Tories arguing for extra borrowing shock


by Paul Cotterill    
6:05 am - September 24th 2009

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On the evening of Thursday 24 September, click here and you’ll be able to watch Conservatives arguing hard for additional borrowing.

Sounds unlikely? Well, it’s true.

The venue for this bizarre reversal of Conservative orthodoxy will be the Council Chamber in Preston, where Lancashire’s new Conservative administration will argue for an additional £10million in immediate borrowing to cover additional revenue costs, £9 million of this for ‘highways works’, and a further £39 million over three years to cover a range of capital costs. See press coverage for a quick overview.

A Tory council spending massively beyond its means? A Tory council making future generations hostage to fortune? What’s going on?

Has Cameron, who was up in Preston on 05 June celebrating his people’s success, heard about all this? Why hasn’t the council cabinet been expelled for Keynesian heresy?

The truth of the matter is that the Conservative party is all over the place on public spending. Behind the rhetoric, there’s the reality that the Tories in Lancashire promised the earth in Lancashire in order to get elected, and now they are being found out.

They promised all the potholes would be mended, and now they realize they can’t afford it without borrowing £9 million.

This is £9 million that is being, pretty literally, poured down holes, holes which will only reappear when the temporary filling degrades, on road which need proper resurfacing.

And, as the press coverage makes clear, it’s £9million which will be paid back through savage cuts in a range of other service areas.

Of course it makes sense for council to borrow money to invest in the future, especially when interest rates are so low. What the Tories in charge of Lancashire County Council should be doing is borrowing enough, or taking enough from its reserves, to do the highways works properly, so that potholes repaired now don’t have to be repaired again next year.

But more importantly, Lancashire Conservatives’ borrowing exposes the national Conservative rhetoric on borrowing for what it is – empty rhetoric. Just as an incoming Thatcher government promised fiscal restraint and then proceeded to increase public spending throughout its first term, so to the Tories will tell us one thing to get your vote, and then do another.

Just watch the Lancashire Tories in action this Thursday, on the webcams installed by a Labour administration, as they live the lie, live on your PC.

Oh, and just check where they are planning to borrow the money from. That could be very interesting.

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About the author
Paul Cotterill is a regular contributor, and blogs more regularly at Though Cowards Flinch, an established leftwing blog and emergent think-tank. He currently has fingers in more pies than he has fingers, including disability caselaw, childcare social enterprise, and cricket.
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Story Filed Under: Blog ,Conservative Party ,Economy ,Local Government ,Westminster


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Reader comments


Ooh £10m.

2. the a&e charge nurse

Can’t the Tories simply use some of the North Sea oil money?

Oh, hang on, their former leader has already blown it, hasn’t she?

I hope this is going to be the start of LC’s comprehensive coverage of local council issues.

It is, isn’t it?!

@1 – well, what is £10m as a share of their revenue?

Err, the Tories have not said borrowing is wrong. They have not said government borrowing is wrong. They have not said local government borrowing is wrong.

They have said that too much borrowing is wrong, and that the governments spending path is as set out by the treasury in the last budget is unsustainable.

It is a matter of degree. if every administrative county in England replicated the plan, it would add I would estimate circa £1,000m or so of debt to the current stock of local government debt. The government is adding $175,000m this year alone. As I said, it is all a matter of degree

Try again.

#4

I hope so too – genuinely. To be fair, though, Paul has an established track record at covering local council issues.

Praguetory @1: see comments below which I think picks up where you’re coming from.

A&E nurse @3: Yup, agreed, as I do with Don P on same. I used to work in A&E too. How is it?

Cjcjc @4: Yes, I hope so too, but that’s an editorial thing, innit? Clearly specific local issues aren’t going to excite people’s juices, but picking up local issues in detail as reflective of a wider political environment has merit, I reckon.

Dontmindme @5: With respect, for I can appreciate why you would want to take this line of argument in defence of the Conservatives, it’s not about scale. It’s about the distance between rhetoric and reality.

The Conservatives now in charge of Lancashire came to power, as part of a national swing towards the Conservatives at local election time, on the promise of ‘living within our means’ etc etc. They may not say explicitly that they are against all further borrowing, but a commitment to reducing the national debt quickly, in the face of the ‘double dip’ evidence that lots of people you wouldn’t expect to criticise the Tories are providing (e.g. Sidelski) is pretty close.

General note: Don Paskin, a regular here at LibCon, has a useful post up about with further evidence of the Conservative reality/rhetoric gap: http://don-paskini.blogspot.com/2009/09/how-to-cut-spending.html

Locally, they also suggested that they’d mend lots of potholes. Within weeks of coming to power, they realised the only way they could match the promise was to borrow and pay back later via savage cuts to services.

It’s about hypocrisy, and it’s about poor short-termism management of local government finances whereby money is wasted on potholes that will reappear, and comes at a cost to people they’ve been elected to serve.

timf @6: Ta.

“Within weeks of coming to power, they realised the only way they could match the promise was to borrow and pay back later via savage cuts to services.”

Depends what you mean by Savage – once they’ve sacked their diversity managers, five a day officers, street football co-ordinators etc.

