How Treasury orthodoxy undermined May

Young people voted overwhelmingly for Labour's promise to ditch austerity Credit: PA

Michael Gove's defence of this government's austerity - that it would protect the next generation from the risk that paying crippling interest payments on a swollen national debt would hobble their public services - is dubious both politically and economically.

The political flaw is that the next generation, today's youngest people, voted overwhelmingly for Labour's promise to ditch austerity and increase funding of public services by circa £50bn a year.

The overwhelming message of the general election, as I have been saying for weeks (including on election night, when everyone else was banging on about Brexit), is that young people and those on low incomes are tired of waiting till tomorrow for their jam - because as far as they are concerned tomorrow never comes.

Jeremy Corbyn Credit: PA

What mostly did for the Tories was a manifesto which was all about sacrifice and very little about reward.

Voters noticed that Corbyn is in his kitchen actually making the jam they want - and to extend the metaphor it is extraordinary that May didn't wake up and smell the coffee.

Nor is Labour's approach economic and fiscal madness - even if as the Institute of Fiscal Studies pointed out it will probably have to borrow more than it claims.

Labour would eliminate the deficit on current spending by 2022 even if its borrowing turned out to be £20bn a year greater than it hopes, according to the IFS. And £20bn is at the upper end of the tax gap that could emerge.

Unless you believe Labour would totally waste the £25bn a year they would borrow to finance investment in infrastructure and other capital projects, it is difficult to argue that they are mad to reject the Tories' approach of aiming for an absolute surplus by 2025.

Theresa May Credit: PA

Borrowing to invest looks shrewd when the economy is slowing, and our post-Brexit prospects are uncertain.

For the avoidance of doubt, the burden of public-sector debt is a world away from being as depressive of our prospects as Greece's or Japan's - although there is more reason to be profoundly uneasy about our households' property-related private debt.

The Treasury orthodoxy, that with the national debt doubling under this government to 90% of national income or GDP, it is a matter of economic life and death to reduce the numerator - the numerical debt - and not concentrate instead on increasing the denominator, GDP, may have seemed reasonable when the the deficit was 10%.

But now that the deficit has been cut to low single figures, that Treasury hairshirt-ism looks the short cut to a perennial crisis in our public services and endemic low growth.

Arguably it was also the Treasury's contribution to May's electoral humiliation.

On a day when inflation is reported as having surged to 2.9%, which is merely an index of how the living standards of poorer people are being squeezed, it is clear that the electoral prospects of Labour and Tories hinge on which offers most hope of reviving living standards today, not in another ten years.