There’s plenty of reaction to the Tory tax plans in today’s papers (usefully summarised by Jonathan Isaby over at ConservativeHome), alongside some punchy articles on tax, debt and spending more generally. Peter Oborne writes on the issues here, as does Simon Heffer here. The Heffer article makes the following central point:
“When the economy is turning down, the imperative is to stimulate that demand. There is one obvious way of doing that, and that is to reduce spending on the unproductive sectors of the economy and transfer it, instead, to the productive sectors. There is only one sound means to do this. It is to cut back the size of the public sector and the role of the state, and to put at least some of the money saved into people’s pockets through immediate tax cuts.
Yet no party dare use the “C ” word in the context of the public sector. But it has to be cut. There is a Heathite fear of provoking unemployment, not least in the Tory party. It is cheaper to bribe an employer to take someone off the dole than to pay them the dole; yet it is even cheaper to take someone off the public payroll and pay them the dole. I am sure some of the 700,000 people who have joined the public payroll since 1997 are necessary. I am equally sure many of them (especially in white-collar office, lower- and middle-management) are not. It is time to sort out who is needed and who is not, and to allow the latter to take their chances in the private sector. Unemployment is, regrettably, a concomitant of recession in all but sovietised societies (and we know what happened to them in the end). The pretence that it can be avoided – or indeed that it should be avoided, given the likely new unemployed would have modern skills that would help them find work in a revived and stimulated private sector – is patronising and offensive. Instead of worrying about that, our politicians should accept the imperative of increasing demand, and of doing so by the massive transfer of resources from the public to the private sector.” One imagines the opposition parties are – and will continue to be – wary of this perspective because of the opportunity it gives Labour to deploy their “investment vs cuts” argument. On top of that, there’s the caustic issue of increasing (public sector) unemployment. The question, though, is whether all that’s worth risking for the political and economic gains that could arise from creating more room for fiscal stimuli elsewhere in society.
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