Ten reasons why a Tory government should cut state spending
Fraser Nelson 1:33pm
For most of the 15 years, an orthodoxy has governed Westminster: that cuts are bad, and that higher state spending – sorry, “investment” - is good. While the Tories stayed mute, Gordon Brown embarked on the biggest explosion of state spending in the developed world. As I say in my column today, only the oddballs say that state spending is too high: Lord Tebbit, John Redwood and 72% of the British public. This last figure is from a poll conducted by PoliticsHome – which is moving into opinion polling, but of a specific type. It has a new technique, deliberative polling, where a representative group of 1,400 people are chosen. You ask them the question, then present them with the arguments, then ask them again. The result is clear: 72 per cent think that state spending is too high. PoliticsHome has the full analysis here, my political column is here. But here are ten reasons to cut spending.
1. The public wants cuts. One of Britain’s many blessings is having a public way smarter than those who seek to rule them. If spending can be more than doubled with little or not effect on services (some, like education, have grown worse) why should they believe that cuts should be so damaging? The PoliticsHome/Spectator poll has more.
2. The “stimulus” isn’t working. Brown and the neo-Keynsians claim extra state spending was vital in last October to stem the expected jobs decline. Then, claimant unemployment at the end of this year was expected to be 1.1m. Now, its expected to be 1.9m. The outlook has grown much worse, not better. The only independent analysis of the stimulus (commissioned by The Spectator) shows it will be a net destroyer of jobs. The theory doesn’t work.
3. There is a clear moral case for cuts. If we’re not prepared to pay taxes to fund spending, why saddle our children with the bill? Look at the graph at the bottom of this post: the dotted line is UK tax receipts, the red line is UK spending. The gulf between them is the amount we’re leaving for the next generation to pay. There is no moral defence for this.
4. Without cuts, Britain will be at permanent risk of an IMF bailout. George Osborne is right to say there is a risk (albeit a small one) that the UK government may find no one willing to buy its IOU notes – leading us to an IMF bailout. But that risk won’t go away after polling day. If the IMF guillotine falls in a Tory government, it will be Osborne’s head in the basket. And a Tory government that will be judged to have failed.
5. David Cameron needs cuts, to make his rhetoric true. “It’s morally irresponsible to rack up more debts for our children to pay off,” he said in Cardiff last weekend– yet without cuts this is precisely what he’d do (details here.) Even if he freezes state spending, that baby in the Tory posters - owing £17,000 today – will owe £24,000 by the end of the first Tory term. Labour would be richly entitled to produce posters saying so (a bit like this one) and conclude that Cameron either deceived the public, or failed in his stated aim.
6. A “third way” of ‘slower spending growth’ doesn’t exist anymore. For years, the Tory hope was on “sharing the proceeds of growth” – ie, growing sending at a smaller rate than the economy, letting tax receipts rise at a higher rate and then paying down debt (or giving a rebate). Yet from 2010 to 2014 there will be no growth to speak of. No proceeds to share. There is a binary choice: Brown’s spending plans, or cuts. Rhetorically, this doesn’t suit the Cameroons one bit. But this is, alas, the economic realpolitik.
7. The Tories can drop their ‘no-cuts’ pledge with relative impunity. Brown is accusing them of “deep and painful cuts” anyway – he has been since 1994. No one else was really noticed Cameron’s references to “growth”. So the word can be dropped, and probably no one will notice.
8. There isn’t much time left. Remember when Lynton Crosby came in for the 2005 campaign? He had 18 months – and even then it was argued that it was too late to introduce a radical idea. If the Tories do want to prepare the public for cuts – and their rationale for doing so - they’d best get busy.
9. Money is best placed in the hands of the people who earn it. Brown has done us at least this favour: tested to destruction the idea that higher spending is the solution to public services. It is time for the Tories to state their basic credo: that, unlike Labour, they admire and trust the public and believe they will spend their money more wisely, creating a just and fairer society. It’s time to declare intellectual independence from Labour, and show there is principle behind Tory economic policy.
