Watch Brown's corset come out of the closet for a nation on the never-never

GORDON Brown needs a corset, and if he looks in the Downing Street wardrobe, he should find one. It was hung there by Sir Geoffrey Howe, who mistakenly thought he had no need for it, but it was worn with great effect by his predecessors as chancellor, Denis Healey and Tony Barber.

The corset was the strangely-termed mechanism for controlling credit: when things were getting out of control, the Treasury pulled the strings and the corset tightened, causing banks to reverse their advances.

Brown needs to tighten credit now, but he finds that the traditional kit for doing so is out of fashion. When past governments wanted to stop us spending tomorrow’s money on today’s luxuries, they could force finance companies to make us pay up to 40% of the price in cash and repay the rest over no more than two years. That stopped people buying cars.

They told credit card companies to increase our minimum monthly payments. They instructed hire-purchase companies to make the never-never more finite. Chancellors could order the clearing banks to make special deposits at the Bank of England, thus giving them less to lend to the public.

Howe scrapped all that, leaving interest rates as the only control on credit. As credit-card rates show, that is not always an effective tool - but Brown has handed even that sanction to the bank, and while the independent bank is also worried about our borrowing, it can’t afford to damage the rest of the economy by raising rates.

Whether we call it a corset, a girdle or stays, Brown needs something to restrain Britain’s bulging boom in credit. Equity-withdrawal on mortgages is running at 40bn a year, financing 6% of all consumer spending; the average person has 1,400 of credit card debt.

Britain’s consumer-led boom has been financed from tomorrow’s earnings and, as Mr Prudence knows, that cannot go on for ever. But if consumers even stop increasing their debt, it will depress growth; if they start repaying it we could head for recession; and if they don’t repay, the banks are in trouble.

He has already left it too late to act, but compared with his current straitjacket, a corset seems preferable. Brown needs us to stop borrowing so that he can start borrowing. The time for him to show us this garment will be the pre-budget report expected this month. He can have it remodelled to suit today’s fashion, but Brown has to make us tighten our belts.