John Rentoul: Lies, damned lies, and spending cuts

Gordon Brown was sort of telling the truth when he said David Cameron's "proposals are for a 10 per cent cut in most departmental expenditure". And Cameron was sort of telling the truth when he said: "The figures that the Prime Minister is hawking around are his own figures." Yet their exchange in the Commons on Wednesday was completely at odds with the desire expressed by both party leaders to engage the people in politics, and involve us in the difficult choices that have to be made.

It is not true, as the cynics assert, that "they are all the same"; that there are no policy differences between the main parties. This is an impression that might have been promoted by the fuss over MPs' expenses, which suggested that MPs of all parties were "as bad as each other". But they are not. Depending on what you want, one party is worse than the other. It is a difference that started to emerge only nine months ago, when the credit crunch turned into a sudden downward lurch of the world economy. Before then, Cameron had pursued a strategy of hugging Labour close, minimising the policy differences with the Government. But when the Chancellor, Alistair Darling, cut VAT in order to stimulate the economy, Cameron and George Osborne, his shadow Chancellor, opposed it. That difference remains, even if the VAT cut itself will probably be history by the next election. The plan is to restore the cut on 1 January next year. The revenue lost will be lost for ever. But the Conservatives will still cast themselves as the party of fiscal responsibility, while Labour will pose as the party that protects public services.

Brown put it like this last week: "There can be no doubt that the choice, whenever it comes, is between a Government who are prepared to invest in the future and a Conservative Party that will cut." Yes – to digress for a moment – it was a slip to say "will" rather than "would". He keeps on making verbal mistakes. When he read out the figures for public spending, he said millions rather than billions throughout.

However, it is the dishonesty of his characterisation of the divide between the parties that should concern us here. Redefining the spending of taxpayers' money as "investment" is an old, old New Labour trick. So much so that, before the credit crunch, we had become used to the idea that hard-working families all over the country were investing in DVD players, Lottery tickets and foreign holidays. Accusing the Tories of cutting public services, however, is an old, old Old Labour trick. It was a charge levelled against Thatcher, under whom public spending continued to rise faster than inflation, if not quite as fast as in other historical periods.

Cameron's response was not completely straight either. He did not say: Yes, we will have to cut spending in real terms (taking inflation into account), and so would you if you were re-elected. He left out the first half of that statement. But he was more truthful than the Prime Minister. It is right that the Government's own plans imply real cuts in public services over the next five years. Economists can debate the actual 10 per cent figure, which was first calculated by Fraser Nelson, the brilliant young political editor of The Spectator. He looked at the Budget numbers and worked out the real-terms cut implied for other government departments, if NHS spending were protected, as Cameron has promised it would be. Brown's attempt to suggest that spending on services would rise under Labour by reading out cash figures – not adjusted for inflation or debt repayments – was a disgrace.

Yet there remains a quark of truth in Brown's dishonesty. The choice at the next election will be between a Labour Party that is more concerned to preserve spending on public services, and a Tory party that is more worried about the huge gap between revenue and spending that is bridged by unprecedented borrowing.

It is therefore safe to assume that taxes, public spending and borrowing would be higher under Labour than under the Tories. Possibly not by much, but by enough to make a real difference to most people's lives.

If only the unfortunate Andy Burnham, the new Secretary of State for Health, had understood this before his political career was publicly disembowelled on BBC television later that day. That is the trouble with Brown's style of politics: not only does he fail to take the voters into his confidence, he leaves his fellow cabinet ministers stuck in front of a camera without the slightest idea of how to reconcile his statements with plain facts.

Still, that might not matter if Brown had drawn his dividing line in the right place. But here he is in danger of making something more serious than a verbal slip. This is more serious than calling it Obama Beach, as he did in Normandy last weekend. He thinks that the fiscal stimulus has been vindicated. And most economists agree that it was justified – as well as politically highly convenient – to throw prudence to the winds. The urgent need last November was to pump money into the economy to minimise the risk of a slump.

But now the world has changed again. The recession may not quite be "over", as The Independent had it on Friday, but the economy has stopped contracting. That is, paradoxically, disastrous news for Brown. Because it turns out that it is an "ordinary" recession, worse than 1990-92 but not as bad as 1979-81, and unlikely now to turn into a global slump.

That means that the focus of policy moves from averting the risk of catastrophe to rebuilding the public finances to get debt under control. Of course, many people are still worried about their jobs and even more people don't like the idea of cuts to the NHS and schools. But they are also worried about the debt burden for the future. The economic argument at the next election is tilting inexorably in Cameron's favour.

John Rentoul's blog is at independent.co.uk/jrentoul