Tuesday, 4 July 2017

Taking the Fight to the Liars of Labour

Seeing as I am an eternal optimist, I have sought to find a silver lining to the dark and thunderous cloud hanging over us all since the election. That lining is of course that, had Theresa May won, she would have left in place her newly empowered advisors Fiona Hill and Nick Timothy and they would even now have started enacting their modern day version of Ted Heath's failed prospectus minus his European fanaticism. Even now we would be seeing all manner of interventionist claptrap in the name of standing up for the JAMs but in reality only making matters worse.

And yet here we are with the dust having finally settled and there are members of the Cabinet offering similar ideas. Actually that is to dignify them much too far. Spooked by the success of Chauncey they are intent upon demanding a kind of diluted form of his idiocy. Quite what they imagine this would achieve is a mystery. Let's vote Tory, the students would say, they're offering us less than Labour having previously offered us nothing at all. The same would go for the public sector workers who would flood back to the Tories having had their pay increased at last. We never wanted to vote Labour they would say, we just wanted the Tories to be less evil and less inclined to tie us to railway lines whilst chuckling to themselves and twirling their moustaches before going off to ravish virgins.

Perhaps we all need the summer to regroup. We're nearly there. Just a couple more weeks to go.  Perhaps then Conservatives will rediscover their conservative instincts and grow a pair again.

Austerity, as this blog has seldom ceased to remind everyone, has not really happened. It was always George Osborne phoney austerity. Spending has increased every year since 2010. The only reason that cuts have had to be made at all is thanks to the various protected budgets of the NHS, schools and so on and because of the ever increasing cost of servicing our growing debt. If ever interest rates start to increase to more normal levels it will only get worse. Spending more would just make the need for higher interest rates more urgent.

Government is about making choices. So why don't our ministers, instead of abdicating responsibility and taking the easy option, explain the choices facing us? We have a national debt of £1.8 trillion. That costs around £45 billion a year to service. That's getting on for 9% of all public spending being spent just on the interest on our debt or about the same as we spend on defence. That is why we have to stop living beyond our means. Because if we fail to do that then the debt will continue to grow and we will have to keep putting up taxes just to pay for it. So we will be sucking up ever larger sums in tax but spending will not be growing because the money will be spent on interest instead.  Eventually when a country gets into this situation it finds that the debt is dragging it down and that putting up taxes ever higher makes matters worse because it damages the economy and cuts growth. It's like being in fiscal quicksand. That's why Labour's promise of ever higher spending is dishonest, irrational and reckless.

And we have been here before. Under Labour from 1997 to 2010 public spending more than doubled. Spending on the NHS also more than doubled. Yet by the time Labour left power the NHS was still struggling and unemployment was rising. Labour had taken the easy option of throwing money at the public services without reforming them and getting more productivity. In the 1970s Labour's response to the crisis created by the sudden increase in the oil price caused by OPEC was to vastly increase spending. This created a huge balance of payments crisis and inflation took off. Eventually Britain had to go cap in hand to the IMF. What did they do? They demanded that we cut spending. That worked and the economy recovered after some more much needed medicine administered by Margaret Thatcher, although then, once again, Labour blamed her for clearing up the mess they had created.

And simply handing out payrises to the public sector now would be politically expedient, of course it would. But it would be wasteful if it was not accompanied by gains in productivity. This is not to say that pay rises for some public servants should be ruled out. If there is a recruitment or retention problem then pay is one remedy. But across the board pay rises are not the answer and even if offered the Tories will get no credit for them. Better to keep control of the public finances and get the economy into shape. Higher growth will lead to higher taxes and thus more money to spend.

Anyway it would be grossly unfair to hand over billions to the public sector paid for by the private sector, which is also struggling to get pay rises. The best way to ensure everyone gets a pay rise is to cut everyone's taxes. But we can't do that while the public finances are in such a poor state. Why are they in a poor state? Because Labour lost control of the public finances. The government, for all of the rhetoric, has not been especially tough on public spending. It has been pragmatic and has taken things slowly. Maybe too slowly.

And as for talk of copying Labour's bribes to students, who are we kidding? There is simply no need for this. Students are being loaded with debt it's true. But then they are also going to university in order to get better paying careers. Who better to pay for that than the chief beneficiaries? If they don't have gilded careers on high paying salaries they won't have to pay their loans back. That is a well designed system. It should be pointed out that tuition fees were introduced by Labour and the current system was designed in part by a Lib Dem. And Chauncey's claim that working class students have been put off going to university is a bare faced lie. It's just not true.

The system we have now turns students into consumers who must weigh up whether going to university is worth the investment. That is as it should be. Just turning students back into the recipients of welfare and a free for all would deny the universities much needed funding and make them less responsive to their customers.

Conservatives believe in a smaller state, lower taxes, libertarianism, of the power of markets and the need for individuals to take responsibility for themselves without denying the vital role of the state in acting as a guarantor of our safety and a safety net where required. None of these arguments were made during the election and so into this vacuum stepped in the fantasists and liars of Chauncey's Labour. It's time Conservatives had the guts to take the arguments on rather than surrendering ground to Labour. We have the advantage of our being right with all of the facts and history on our side.

Tories need to keep our nerve. The election was a disaster but now we are governing again. Get your act together. Build lots of houses. If you want to spend extra money then take it out of the foreign aid budget. But do not relax austerity. It was there for a reason and that reason has not gone away. It is a £50 billion a year piled on top of a national debt that has doubled under the Conservative Party. That is a funny kind of austerity. But it cannot be wished away. Better to explain it instead.

No comments:

Post a Comment

All comments are published at the absolute discretion of the owner of this blog, but there is a general presumption towards publication. This is a free speech blog.