A smaller state is better for Britain. The consistent growth of the state over more than a decade has demolished Britain’s financial strength. In changed economic circumstances, its continued growth is unsustainable. July is a month that should produce a revenue surplus, as tax receipts outweigh borrowing. This year saw a £8.1bn deficit. Nothing expresses the nation’s parlous financial position and the degree to which old orthodoxies have been inverted more effectively. Radical change is required.
Spending cuts are more than an ancient Conservative ideological commitment; they are an immediate necessity. Britain cannot fund itself with tax hikes whilst it waits for the return of growth. The Tories’ proposed Emergency Budget is clever politically in that it moved the debate to a future that will contend with Brown’s continued debt addiction, and it expressed that this is a conservative moment. Whilst Keynsian spending pledges were the order of the day last autumn, stringency and austerity are the mots justes this time. The Tories still have to finalise their economic policy, notably on 50% tax, but what they have so far is opportune.