Yes a bit Daily Mail, but this is not untypical of expenditure at council level, and maybe the people of Lancashire, given a choice between this latter type of expenditure and filling some pot holes, have made it clear what they prefer.

“They may not say explicitly that they are against all further borrowing, but a commitment to reducing the national debt quickly, in the face of the ‘double dip’ evidence that lots of people you wouldn’t expect to criticise the Tories are providing (e.g. Sidelski) is pretty close.”

Again no. The tories only talk of reducing the rate of increase of the stock of debt. If that rate of increase is reduced, by amount x, then debt as a proportion of GDP will fall from y% to z% over time, compared to current treasury forceasts. I have not heard anyone say that the absolute stock of debt will be reduced. The Tories are commited to reducing borrowing, not debt stock. There is a difference.

I am not supporting the Tories policy here, as I actually would like to see the absolute stock of government debt reduced (horror of horrors I hear you say). But I am trying to correct what seems to be a flawed understanding of the Tories views on debt in the article.

“Depends what you mean by Savage – once they’ve sacked their diversity managers, five a day officers, street football co-ordinators etc.”

Just a quick one on this – local councils save £0 by sacking five a day officers, because all the five a day project stuff is funded by Big Lottery Fund.

http://www.5aday.nhs.uk/original/locally/Howwearefunded.aspx

This sort of fact doesn’t matter when ranting on the internet about how councils waste money on politically correct nonsense, but is rather important when it comes to actually trying to make council budgets add up.

One option could be to politicise the Big Lottery Fund so that either central or local government (or both) had a greater input into its allocations of funding so that BLF money could be diverted away from projects which aren’t seen as a political priorities by the Tories to cover for cuts in services elsewhere. Is that what you are suggesting?

Dontmindme @10: Thanks for that clarification. Ok, fair enough, the Conservative policy is not to reduce in total, but to stop the growth of the national debt as % of GDP, and I’ve no problem accepting that the article might have been a little clearer on that, except to say that the article didn’t make any specific reference to national Tory policy, other than a mention of ‘fiscal restraint’.

Here, though, we’re talking about brand new borrowing made for political credibility reasons and out of keeping with common sense on proper investment.

Vulpus Rex @10: Yes, it is a little Daily Mail, and thanks to Don P @11 for the clarity on one area. Can I simply recommend, as examples, the following articles on the real, as opposed to Daily Mail interpreted, effect of cuts:

http://thoughcowardsflinch.com/2009/09/23/tory-and-new-labour-cuts-bite-deep-in-coventry-and-canterbury/
http://badconscience.com/2009/09/08/spending-cuts-who-suffers/

Oh, and the ‘savage cuts’ inlclude 10% to the highways Division, so ther’e'll be less money to do the resurfacing that’s needed when the potholes degrade again next year following this year’s ‘false economy’ measures.

@12 I thank @11 for clarity too.

Thank you also for your examples but I will point out that just because someone has written something on a web site doesn’t make it true.

A blog with the title “Though cowards flinch”, hardly sounds like a completely agenda free bastion of objectivity does it? Maybe its reporting might possibly just be a bit one sided too à la Daily Mail?

“Oh, and the ’savage cuts’ inlclude 10% to the highways Division” – Sorry what 10%, do you mean those discussed nationally or something related to Lancashire?

Either case, no they don’t, or certainly don’t have to include the Highways division, you could look more closely elsewhere in order to preserve your Highways budget.

12. Dave Semple

Vulpus Rex, I am neither unbiased nor agenda-free. The difference between the mainstream media and myself is that I’ll tell you my agenda beforehand. But nothing of what I’ve written there is untrue, to the best of my knowledge and I’ve left out nothing that would correct the skew of the story.

Vulpus Rex @13

Sorry, a bit elliptic in my rush to comment before I went off to meeting. The 10% cut in each division is in fact referred to in the press coverage I link to, not in the article itself:

‘Each department has been told to investigate the impact of a 10per cent budget cut as the Tories look to find £16million by February to pay for the council tax freeze.’

That press report is reliable enough. So, yes, Highways Division is included by the Conservatives/

Dave from Though Cowards Flinch has spoken for himself @13, and if you look at the article you’ll find plenty of source data. The other article I refer to by way of example is from a Liberal Democrat researcher, and the article by Don Paskini I refer to above refers to research undertkkaken by a Conservative.

The message is that, when you get down to detail, the ‘savage cuts’ so easily dismissed as being good because they take ‘non-jobs’ out of the council (let’s leave aside for a second what Doncaster-mayor nonsense that is in the first place), have real negative effects on the most vulnerable – the elderly in (un)sheltered housing, the homeless – and on mainstream services lliek highways.

UK local politicians arguing about potholes is a national cliche, but are there any serious studies about their cost? Potholes in pavements are a no-brainer for me; the social and financial cost of injury to elderly and partially sighted people is convincing.

But holes in roads? Modern vehicles are designed to cope with bumps. Would motorists be prepared to accept a bumpier journey if it meant fewer road repairs and disruptions? Do uneven roads slow traffic enough to impose an economic cost?

Comparisons with other EU nations may not be valid owing to the traffic density on popular roads in the UK. So it has to be a like-for-like study.


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