Speaking today at BCSC 2009 in Manchester, ex-Conservative Cabinet Minister Michael Portillo delivered his verdict on the state of the UK economy.
In a sobering speech, Portillo gave his prognosis for the public finances in 2010, and outlined some of the proposals set out by the Conservatives on taxation and new local government powers.
Speaking with no notes in Manchester's Bridgewater Hall, Portillo referred to what he calls the "phoney recession", where financial institutions have suffered and the Government has borrowed huge sums of money, but the average person who remains in employment has benefited from a higher standard of living via low interest rates and lower oil prices.
Portillo pointed out that recent reports of an increase in consumer confidence are a false dawn, and that the expected tax rises and public sector spending cuts after the next election are likely to dampen this sentiment.
Portillo said: "There is a huge public finance problem to be addressed, and the next Government, whether it is Labour or Conservative, faces massive challenges to address this. We need to be more honest about the gravity of the situation – it's not what people want to hear, but it's what they need to know.
"But economies are much more dynamic than we give them credit for, and when you are emerging from a recession the amount of income coming in from additional taxation will provide an enormous boost to recovery."
Commenting on whether the outcome of the next election is a foregone conclusion, Portillo said: "The Tories still need a massive shift in the vote, and in order to win must secure a far higher percentage of the poll than Labour. Brown has already mounted two recoveries, in Autumn 1997 and at the time of the banking crisis in September 2008, it is not impossible that the current situation could be reversed."
However he went on to say that he didn't think this was very likely, given "Labour Party defeatism" and the clear will of the media to force a change of Government.
Portillo also explained some of the key Conservative proposals on local government and explained their relevance and importance to the audience of retail and retail property industry delegates.
Specifically, he cited the plans to allow twelve cities in England to hold referendums for directly elected Mayors; and a financial incentive for local authorities to bring forward extra housing – by allowing them to keep 100% of future council tax revenue for six years. He also mentioned a similar proposal on business rates.
Portillo highlighted the significance of a proposed new general power for local authorities that will allow them to undertake any activity as long as it is lawful, as well as plans to allow councils to raise their own bonds – which might be used to fund infrastructure.
The largest gathering of the retail property industry in the UK was also treated to a number of lively political anecdotes from Portillo's time as an MP and Cabinet Minister. He self-deprecatingly referred to his downfall in the 1997 elections as one of the most popular television moments in history.
The British Council of Shopping Centres Conference & Exhibition is taking place at Bridgewater Hall and Manchester Central until tomorrow (11 November), and is being chaired by development partner at Cushman & Wakefield, Alistair Parker.
Chartered Land is sponsoring the event for the second year running following a successful 2008 Conference in Liverpool.