bn, £118bn and £97bn.

As Matthew Elliott of the Taxpayers Alliance put it: “This Budget commit taxpayers to a terrifying amount of debt that will burden ordinary families for decades to come.”

Labour can blame the global economy all they like. I suspect the response of voters will be: “It happened on your watch.”

Could it all still come right for Mr Brown and Labour? Could this Budget yet be the springboard for election victory in the unlikely event that Mr Darling is proved right in his forecasts and growth picks up again from the end of the year?

Well, if you had asked me that question a couple of months ago, I would have said yes – on the basis that it is “the economy, stupid” that usually determines election outcomes.

But then came the damaging row over Home Secretary Jacqui Smith’s expenses and the truly appalling “smeargate” scandal involving former No 10 spin doctor Damian McBride.

As a result, this government has now begun to take on the same air of decay and moral degeneracy that characterised John Major’s Tories in the run-up to 1997.

To my mind, it is now inconceivable that the public will vote for another five years of this, even if the green shoots of recovery do start to appear by the time we go to the polls next spring.

When Mr Brown became Prime Minister, his admirers – of whom I was one – hoped he would restore trust in politics by ending the spin culture that will forever be associated with the Blair years.

But those who argued that Mr Brown was no different from his predecessor in this regard have been proved right, and the sense of optimism that surrounded the start of his premiership has long since faded.

It will take much more than this grimmest of Budgets to restore that sense of hope.