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Illustration by Andy Bunday 

The difference between the world we have lost and the one we are stuck with can be measured in billions of pounds. Before the crash, anyone could appear on radio or TV and demand  inheritance tax cuts for the wealthy or income tax cuts for low earners; tax breaks for marriage, green energy, research and development or new businesses; tax credits for the poor and not-so-poor; and more spending, ever more spending, on our armies in Afghanistan, on our schools, hospitals, railways and roads, on starving children in Somaliland and obese children in Sunderland, on abandoned mothers, deprived toddlers and infirm pensioners, on the BBC, the film industry, theatre, opera and ballet, even on that classic example of "well it seemed like a good idea at the time" fiscal recklessness, the 2012 Olympics. Before 2008, the British could stand up and demand more for everyone, everything and, especially, for themselves. Although compliance with all the requests would have bankrupted Britain, each request sounded plausible because billions seemed to be available. Now each demand for money sounds implausible to the point of absurdity because we are bust, with debts running into the hundreds of billions.

Or rather they ought to sound absurd. Voters who weren't paying attention to the election campaign may not have noticed the grim change in Britain's prospects. The gap between optimistic political rhetoric and the woeful state of the nation's finances was so wide that editors ought to be commissioning articles for a year from now contrasting what party leaders promised in 2010 and what happened to Britain in 2011. As in every election for as long as anyone can remember, the Conservatives said they wanted tax cuts, or to be precise to drop Labour's proposed rise in National Insurance. They were the party that expected to form the next government, and ought to have known they would need every penny they could collect to pay down sovereign debt. But the insouciant Shadow Chancellor George Osborne decided to forget his grim warnings about Britain entering an "Age of Austerity". Not only could a rise in National Insurance be spared, he could also afford to protect funding for the NHS and overseas aid, and find money from somewhere or other for cancer drugs and tax relief for married couples.

As has also been the case for decades, Labour responded to the Conservative challenge by promising to protect public services from the ravening Tory beast. For Gordon Brown, the Conservatives' commitments to ring-fencing health and overseas aid were not enough: in Britain's first-ever TV election debate, he taunted David Cameron about his failure to extend the same protections to teaching and policing. Voters should stay with Labour. It was prepared to make these promises despite the fact that at the start of the campaign the admirably straightforward Alistair Darling had said that if Labour won it would have to impose spending cuts far more severe than Margaret Thatcher ever dared implement. So, now I come to think of it, did Osborne and the Liberal Democrats' Vince Cable in the chancellors' debate on Channel 4. In the first of the TV leadership debates, the LibDems' Nick Clegg, too, seemed to be facing reality. "We all know we've got this great black hole in our public finances," he said. "We all know we're going to have to save money, we all know we're going to have to make cuts." Yet much of his savings came from closing tax loopholes, which, like eliminating waste or believing door-to-door salesmen, is a strategy that habitually promises more than it delivers. Armed with this notional windfall, Clegg was able to offer the electorate generous tax cuts and funding on pet projects, from cutting class sizes to 20 in primary schools, to increasing one-to-one tuition for secondary school pupils, to abolishing tuition fees. All worthy schemes, to be sure, which had the added advantage of appealing to parents and students at university, but, alas, they were likely to be unaffordable.

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April 29th, 2010
11:04 PM
Most of the world's ships of state have transited from waters like a mill-pond to something like Cape Horn on a moderately bad sailing day. They sail as if roped together in line astern. The GFC threatens to turn into something worse: the IFC; the Integrated Financial Crisis. Normally, each ship helps the others to stay afloat. But a sufficient number of them heading for the bottom will drag the rest down with them, and once the whole fleet is on the bottom, each will be prevented from floating up again. When all economies are on the bottom, who will be able to come to the financial rescue? Credit is a trap for everyone, from individuals up to global civilisations. Maybe the mediaeval ban on usury was not quite so hare-brained after all.

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