10. The alternative to cuts is the Europeanisation of the UK economy. Once Brown had made “cuts” a four-letter word, ratcheting up state spending was a one-way process. And my, how he ran. When he came off Tory spending plans, we spent less than the average developed (ie, OECD) country. Now we’re spending more than the Eurozone. Say what you like about Brown, but he is no failure in this regard. This was his mission, and it was a success – albeit one that now threatens to bankrupt the country. But even Brown didn’t dare raise the taxes to pay for it (see dotted purple line). This, irony of ironies, will be Cameron’s job. Brown’s hope is that the Tories stick to a “no cuts” policy and therefore jack up taxes and complete his mission: to saddle Britain with Euro-sized government. Without spending cuts, the Tories would simply be completing Brown’s life’s work. And we’d all be the poorer for it.
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Peter Buss
April 2nd, 2009 2:00pm Report this commentSorry Fraser, but look again at that poll. The same people who said that public spending was too high were also adamant that they wanted the public services potected ie if its a choice between fewer doctors/teachers/firemen/ etc and higher public spending then they will opt for the latter. The sort of cuts you ae wanting Cameron to introduce just cannot be achieved by slashing the support/admin staff - to think it can is just delusional.
Yes the public debt as a percentage will have to be reduced - but it will have to be a mixture of cutting waste/raising indirect taxes and through economic growth. I think Cameron is on the right moderate path here.
GAW
April 2nd, 2009 2:20pm Report this commentI have one area where increased state spending is essential: MPs salaries. They need to be increased and by a lot.
Forget the expenses controversy. We need a political class that can feel little envy for millionaires, one which regards wealth as a run-of-the-mill sort of thing. Only then will we have one that has the confidence to put the financial marketeers in their place. More at www.gawragbag.blogspot.com.
Hawkeye
April 2nd, 2009 2:29pm Report this commentI think that the key phrase in the article is this "If spending can be more than doubled with little or not effect on services ... why should [anyone] believe that cuts should be so damaging?"
Sums it up perfectly and it makes a great soundbite.
Paul B
April 2nd, 2009 2:33pm Report this commentYou only need one reason why state spending needs to be cut. That is I (and all individuals) can spend my money, more efficiently, that the state can. It is also immoral and should be against my human rights, for the the state to assume and take my money (& ultimately the threat of imprisonment) and spend it on my behalf in the arrogant belief it can spend it more wisely. It also infantalises the individual , keeping them tied to the proxy mother (the states) apron strings. Is it any wonder we have alcoholic related public order problems in so many of our towns and high streets. Treat people like children and they behave like children.
John Page
April 2nd, 2009 2:45pm Report this commentGood stuff as usual, except for heading 9, "Money is best placed in the hands of the people who earn it". I'd have preferred to say "best LEFT in the hands" etc. It is not for the state to place it there - that money belongs to earners, until the state takes it away.
As Ken Dodd likes to say, "I thought it was my money".
Wily Trout
April 2nd, 2009 2:50pm Report this commentCut the bureaucrats, not the front line. The bureaucracy and quangocracy make the front line perform worse not better, by saddling them with fatheaded political fashions and targets. And the bureaucrats are paid far, far higher. Someone in the Conservative party needs to do a close study into what goes in on the Local Authorities and who is productive, and who isn't. There's millions to be cut in the middle to senior management ranks of Local Government: this is where the big increases have been.
Tim Carpenter LPUK
April 2nd, 2009 2:55pm Report this commentWhat Paul B says and well highlighted Hawkeye.
Returning to 2001 spending levels adjusted for inflation would - well, did in 2007/8 - allow us to abolish income tax.
That is the way to put money in the hands of those who know best how to spend it. It also gets the state out of people's faces, for when you don't worry about income tax, non-dom becomes non-issue and so one of the few tissue-thin fig-leaves over the Itinerary database is pulled away.
Denis Cooper
April 2nd, 2009 3:04pm Report this commentAll good reasons to gradually cut public expenditure down to about 30% of GDP - when the economic conditions are such that the private sector can readily absorb the 10% of the workforce who will have to be redeployed.
Pat McGroin
April 2nd, 2009 3:21pm Report this commentwhy do people always refer to 'cuts' as getting rid of doctors and nurse? the first people to go are the pointles middlemanagement, quangos and non-job civil servants. no-one who know the difference.
