Economies: UK: 750,000 empty homes and rising – and so is inflation.

Figures produced for the Conservative opposition show that Labour's push for ever more housing stock to be built – often in districts that have historically been Conservative voting areas and, despite the Labour party's supposedly environmental concerns on greenfield rather than brownfield sites – there are, right now, around three quarters of a million empty properties across the UK – and that is before the anticipated rapid growth in properties subject to repossession as mortgages go unpaid.

And they will go unpaid: a tank of fuel for an ordinary family saloon now costs more than GBP60. That gives only about 350 miles of travelling. From Ashford in Kent, one drives less miles to go shopping in France than to the nearest comprehensive shopping centre, Bluewater, in England. To go to Bluewater is a 60 miles round trip. The nearest shopping centre worth its name is Canterbury – and that's a 30 miles round trip but it lacks the range of Bluewater.

Long distance commutes are a feature of life in the South East of England. And because of poor – and wildly expensive – public transport, driving is the only way of making the journey from the greenfield dormitory developments of the past ten years to where the work is. As the jobs market has tightened over the past ten years – and although some sectors have boomed, high-level jobs in mid-sized companies have become increasingly scarce leading to many people commuting around London – often travelling between 70 and 100 miles per day.

That's using a tank of fuel each week, just to get to work and back – at present prices that's more than GBP240 per month.

Labour figures show that the UK has low inflation – but even so that it is edging close the the 3% limit that Brown declared would be his maximum. However, that inflation figure remains low for the simple reason that the figures have been fiddled.

Ignore the politician's definition of inflation and take the figure where it really matters: how much does it cost the average family spending their money on ordinary things to live today compared to a year ago.

The answer is startling: even though supermarkets run special offers (one, Morrisons, is offering a food-pack for GBP4 and it's enough to feed a family for a day) the reality is that food prices have increased significantly in the past year. For example, half a dozen large eggs in a supermarket now costs GBP2. For comparison, in Malaysia a tray of 36 large eggs in the market costs around GBP1.75.

Figures produced today by The Daily Mirror, a tabloid that has for decades been an unquestioning supporter of the Labour Party, show that Labour's inflation figures are fiction when cross-referenced to real-world living expenses. The Mirror says that, far from the approx-3% figure published by Labour's Treasury, real-world inflation is actually running at almost 18%. It's not inflation of Zimbabwean proportions, but it's bad enough to drive already marginal households into deficit.

The Mirror says “Our Cost of Living Index, compiled with retail industry bible The Grocer and price comparison website money-supermarket.com, indicates that inflation is running at 18.53 per cent. That's more than six per cent higher than Mirror-Grocer figures for last month.” And, it says, that with the Bank of England predicting inflation as high as 4.5%, the real world figures are going to be much worse.

The demonstration of the failure of Labour's policies is underlined by the Conservative figures on housing. One of Labour's big selling points to win the 1997 general election from the incumbent Conservatives was the waste of unoccupied housing stock when there were people in need of homes. Labour displayed synthetic outrage – there were 100,000 empty homes. Now, say the Conservatives, that number has climbed to more than three quarters of a million. Labour says it's the fault of local councils who do not seize and recycle empty properties. Commentators say that in truth its because development policies have created flats instead of houses, and built them in the wrong districts. After all, how many families can afford GBP75 per week per person to commute into London to work when they are already stretching to afford a home?

The position, then in inevitable. Already daytime television in the UK carries adverts dominated by promises of free money for those involved in accidents, for discounts on insurance, and for debt recovery services including insolvency practitioners. They would not be spending money on TV ads unless they were jockeying for position in anticipation of a downturn. As much as a year ago, the smart money in the City was on insolvency practice booming and one City insolvency practitioner who wished not to be named told us yesterday that his firm is working feverishly to clear outstanding cases in anticipation of a gold-rush starting this summer. Given that it's already halfway through July, there isn't much of summer left.

In May, the City of London's financial institutions announced that they expected to reduce headcount by more than 10,000 in Q3, 2008. In July, a national house-builder announced that it would cut more than 1,500 jobs. Everyone knows at least one person who has been told that they are being made redundant, or their contract is no being renewed, it seems.

And all the while, the Brown legacy being implemented by his little Darling, is to increase taxes. Last week, Brown's claims that most motorists would be “better off” under a new tax regime to charge cars with higher COP2 emissions were admitted to be false: in fact more than 2/3rds of motorists – that's 9 million people – will see their motoring taxes increase substantially – in some cases more than doubling. Worse, that does not take into account the increases in the tax on fuel – some of which are specific increases of around 1% and others of which are windfall increases because of the application of VAT to the pump price – which already includes hefty duty paid on the refinery gates.

Brown's huge increases in “stamp duty” - a purchase tax on transactions for the sale and purchase of homes and commercial property – attracted massive criticism. But for Labour, this was irrelevant – they increased the tax most on properties that they said were expensive. In short, the sort of properties that “working class” people did not own. But house price inflation has brought more and more houses into the higher rate bands and Labour has not increased the thresholds. Now there are proposals to provide temporary relieve in some sectors to try to stimulate a housing market that is heading for falls that, if not halted before they pick up speed, could lead to property prices falling by 25, 30 or even more percent.

When that happens, the market goes into a form of chaos. Financial institutions secure orders for possession but suspend them on terms that they will take almost whatever offers for repayment they can get, for now. But borrowers are likely to be wise to that trick after it was widely used at the end of the 1980s: some financial institutions constantly tried to increase the amounts being paid to pick up arrears, keeping families short of money for years.

When UK property prices last collapsed – and it's not long ago – financial institutions found themselves suddenly in possession of a huge housing stock the value of which was rapidly deflating. And the deflation was accelerating because homeowners, seeing the debt secured on the property was far more than the value of the property itself, went into lenders by the thousand and simply handed over the keys. They worked out that it was cheaper to rent than to stay in the property – and by surrendering it, they did not suffer the bad-credit effect of a court judgment against them.

So the stage is set for an economic catastrophe that Blair, Brown and Darling have been denying was happening. But all the signs have been present for the past ten years. Brown and Darling may blame world conditions – and they are a factor – but this is a home-grown crisis borne out of arrogance, waste of resources, overspending and economic mismanagement of epic proportions.