Here comes the Brown debt hangover

Its moving closer. Inflation is heading up - even by the government re-gigged measure that ignores the stuff middle class families find expensive. ( The floods and food prices won't help - neither will the price of oil heading up, and that's before the Iraq pull out sets the middle east alight. )

All this sounds oddly familiar. Changes in the way inflation is recorded ( Dennis Healey anyone - changing inflation to being measured over 3 months instead of 1 year - I may have some of the details wrong I was rather young at the time ).

Now a new "Price Check" like system for Mortgages - as Alistair Darling wishes everyone's mortgage didn't go up with the Bank of England base rate. ( Shirley Williams - when in the Labour party - or was it Barbara Castle can't really remember. Just remember the sign outside the local sweet shop when I went of to spend my 10p pocket money. The sign would be up for half the period it was meant to cover - then the shop would give in a raise its prices - as of course it had to do so, it was self delusion to think otherwise.)

Its all familiar - because it should have been burnt into our memories, and because it didn't work. We needed a grocers daughter to explain to us that basic good money and budgeting are needed.

We have got used to money being good and debts being manageable. We have relied upon it. Gordon Brown has financed the massive increase in the public sector to buy votes with it. ( And of course all Gordon's clever little wheezes to spend tomorrow's pensioners money of his own little schemes today and hide large debts of balance books with PFI.)

The facts of life do inevitably turn out to be Tory - but we've forgotten them.

Clever tricks to make money out of peoples debts or government initiatives designed to buy new air time at our long term expense with statements about key workers etc will not help.

The fundamentals are wrong. The state sector is too big and wasteful. We deal with it now - with some pain or we deal with it when the Chancellor has to turn his car round on the way to the airport as the economy starts to collapse. But we will need to deal with it.

Its not what the British people want to hear. There will need to be much more clear evidence of the failure of current policies before they will accept it - but the irony is by that time the cure will be as bad as the disease. ( That is perhaps because the soft left and BBC bang on about the pain of the cure in the 1980's, but not the disease of the 60's and 7o's that made the surgery necessary).

Sorry this is a bit of a ramble today - but I worry we are repeating our mistakes and Gordon Brown has brought most of this about by himself. It doesn't seem to fit current Conservative strategy to point this out forcefully - but it should.

The greatest irony is that its the very people at the bottom of society that all the political parties claim to care about who will suffer the most by ignoring the fundamentals of the economy.

Update See John Redwood's Diary on the house and debt. John can remember what CPI and RPI are - I mention them above but have forgotten the TLAs !