Bruce Anderson

The Tories’ greatest liability is the belief that they are against public spending

The Tories’ greatest liability is the belief that they are against public spending

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The battle of the slogans will now be joined and could still have a significant effect on the election result. We already know what Labour will say about the Tories’ new economic policy. ‘The Tories claim that they can increase spending and cut taxes. And pigs will fly.’ The Tories will counter this with something on the lines of: ‘Every time this government spends a pound, it wastes seven-and-a-half p. We’ll end the waste and use the savings sensibly.’ Or — next to a picture of Gordon Brown — ‘If you don’t stop him wasting your money, he’ll put up your taxes.’

In three-and-a-half months’ time, we will discover which version the voters believe, assuming that they do hear both. For this to happen, the Tories will have to be much more effective at projecting themselves than they have been for many years. They must employ the tactics Alastair Campbell, Peter Mandelson and Tony Blair used before 1997. Refine the message into a few simple phrases and then ensure that every frontbencher repeats them, endlessly. The repetition must go on until the party’s spokesmen are inwardly gagging with boredom every time they say the words. Then, and only then, the electorate might notice.

Equally, Oliver Letwin must curb his fastidiousness. Too often, the contrast between him and Gordon Brown reminds one of Pale Ernest and Roaring Bill. ‘Pale Ernest thought it wrong to fight. Roaring Bill, who killed him, thought it right.’ That said, the principal merit of the James report is its intellectual credibility. Most of its detailed workings should stand up to expert scrutiny and the overall theme is pure common sense. Everyone knows that if any organisation suddenly receives a huge sum of new cash and is encouraged to spend without restraint, a lot of money will be wasted. That is what is happening under this government; it should not be impossible to persuade the voters to accept a self-evident truth.

As so often, however, the Tories’ task is complicated by the legacy of Margaret Thatcher. On both taxes and public spending, her rhetoric frequently bore no relation to reality. In her 111/2 years, taxation and borrowing did fall as a percentage of GDP, from 39 per cent to 37 per cent. She did reduce public spending’s share of national income, to around 40 per cent. Because of economic growth, she was also able to finance large increases in government expenditure, especially on health. Anyone who examines her actual record in search of the ‘cuts’ indelibly associated with her name will search in vain.

Yet the cut-smith still inspires a lot of young Tory radicals who insist that their party’s only problem is lack of boldness. Be like Maggie: slash spending, slash taxes and all will be well. The myth also influences many voters, who believe that the cuts actually happened, and have not forgiven the Tories. Indeed much of the electorate seems convinced that on 1 May 1997 Tony Blair reintroduced government spending.

The widespread belief that the Tories are opposed to public expenditure is the party’s greatest single electoral liability: it’s equivalent of Clause 4 and the rest of Old Labour’s socialist baggage. It will probably take more than three-and-a-half months to expunge that, but the phrasemakers must try their hardest.

As for the young radicals, they should look at what Mrs T. did, not at what she sometimes said. They should also listen to those in charge of the party’s opinion research. Much of this was conducted by people keen to cut taxes and certain that the voters wanted tax cuts. But the evidence was overwhelmingly the other way. The voters might be persuaded that in the context of an anti-waste campaign and guaranteed spending increases on health and education, a £4 billion tax cut was reasonable. If the Tories were to offer much more than that, the voters would regard them as irresponsible, and also as dishonest. They would refuse to believe that it could ever happen.

On both tax and spending, the Tories’ long-term goal should be Fabian Thatcherism. As long as the economy is growing healthily, a Tory government should aim to spend a lower percentage of the national income every year and own a lower percentage of the nation’s wealth. Even if we were dealing in fractions of 1 per cent, this would add up to significant sums by the end of a parliament. Assuming economic growth, it would also be compatible with real-term spending increases.

At the same time, a Tory government should also pursue a covertly radical strategy to restructure the modern state. The instruments of government can be divided into two categories. There are the ethos-based organisations: the armed forces, the Foreign Office, and the higher ranks of the home Civil Service, at least until New Labour tried to turn them into a glorified press office. In a previous era, the police force was ethos-based, but ethos depends on leadership, which most contemporary policemen are not receiving. There was also a time when a majority of state schools had a sound ethos, before this was undermined by comprehensivisation and trade unionism. Until a generation ago, the NHS had a strong ethos. That too has been widely eroded.

When the ethos has vanished, or never existed, and the public sector is merely providing goods and services, the result is low productivity and waste. As Tony Blair has discovered, and all his predecessors could have told him, where there is no ethos but merely a large bureaucracy, the best ministerial intentions are either frustrated or distorted.

Back in 1979, Sir John Hoskyns, then head of the No. 10 policy unit, realised that the health service was an accountant-free zone and that no one knew what anything cost. As a result, one area health authority would spend three times as much as its neighbour on a certain course of treatment, without any discernible improvement in patient care. John Hoskyns persuaded ministers that the NHS needed better management to ensure an efficient use of resources. So far, so sensible, but look what happened. Management proliferated, costs rocketed, and the goal of efficiently deployed resources is as elusive as ever.

A few years later, when Ken Baker was education secretary, he decided that he ought to find out whether schoolchildren were learning anything. He decreed that there should be tests to monitor their progress. That sounds straightforward, yet it began a process which has now led to 12 pages of bumf arriving each school day on every state school headmaster’s desk.

It happens again and again. A minister devises a simple scheme for enhancing human happiness. He hands it over to the government machine, and immediately discovers that he has been transported to Dr Frankenstein’s laboratory. The modern state is too big and too chaotic to deliver efficiency, and for all its talk about delivering, this government has made matters worse.

It will require a Tory government to put matters right. A Tory government: on present trends, that would need the combined efforts of Frankenstein, Einstein and Wittgenstein. For the present we will have to make do with Messrs Howard and Letwin, aided by David James. They have got to make the most of Mr James. He really is the Tories’ last hope.