John Maynard Keynes was never very popular amongst the Tory right as they opposed increased public spending on infrastructure projects to 'grow' the economy out of recession but to favour market liberalism of tax cuts and reduction of spending. After the recent failure to reduce borrowing as tax revenues plummet and spending increases year on year, the Treasury are having a serious re-think about the government's economic ideology and direction. Today's Guardian reports that the Treasury intend to compensate for the recent reversal in deficit reduction by increased infrastructure spending which is nothing less than a return to Keynesianism and a complete U-turn by Osborne and the Treasury.
There are further anomalies in the Government's plans
In a sign of the government's radical thinking, ministers are drawing up plans to reform the Highways Agency so it can borrow money to pay for a "horizon shift" in spending on roads to boost the economy and reduce congestion and delays.
The agency, which runs the network of motorways and A-roads, could be made more independent, most probably as a government-owned company or public trust, so it can borrow without increasing the public deficit.
One of the obvious questions arising out of this report is the fact that the government intends to grant an unelected quango like the Highways Agency borrowing powers whilst it makes no mention of granting an elected Government like the Welsh Government similar borrowing powers. Secondly the Government want to create a company to hide debt and to manipulate and reduce the public deficit in exactly the same way as Gordon Brown did as Chancellor with the Private Finance Initiative (PFI), which was partly the cause of why we find ourselves in this current double dip recession. Further evidence if we needed it that there is not a blind bit of difference between the macroeconomic policies of Labour and the Conservatives..