Gordon Brown bought himself time yesterday. But he did little to resolve either his or his party’s long-term future. His conference speech will not change the political weather. It was a skilful and warmly received holding operation, his best as leader and a classic social democratic statement of government activism on the side of “people on middle and modest incomes”.

There were, however, big holes. Mr Brown is better at delivering good news than bad. He was specific about new initiatives on child and elderly care, help for cancer patients etc. But, while admitting the importance of current upheavals – the “world was spun on its axis and old certainties turned on their heads” – he was vague about the implications. In that respect, yesterday was largely a prelude to a much grimmer PreBudget Report in a few weeks.

It is not enough to talk about tougher choices and new priorities. Britain faces a large-scale, long-term deterioration in public finances that will take years to put right. We heard about “continuing our record investment” in public services, via unquantified new spending commitments, but nothing on the necessary, and probably painful, fiscal adjustment.

Public borrowing is soaring as economic growth slows sharply and tax receipts fall. This has been aggravated by the acute problems of the financial and housing sectors, which have been big contributors to total revenue. Not only are the March Budget forecasts certain to be left billions, it not tens of billions, behind, but the crucial fiscal rule of holding public debt to less than 40 per cent of national income will be exceeded. Those who have seen the latest Treasury forecasts say that the problem is as big as in the early 1990s, which led to the highly unpopular Tory tax-raising Budgets.

One senior minister has compared the current shocks to a war and Alistair Darling has said that the Government will not resist these cyclical pressures and will “let borrowing rise to support the economy”. So there will be no remedial action in the PreBudget Report, and no measures may take effect before the next election. The central debate now in Downing Street and the Treasury is about designing a fiscal recovery plan: should a new public debt target be set, and what should be the timescale and trajectory? Any new plan has to be achievable, rather than regularly revised, if it is to be credible. This is likely to take longer than two or three years.

Much depends on whether the loss of output, and revenue, is seen as temporary and quickly reversible, or whether the Treasury accepts that there has been a lasting, structural loss of tax receipts. This would require tax increases or a further squeeze in public spending, in the next Parliament.

The bad news, and numbers, cannot be avoided for long, however much Mr Brown wants to promote, and defend, his social democratic vision.

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