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25 April 2011

Michael Fallon: what would you have done differently?

The Conservative Party deputy chairman's criticisms of Gordon Brown are just cheap shots. Let's have

By David Blanchflower

Michael Fallon, the acerbic deputy chairman of the Conservative Party, criticised the appointment of Gordon Brown to an unpaid post at the World Economic Forum, where he will chair a new policy and initiatives co-ordination board.

“This is a case of putting the arsonist in charge of the fire station,” he said. “It beggars belief that somebody who is yet to apologise for the mess he made in our finances should now be advising the rest of the world.” I suppose that means he doesn’t like Gordon much. Just cheap shots.

Interestingly, the Tories matched the Labour government’s spending plans and have still not explained what they would have done differently during the greatest financial crisis for a century. I would be interested in hearing from Fallon what he would have done differently during the crisis. Would he have allowed Northern Rock, RBS and Lloyds to fail? Would he have kept rates at 5 per cent through 2009, 2010 and 2011? Would he have implemented fiscal stimulus or not and, if so, what sort of stimulus would he have done? What would you have done differently, Michael?

I wonder what he has to say now about the coalition’s failure to regulate banker’s bonuses, given what he said on 23 September 2008 in a column in the Guardian.

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Finally, Conservatives have to think more deeply about the nature of reward. The excesses of the past few years have taught us that it’s not enough to believe only in the equality of the starting tape. If we are to rebuild faith in the free-market economy, we need to address fairness and restore some proportion to outcome as well as opportunity. It can’t be right that bankers are rewarded so extravagantly for “deals” that don’t add long-term value, that bonus structures distort proper investment decisions. Mega-bonuses, out of all proportion to ordinary earnings, destroy the social consensus on which a free economy depends.

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Michael: are the “mega-bonuses” being paid in the financial sector still destroying the “social consensus”? Michael, I really am interested in hearing your views on what you would have done differently in the great recession. The big test for any of your proposals is whether they would have prevented unemployment hitting 20 per cent or even higher, which is what doing nothing — as you seem to have proposed — would probably imply. Maybe I am wrong and you had a great plan. Looking forward to hearing the details from you. What should Gordon and Alastair have done differently in 2008 and 2009? Let’s have a serious debate.