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There are 82 billion reasons to ditch Labour

The Tories, after 13 years of misery, have found a leader, and one who is delivering the goods. Natural leaders of an opposition are rare, rarer than decent Prime Ministers. The Tories have not had one since Disraeli, and he was at his best in the 1860s. Winston Churchill and Margaret Thatcher were great Prime Ministers, but neither was a great leader of an opposition.

If one thinks of Balfour, Austen Chamberlain, Bonar Law or David Cameron’s immediate predecessors, one can see how difficult leading an opposition can be, even for able men. After nearly 150 years, the Tories again have a leader with the gifts required for opposition, and he has changed the political weather in their favour. Happy days are here again.

The achievements of his first two months are astonishing. Conservative support in the latest Mori poll is 40 per cent, seven per cent up on the party’s General Election result.

The Liberal Democrats have turned suicidal; they ditched Charles Kennedy as their leader and now have a choice of three successors, none of whom would beat Kennedy in a straight fight. Labour has taken to defeating itself in the House of Commons, despite a majority of 66, and has put itself on the wrong side of the potent issue of civil liberties.

Labour is split down the middle on education, where Cameron is on the same side as Tony Blair but many Labour backbenchers are against him.

No doubt, Cameron will face rougher waters but, since Disraeli’s time, there is no record of the leader of a Conservative opposition achieving so much in so short a time. Beside this achievement, the grumblings on the Tory Right are quite unimportant; Norman Tebbit’s criticisms are mostly moderate, but they draw attention to the change that Cameron has wrought in the Conservative Party.

There is, however, one issue that will inevitably be a major one at the next Election, and probably decisive. Cameron and his Shadow Chancellor, George Osborne, must win this argument. The issue is taxation and public expenditure. Cameron has said tax is one of the issues on which the Conservatives have disagreed throughout with Labour policies. Yet he thinks the previous leadership devoted too much attention to the tax issue at the last three Elections.

I think they may have failed because they left the argument too late. Tax was indeed a major issue in the last three Election campaigns, in 1997, 2001 and 2005. It had, however, also been a major issue in 1992, which was won by the Tories because John Smith’s shadow Budget convinced voters that Labour would put up their taxes. In the 1997 General Election, Labour was still scared of tax-and-spend; it defended its own position by promising to follow Conservative spending plans if elected. It did so, and Gordon Brown won his reputation for prudence on the basis of following Kenneth Clarke’s policies. In 2001, Labour was substantially protected by this reputation for prudence; it successfully counter-attacked by accusing the Conservatives of wanting to cut social services, an accusation that was never true. In the 2001 to 2005 Parliament, Brown let loose the tigers of government expenditure, which Labour propagandists always described as ‘investment’. This has resulted in a steep rise in the budget deficit, which will have to be paid for in further tax increases, by stealth or otherwise.

Labour won four years of time by adopting Conservative spending plans and another four years by raising spending, which would eventually have to be paid for after 2004-05. It was able, once again, to attack the Conservatives for their supposed intention to cut social spending.

The abandonment of prudence in 2001 has had real costs, but the increase in expenditure has not produced the results that were planned. Last week, the King’s Fund, the leading independent authority on health service expenditure, reported its projections for this year.

Using Government data, it calculates that 87 per cent of the extra money received by the NHS will go on higher costs, including pay and drugs, and only 13 per cent will go on development and improved services. We thought we were investing in a better health service, but we are not.

These are the figures. The Government increased NHS funding by £3.6 billion for 2005-06, but only £475 million will go on improvements or developments. As Professor John Appleby, the King’s Fund economist, mildly observes, this ‘raises questions about value for money’.

A well researched new book, The Bumper Book Of Government Waste, by Matthew Elliott and Lee Rotherham, estimates that waste in Government spending is now running at £82 billion a year. This might seem unbelievably high, though it has been confirmed by other studies.

Last December, the public accounts committee reported on Government spending on information technology, which is the highest in Europe. It is thought that £10 billion is wasted on IT services that ‘no one wants and no one may use’. That shows £82 billion may be a reasonable estimate for the total if £10 billion is being wasted on IT alone.

Wherever you look at Brown’s tax-and-spend policies, you find damaging, complicated and unfair increases in taxation — particularly the stealth taxes —and wasteful expenditure. This is a drag on the whole national economy, which pulls us down towards low European levels of growth. Brown, after his prudent first term, has become an Old Labour tax-and-spend Chancellor with a special weakness for complex and confusing schemes. He has destroyed Britain’s private pension system, previously the best in the world. Tax-and-spend will inevitably be at the heart of the political battle of this decade. In 1992, the Conservatives won the argument against John Smith. They lost it in 1997, 2001 and 2005. They have three or four years left in which to win the argument again.

Britain’s taxes have now overtaken Germany’s, which have stunted German economic growth for the past decade. Labour has become the high-tax-and-wasteful-expenditure party. Cameron and Osborne will have a powerful case to make.

Lord William Rees-Mogg is a former editor of The Times. This column first appeared in The Mail on Sunday