Page last updated at 16:01 GMT, Friday, 21 November 2008

Martha Kearney's week

By Martha Kearney
Presenter, BBC Radio 4's World at One

I can exclusively reveal that Westminster will be showered by bombshells on Monday.

The Conservatives' 1992 election poster
Blast from the past: Will the Tories take inspiration from their 1992 campaign?
No, I have not been watching too many episodes of Spooks. The Conservatives will be blitzing Labour in a new campaign with a distinctively retro feel.

In 1992 the party's tax bombshell poster and election broadcast had a devastating impact on Labour. Who came up with the idea?

Why, David Cameron's current head of strategy Steve Hilton who was then a young whizzkid at Saatchi and Saatchi.

'Nasty party'

The 2008 version has been detonated over Labour's plans to extend borrowing in order to pay for its fiscal stimulus package.

This week saw clear blue water between the parties in a radical departure for the Conservatives.

A totem of the Cameron modernising project had been the matching of Labour's spending plans.

Just as Labour in 1997 copied Tory spending plans to prove their fiscal rectitude, in a mirror image the Cameroons wanted to decontaminate the "nasty party" image.

On Monday with the pre-Budget report Labour will face serious questioning over its borrowing levels.
On Tuesday George Osborne announced they would no longer match the plans for 2010/11.

He is gambling that voters will no longer buy jibes about Tory cuts to schools and hospitals.

But will voters believe that spending can be curtailed? I quoted this at him on the programme:

"The James report was a serious and impressive piece of work. But was the overall approach credible? I'm not so sure. To make a long list of efficiency savings in advance of an election, to add them up, to produce a great big total, to turn that total into debt reduction and a tax cut…?

"People didn't believe it, for the very good reason that controlling public spending is not about a one-off efficiency drive, it's about a whole new culture of government."

Prudence jilted

He laughed as he thought those were his own words. In fact they were David Cameron's.

So now we have two very different approaches - in one corner a stimulus package of tax cuts hallowed by the shade of John Maynard Keynes.

In the other corner Prudence, jilted by her old Scottish beau and wooed by a younger man. At least that is what the parties would have you believe.

The IFS reckons all the Conservatives can promise are smaller tax rises than Labour
On Monday with the pre-Budget report Labour will face serious questioning over its borrowing levels.

I can remember Gordon Brown boasting in many a budget of how he had kept to the Maastrict criteria of keeping any budget deficit to under 3% of national income.

It now looks like he will double that. Labour maintains it can afford annual deficits as it paid back levels of national debt.

True - it inherited levels of 42.5% which it took down to 29.7% at one point.

But according to the Institute for Fiscal Studies, it will now get higher than the Conservative peak of 46.2%, storing up big tax rises for the future.

The Conservatives want to claim the high ground of fiscal responsibility.

They pledge to reduce debt as a percentage of GDP and to balance the budget over the cycle policed by their new Office of Budget Responsibility.

But according to the IFS, savings will be hard to achieve in the short term.

If they inherit power in 2010, the spending will have been allocated and will be hard to claw back.

So the IFS reckons all the Conservatives can promise are smaller tax rises than Labour.

But maybe there will be an election next spring so all bets are off.

The highlight of my week - apart from reading "The UK Public Finances: ready for recession" by the IFS with some snazzy graphs - has been a present from Eddie Mair of a William Shatner doll from Boston Legal.

He says "Denny Crane" and everything.

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