In 1992 John Major’s Conservatives scored an unexpected General Election victory over Neil Kinnock’s Labour Party. The Tory victory was partly due to the party’s use of the slogan ‘Labour’s Tax Bombshell’ which adroitly exploited the electorate’s aspirational yearnings. Gordon Brown learnt a bitter lesson in 1992 and New Labour’s subsequent electoral successes were based on a promise not to raise the top rate of income tax and slightly Machievellian threats about potential cuts in public services under a Tory Government.

Despite abundant evidence that even a Labour Government will preside over public service budget cuts after 2010, Gordon Brown seems determined to run a campaign designed to provoke fear over public service cuts under a Tory Government.

Yet the Treasuary’s own figures suggest that there will be at least a 7% cut in departmental funding for public services between 2011 and 2014. The budget deficit for this year is expected to exceed £75 billion; interest payments on the national debt for 2009 alone will exceed £35 billion (the same as the defence budget). By 2013 the national debt is expected to be around 75%. In short the UK’s national debt will soon be unsustainable, unless drastic action is taken.

Brown has already reneged on New Labour’s pledge not to raise the top rate of income tax. The Laffer Curve suggests that raising the top rate of income tax can actually lead to a decrease in tax revenues for the treasuary, as the rich are given an incentive to avoid punitive taxation. Yet even if the rich are taxed ‘until the pips squeak’ it would not be enough to reduce the UK’s national debt to manageable levels.

When a private consumer faces economic uncertainty they reduce their spending, pay off their debts, put off frivolous purchases and aim to spend their money more efficiently. Governments should do the same. It is likely that we, our children and our grandchildren will be paying for the banking recapitalisation and the recession of 2009 through higher taxes. Yet we also have a once in a generation opportunity to reform a public sector that has become bloated and wasteful through two decades of unprecedented boom and Government largesse. The Government operates a £700 billion budget; it is inconceivable that efficiency savings cannot be made. In the 1990s Canada faced a similar public sector crisis but managed to reduce public spending by 20%, without significantly damaging its welfare state; indeed it is also riding out the world recession much better than most other countries.

Unfortunately Brown does not want to engage in adult debate with the electorate or respond to the problems that Britain faces. He simply wants to get re-elected. But Brown has surely misjudged the public mood. The electorate knows that the national debt is becoming unsustainable and surveys indicate that even the poorest workers in society show disdain for those who exploit the welfare state. It is likely that the Torys will win the next election, if not with a significant majority. Yet Cameron and Osborne have also proved reluctant to grasp the nettle of public sector reform. It is important for the future of the country, as well as the electoral success of their party, that they have the courage to do so.