Andrew Rawnsley writing in the Observer today confirms that the Government really doesn’t have a plan b for the economy despite the 0.5% reduction in GDP reported this week for the final quarter of 2010 along with rising inflation which many experts expect to reach 5% before it starts to fall and a rise in unemployment announced earlier this month.
He writes ‘When they insist that they have no intention of turning back, you need to know that the prime minister and chancellor are perpetrating the most dastardly trick in politics: they are telling the truth. They really do not have a Plan B. When they speak of their determination to lash themselves to the wheel, they absolutely mean it.
I expect the chancellor is preparing a few "concessions" for his budget to try to ease some of the anxieties among the coalition's backbenchers and take the edge off public discontent. He is already hinting he may cancel the 1p fuel duty rise scheduled from April. But such sops will represent tactical manoeuvres, not a fundamental reappraisal of strategy. Even if it might seem eminently sensible for the coalition to have a fall-back plan to temper spending cuts, such a plan does not exist.
The first reason they do not have a Plan B is that they can't see how they could get to it from Plan A without looking weak and floundering both politically and economically. Any whiff from within government that it is no longer so committed to its deficit-reduction programme would provoke the bond traders who have battered so many European governments. The coalition would then be faced with a potential crisis in the financial markets on top of everything else.
The next reason why they do not have a Plan B is that they still believe in Plan A. When it comes to public finances, tax and spending, there are broadly three types of Conservatives in the world. There are the followers of Reaganomics, the school of the late American president, who essentially think that the answer to any economic question is a tax cut. So long as you cut taxes by a lot, everything else, including deficits, will eventually take care of itself. Boris Johnson seems to be positioning himself as the leading advocate of Reaganomics. When you hear these sort of Tories calling for "a plan for growth", what they really mean is that they want a plan for tax cuts.
Then there are Big Government Conservatives, a recent example of which was George Bush II. These are Conservatives who like state spending as much as politicians of the left except that they spend a lot on rightwing causes such as the military and Conservative-inclined voter groups like the elderly. As the public spending cuts bite, I expect we will find there are quite a lot of closet Bushites on the Tory backbenches.
Messrs Cameron and Osborne are neither Reaganauts nor Bushites. They belong to the third category of the right when it comes to the economy. They are fiscal conservatives. Shortly before the election, a friend asked David Cameron what he expected his first term in government to be most remembered for. Mr Cameron did not respond by naming schools reform or changes to welfare or the "big society". He told his friend: "I'm afraid it will be tackling the deficit." He and his chancellor really do think that the primary responsibility of Conservative government is the pursuit of sound public finances.
It is important to understand what motivates them. They are taking such a swift and deep axe to public spending not because they are evil Tory bastards who get their jollies from taking away people's services and jobs. They genuinely think their priority is right, their method is correct and the economy will be better for it in the end. Their Lib Dem partners are more confused and divided. At some point between the election campaign and the conclusion of their May coalition negotiations with the Tories, the leading Lib Dems concluded that the Conservatives had been correct to argue for deeper cuts and that they had been wrong to previously decry the Tory approach as reckless.'
The rest of the column is here Any source
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