Fraser Nelson
April 2nd, 2009 3:29pm Report this commentPeter Buss, if you don't mind me saying so this is the Brown argument: that any cut must mean one fewer nurse, fewer doctors etc. As opposed to ID cards, the £3bn science budget, the quangos, the regional assemblies, aid to China and India, that kind of thing.
The UK government now consumes almost half the country's wealth - do you really think you can't downsize it without leaving hospital wards unattended? There's a story today in the papers about how there are 10% fewer hospital beds than 1997 - and that's when the NHS spending has almost trebled.
This is about intellectual breakout, and it is stating the obvious to say that a state whose budget has more then doubled to no good effect can be slimmed without too much pain. And if we don't start planning to do it now, we may have to at the IMF's behest.
I will look up the amount spent on the wages of frontline staff, as a percentage of overall state spending. I suspect the figure will be rather small.
The Bellman
April 2nd, 2009 3:53pm Report this comment#3 should be #1, and vice versa.
@Peter Buss: 'What the public wants' is not always reconcilable with reality, nor in the national interest. If we cannot afford to fund our commitments, we must cut, and that means a measure of leadership, to replace the debt-funded purchase of votes of the last 12 years.
And it's a measure of the traction of McSnotty's propaganda that so many people still think (assume) that reducing spending means reducing services. It's lazy, deceitful and corrosive.
RayD
April 2nd, 2009 4:24pm Report this commentReducing public spending means sacking most if not all of the people taken on in the last twelve years because that's where most of the money has gone. In a recession with already high unemployment, I would have said that was politically impossible. More than happy to be proved wrong.
David Ossitt
April 2nd, 2009 5:05pm Report this commentWily Trout
April 2nd, 2009 2:50pm
"Cut the bureaucrats, not the front line"
SPOT ON!
Fraser Nelson
April 2nd, 2009 3:29pm
"Peter Buss, if you don't mind me saying so this is the Brown argument: that any cut must mean one fewer nurse, fewer doctors etc. As opposed to ID cards, the £3bn science budget, the quangos, the regional assemblies, aid to China and India, that kind of thing".
Fraser you are absolutely right the masive over spend in every area that this government touches is beyond all reason.
No business would ever succeed that allowed such profligate spending.
If the next government were to
employ for a short period onehundred successful men or women from the private sector who have a past record of being profit makers and to give them one brief and one brief only.
For each to be given a specific area to focus on with the object of cutting by at least 60% all non productive areas of our public services and government spending in itself by 75%.
Moraymint
April 2nd, 2009 5:10pm Report this commentJust makes my point made in a post to another/earlier blog: time to vote Labour. I'm a lifelong Tory voter, but hell I want to see Brown eat this mess.
Susan Hill
April 2nd, 2009 5:47pm Report this commentMaybe we NEED the IMF to come in. Sometimes people have just to be told what to do.
jon
April 2nd, 2009 6:13pm Report this commentRayD, you don't have to sack anyone. Let them retire, only recruit front line staff not bureaucrats to replace the retirees. Tell the civil service to do the same with less.
Fergus Pickering
April 2nd, 2009 6:26pm Report this commentBut,Moraymint,who is going to PUT IT RIGHT? The Tories put it right in 1951. They failed to put it right in 1970 because Heath was a Shit of Hell. They put it right in 1979 and they will put it right in 2010. Shoulld take about fifteen years but, hell, we'll HAVE fifteen years, won't we? In the meantime perhaps the Lib Dems could replace the Labour Party. They are every bit as silly but not so nasty.
Ian C
April 2nd, 2009 6:38pm Report this commentThe "intellectual break" from Labour is freeing the individual from the burdens of the state and unleashing entrepreneurship through tax reductions.
Cuts have to be made, but the way to sell that is to grow the size of the economy through killing the disincentives in the tax and benefit system.
The big idea is just that - that we must be set free to grow the economy.
Peter Buss
April 2nd, 2009 6:48pm Report this commentFraser - thanks very much for your response - much appreciated.
I am sure we both want the same thing but I genuinely believe that what you are poposing cannot be achieved (cetainly in the short term) without the most horrific damage to our essential services.
