On Monday night, all new Conservative MPs were summoned to a meeting with the chief whip in Portcullis House.
On Monday night, all new Conservative MPs were summoned to a meeting with the chief whip in Portcullis House. The chief, a former miner who couldn’t be more different from the gilded youth of David Cameron’s A list, impressed on them the line for the week: the Conservatives do not want to be making these cuts — they are a matter of regrettable necessity. This reminder was largely unnecessary. The new MPs know the script.
It is not the whole truth, though. Talk to almost any Conservative MP and they’ll tell you that the cuts will, ultimately, be good for the economy, that they will spur higher growth. But when you ask them if they expect the government to make this case, they look at you like you have just suggested mentioning the war to some German hotel guests.
The Conservatives are desperate to avoid the charge that these cuts are ideologically motivated. So anything that implies the cuts could be good in and of themselves is verboten. They don’t want anyone to think that they are taking advantage of this crisis to shrink the state. If people thought that, they believe, popular support for deficit reduction could not be maintained.
Defending the cuts as a matter of necessity is an easier wicket to bat on. If there is no alternative, you can blame the cuts and the tax rises that are coming on the last Labour government, something that George Osborne did repeatedly when presenting the spending review to the House. The no-alternative position also makes it easier to keep the more left-wing Liberal Democrats on board.
But there is a risk to the coalition’s approach. The more successful the government is in reassuring the markets about its determination to deal with the deficit, the more quickly market pressure lifts. Indeed, on Wednesday both Cameron and Osborne talked about Britain being out of the ‘danger zone’. The less likely a Greek-style sovereign debt crisis looks, the harder it is for Mr Osborne to argue that the bond markets have a gun to his head. This gives Labour more room to argue that the pace and scale of the cuts can be eased.
Since he became leader, Ed Miliband has said that some unpleasant cuts are necessary. This reasonable tone is designed to win Labour a right to be listened to when it says that the coalition cuts are too deep and too painful. Miliband, just like the Tory leaders, hopes to avoid sounding like an ideologue; hence his decision to make the non-economist Alan Johnson his shadow chancellor rather than one of the intellectually abrasive Keynesians, Ed Balls and Yvette Cooper.
As the sense of impending crisis ebbs and it appears that Britain can safely borrow more, Miliband’s position could sound increasingly attractive. At some point, the coalition might well have to make the positive case for the cuts or risk losing the argument.
What was cut and what was not tells us a lot about the priorities and politics of this government. The NHS and the Department for International Development were both protected from the process because of politically motivated pre-election commitments made by the Conservatives. In the Budget, Osborne made clear that he would try and spare two other departments from the worst of the cuts — Education and Defence.
In the end, it was Education that received the best deal, a mere 3.4 per cent cut in real terms compared to the 8 per cent one that Defence is undergoing. There were many reasons for this. Senior government sources were keen to praise the Education Secretary Michael Gove for not conducting his negotiations via the media, working through the coalition and respecting the Osborne/Alexander dynamic. The implicit contrast with Liam Fox and his very public campaign against defence cuts was clear. One close Cameron ally, his voice shaking with rage, described the service chiefs turning up at Downing Street late last week in their full dress uniforms to intervene in the process as ‘absurd’ and ‘completely ridiculous’. There is a determination in Downing Street to show that Fox’s hardball tactics didn’t pay; although one senses that it protests too much on this point.
But the reasons for Education’s excellent settlement — the best of the non-ringfenced departments — extend beyond Michael Gove’s negotiating skills. His willingness to be the first minister to go over the top and make cuts, scrapping the building schools for the future programme and abolishing various education quangos, showed his determination to get value for the public’s money. The rapid passage of the Academies Act guaranteed that the money would be going into a reforming system rather than just propping up the status quo.
In his determination to show the Treasury that the money would be well spent, Gove even invited Danny Alexander, the Chief Secretary to the Treasury, to his department to discuss the inefficiencies in the education system with a group of teachers on the Teach First programme. Most ministers wouldn’t have wanted to show the Treasury that there were savings to be had in their budget. But Gove wanted to demonstrate that he was shining a light on waste in schools rather than seeking to protect it.
The coalition’s plan is ambitious. It is trying to reduce public spending as a percentage of GDP by 7.5 per cent by 2015/16 — the equivalent of what Margaret Thatcher did between 1979 and 1990.What will determine whether the coalition’s plan pays off or not is whether this stops the economy bumping along the bottom and gets it growing again.
So far, the coalition has had far more of an austerity narrative than a growth one. Labour has picked up on this vulnerability, making the seductive but intellectually flawed argument that the country can just grow its way out of the deficit.
The coalition needs to tell the country about the valley below and not just the arduous climb to conquer the deficit mountain. The growth white paper it will publish in a fortnight’s time needs to be the beginning of a major push to explain how the coalition’s enabling of a monetary stimulus, its corporation tax cut and infrastructure spending are creating the conditions for growth (as Osborne pointed out on Wednesday, more will be spent on transport projects in the next four years than was in the last four).
Osborne’s economic plan is also a political one. He is, after all, the Conservatives’ chief electoral strategist as well as the Chancellor. If his plan succeeds, then the Tory re-election campaign will write itself. It will be morning in Britain — and why would we want to go back to where we were five short years ago? This is the strategy that dare not speak its name.
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