The Ask The Chancellors debate featuring Alistair Darling, George Osborne and Vince Cable got the Twitterati into such a lather the programme started a fresh trend on the micro-blogging website soon after hitting the airwaves last Monday night.
This should come as no surprise: the decisions that will be taken by whoever resides in No 11 after May’s election will be critical to our economic futures.
But this was a scrap over the most undesirable job in politics. Despite the £144,000 salary, the perks, the chauffeur-driven limousines, the globetrotting meetings with other finance ministers from the G20, etc, the next Chancellor is likely to have to make the starkest choices made by any occupant of No 11 in living memory.
Indeed, all three men aspiring to the job conceded during the debate, broadcast by Channel 4 that in the next parliament the Government is going to have slash spending more savagely even than Mrs Thatcher’s governments did during the 1980s.
To recap: the Government of Gordon Brown will this year spend £167 billion more than it earns through taxation. If the situation is not addressed, the UK is at risk of losing its “AAA” credit rating. Were that to happen, buyers of gilts – Government bonds – would start demanding a higher risk premium and our debt mountain would become costlier to service, meaning public spending cuts are likely to have to be even more savage than currently expected.
So who came out on top from Monday’s programme? The consensus view is that Vince Cable, the Liberal Democrats’ Treasury spokesman, narrowly defeated his two rivals.
Vince Cable more realistic about challenges Britain faces
Vince Cable more readily acknowledged the scale of the mountain Britain needs to climb after the multiple train wrecks presided over by Labour. He was also the only one to come up with workable proposals for reining in spending by the public sector.
He talked of “painful and difficult discipline over public sector pay”, the axing of the child trust fund, an end of child benefit being paid to high earners and the scrapping of Trident. He also said the LibDems would take a serious look at hacking back the “surveillance state”, and proposed to go further than his rivals when it comes to redistributing wealth. This would include imposing heavier taxes on aviation and mansions and removing 3.5 million low earners and pensioners from the tax system altogether.
Thanks to his honesty, quick wit and humour, Vince Cable was also the only putative chancellor to elicit applause from the studio audience. Claps came when he said that large banks should be broken up, with traditional “retail” lending functions separated from “casino operations” such as proprietary trading.
The audience was equally responsive when he accused the Conservatives of squandering most of the North Sea oil revenues, selling off the family silver on the cheap, and of “wanting to have another turn to get their noses in the trough and reward their rich backers”.
Shadow Chancellor George Osborne seemed more honest than Alistair Darling when it came to the severity of the UK’s fiscal crisis. He pointed out that, as with any near-bankrupt, it is essential that the country tackles its debts as soon as possible.
But when Vince Cable accused him of having the interests of double millionaires at heart, it was hard not to think of Mr Osborne aboard the yacht Queen K, which belongs to Russian oligarch Oleg Deripaska, in August 2008, along with the hedge fund manager Nat Rothschild and the then-EU trade commissioner Peter Mandelson.
Whether or not Mr Osborne solicited funding for the Tories from Mr Deripaska, there was something distinctly sinister about the episode, which led some to conclude that David Cameron’s party is basically a front for those kinds of people, regardless of claims they have the interests of ordinary voters at heart.
It was also cheering to hear Vince Cable saying it is essential we find more sustainable ways of generating growth, including building “a new kind of economy that is much less dependent on a few prima donnas in financial speculation”. If this is true for the UK as a whole, it is even more apposite in Scotland.
Vince Cable was also spot on about the City types who have been threatening to up sticks and move to somewhere like Switzerland if their bonuses are more heavily taxed here. He said: “This country was held to ransom in the 1980s by Arthur Scargill, now we’ve got these pin-striped Scargills threatening to blackmail us in exactly the same way.”
But considering the cross Alistair Darling must bear (no Easter pun intended), given the near-regulatory vacuum in banking overseen by his Government, he came over better than I expected. He seemed solid, unruffled and a safe pair of hands, if rather uninspiring. Perhaps more importantly, he did convince when he claimed his Government could take credit for stabilising the British economy.
However, I fear that he is deluding himself about the growth potential of the UK economy over the next two or three years and with the idea that public expenditure cuts don’t need to be made until 2011. Soft-pedalling on public sector reform isn’t really an option now.
In absolute terms and on the strength of this debate, there’s plenty of reason to argue that the LibDems are the best solution for Britain, but one does wonder about the strength in depth of their frontline team. So despite Vince Cable’s self-evident superiority on the day, there were really no easy winners.
This article was the main business comment in the Sunday Herald on 4 April 2010 (Easter Sunday)