Not sure what the figure is now but when I was a Personnel Manager in the largest LEA over 80% went on teachers salaries. The remaining 20% went on clasroom assistants, cleaning staff,educational psychologists, caretakers, education welfare officers,school meals staff,and other non pen pusher jobs and only a very small proportion was on admin staff.Of these admin staff, every school had a school secretary and of course there is still some absolutely essential admin work needed in addition if the service is to be run effectively.So swingeing cuts under the present system would inevitably mean cuts in teaching staff.
It is important to recognise that a significant proprtion of the increase in spending has gone on increased pay for nurses, doctors and teachers as opposed to inceases in actual numbers.
Of course savings can and should be made and |I would go along with the areas you have mentioned but they are indeed small beer in the total.
My own view is that those should comprise the immediate areas of saving followed by a complete overhaul in how we run public services as per the Gove approach to Schools.We should be prepared to spend more up front on Education as required to get his proposals off the ground knowing that in the medium to long term we shall have a better education service for less.
My quarrel is with the idea that floats around that somehow we can slash billions and billions off the public sector without affecting frontline staff. I hold to that and believe that only by having a hard look at HOW we provide these great public services willreal savings be achieved.
Ben Elford
April 2nd, 2009 7:21pm Report this commentFraser: you make a powerful case that cuts in public expenditure can and should be made without affecting essential services.
I'm struck for example by how much broadcast advertising government and quangos are spending money on these days(we have the builders in recently, and I've listened to a lot of commercial radio).
Two difficulties arise. The first is making the argument in terms that the public understands, after years of brainwashing. The second is preventing local authorities and other spending bodies making cuts in all the wrong places in order to try to discredit a government which, at last, aims to have us live within our means.
Verity
April 3rd, 2009 3:50am Report this commentBen Elford, you write: "Fraser: you make a powerful case that cuts in public expenditure can and should be made without affecting essential services."
Define "essential services". Handouts to "asylum seekers"? Let them try Brazil or Equador. We, on the edge of the Atlantic are no more the first port of call than the Americas.
For those who propose to suck off the tit of the British, let us, in our ancient tradition, hear the cause of their complaint against their native land and all the other countries they have passed through.
They should be required to disclose all, as real British taxpayers are required to disclose all to the Internal Revenue. Let's have their photos and their history so Harriet Harmon's "court of public opinion" can consider their cases.
john miller
April 3rd, 2009 6:55am Report this commentIf anyone thinks that UK tax receipts are flatlining as shown in the graph, they are sadly mistaken. A sort of Beachy Head type profile, where the land ends and sea begins would be more accurate.
Postscript
April 3rd, 2009 4:43pm Report this commentI am incredibly sceptical about the polling politics home has conducted here. While there is no doubt that, bounce aside, Labour are heading downwards in the polls, the questions asked by politics home must be known to determine how effective its survey was. Using loaded questions and subtle biases through language can easily distort a deliberative polling attempt (which, in reality, should not present for and against arguments but offer a chance for debate between the peoples polled).
Looking at the pdf of the poll, if the "summary" questions are anything to go by, the poll does seem to have some subtle linguistic biases in it which would be able to sway an uninformed voter quite easily.
Paul C
April 4th, 2009 6:31am Report this commentHow to fix the economy and balance the budget forever:
Pay every UK resident 200 a month whether they work or not (plus extra for non-bogus disabilities). Charge them 30 percent tax on every penny they earn, collected by employers using a trivial calculation, very efficiently. Fire the Inland Revenue as it will no longer serve any function.
If 30 percent does not meet the government's spending requirement, increase it so that it does. Disallow government borrowing. Soon the public will complain and put pressure on government to cut out waste.
Also, fire all quangos, and make the BBC compete on an equal footing with its competitors. Or use the PBS approach where the government hands over some amount of money for every pound the public are willing to donate.
Would this be fair? Is Brown's "fairness by unmanageable complexity" fair?
Mark
April 4th, 2009 2:51pm Report this commenti would be all for the euroisation of the UK economy - government is now on average far smaller in the EU, much stronger presumption against state involvement in the private sector, and the Stability and Growth Pact which is all about preventing the government from spending too much during good times and getting into too much debt in recessions. The EU and UK long ago swapped places in their views on the size of government and debt funded spending.
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