David Simpson: Past is a foreign country for the former PM

AS GORDON Brown steps up his campaign to succeed Dominique Strauss-Kahn as head of the IMF, questions are being asked about his record when he was in charge of the UK's finances.

Supporters say he co-ordinated the international response to the financial crisis of 2008. But this is liking praising a driver responsible for a major road crash for helping to take the survivors to hospital.

The Brown storyline is that the financial crisis was global in origin. Although it was global in its consequences, the origins of the crisis are to be found in the lax monetary, fiscal and regulatory policies pursued by both US and UK governments from 2000 onwards.

Brown made major policy mistakes in every one of these three areas. In a speech last week he admitted the inadequate framework for regulating banking he put in place in 2000.

Monetary policy was kept too loose for too long. The Government chose to ignore rising house prices, while it put pressure on the banks to lend to households who were unlikely to be able to repay their loans.

Most importantly, Mr Brown, while Chancellor, ignored the risk of a recession occurring. He evidently believed his own propaganda that "there will be no return to boom and bust", because he made no provision for the contingency of a recession.

Martin Weale, former Director of the National Institute of Economic and Social Research has calculated that Brown's budget rule of delivering current balance over the cycle was too slack by about 3 per cent of Gross Domestic Product (GDP).

The result of that error was revealed in Alastair Darling's Budget of 2009. As a direct consequence of the spending commitments entered into by Mr Brown without commensurate tax rises, the country has been condemned to cuts in the funding of public services for years to come, as well as tax increases that will affect all families.

Not surprisingly, in his speeches nowadays, Mr Brown prefers to dwell on the future rather than the past.

• David Simpson was formerly Economic Adviser to Standard Life