Polly Toynbee has written what, for me, has been the most accurate post budget analysis I’ve yet seen. She said today:
The two "truths" universally acknowledged are that borrowing is wildly out of control and that the only remedy is leeching public services and shrinking the state. With aplomb every expert intones these factoids. They are not facts, they are political choices to be made. It's up to us what we do, not some great steamroller of inevitability.
And as she points out, one of these is not going to happen (having appropriately damned Brown for inaction on the way):
Until this crisis, Labour's state as a proportion of GDP has been smaller than in most of Thatcher's time. She swelled it to slightly higher than the 48.1% peak Labour predicts — and just think how hard she tried to wield the axe.
Ask Nigel Lawson: determined to cut, he found only £500m.
Ask Portillo: his "fundamental spending review" found virtually nothing.
But choosing your favourite cuts is the new game in town: Simon Jenkins yesterday picked the Olympics, ID cards, Trident and Titan prisons. We can all pick bad wastages.
But one-offs spent over years yield relatively little. The "efficiency savings", "cutting quangos" and a handful of "over-paid civil servants" Cameron proposed on the Today programme yesterday are the last refuge of politicians afraid to tell the truth.
Precisely.
For all the nonsense of the Right no one has found the savings to be made because it means sick people not treated, pensioners suffering extreme poverty, and the unemployed (the vast majority involuntarily unemployed — let’s be clear) on less than £60.50 a week.
It’s not going to happen.
Let’s face the reality. What failed was neo-liberalism, the Washington consensus, the rule of finance, the idea that we can grow without end. That is what is dead. Gordon Brown says it is dead but does not evidence it. Cameron wants to breathe life back into it at enormous cost to realm people.
Both will fail.
The model does not work. What we will do is transition to a new one. The only hope it that it is relatively painless. And not much blood will flow.
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We are locked in a vicious circle. The tax system makes people poor and then more tax has to be paid to keep them unemployed in penury. But because of the tax wedge we have a seemingly impossible state of affairs – low pay and high labour cost at the same time.
The reason New Labour cosied up to the City was nothing to do with ideology and all to do with politics, namely garnering as much tax revenues as possible to squander money. For example: doubling the NHS budget without any reform or without any thought as to what they were going to do, absolutely wild mismanagement on an absolutely staggering scale. The City was a means to an end, for without it the massive spraying of money at public services could not have happened. Now, the City, by collasping, have basically turned round and punched the government in the face. Public spending has more than doubled over the last decade and what on earth do we have to show for it? Don’t tell me that it doesn’t represent anything other than a staggeringly poor return on investment.
There is massive scope to lower public spending. Public spending could be slashed by at least 20 pc in the next decade. New Labour’s only policy has been to throw money at things. And now there’s no money to throw, there’s no policies.
Henry
So insanely wrong it’s amazing I let you say it on here
Stop living in a land of fantasy – LVT will not fund the future we need
No by itself
It has a role. That’s all
You cannot raise the tax you propose on land without creating the most phenomenal distortions of the sort you believe – but which do not – now
Richard
Peter
Oh yes, agter the usual list noted above.
What?
Leave school at 13 or pay?
No health care for the over 70s?
No unemployment benefit?
Restore the workhouse?
Is that your agenda?
I’m sick of right wingers who have no policy – kjust mantra. Tell me what you’d do
Until then I don’t believe you
And don’t quote the TPA – whenever their lists are reviewed they are shown for what they are
Richard
Straw man Richard. To suggest that believing that public expenditure needs to be drastically reduced means that one am in favour of the workhouse, no unemployment insurance etc is stupid. I detect a desperation that you know the era of high-spend government is coming to an end in the next few years so you resort to ludicrous claims like this, which frankly make you look silly. And I have not quoted the TPA.
Two questions: Do you seriously believe the current level of public spending and borrowing is sustainable? Do you seriously believe that the doubling of public spending since 1997 has led to a doubling in the quality of public services?
As to what I’d do, I’d set out credible targets to reduce public borrowing in the medium term, which however much you may protest, IS a big issue and one which you appear to concede you are losing the argument on. This is necessarily going to mean cuts in public spending in the coming years, I don’t think anyone seriously denies that. Given the return on investment we have seen on govt spending since 1997, I am quite sure you could cut it by 20 pc over 10 years and no-one would notice a blind bit of difference.
To spend, spend and spend, and when you run out of money you borrow some more is the height of stupidity. People would have laughed a decade ago when we talked about printing money, yet it’s happening now!
I notice how conviently those now calling for a Keynesian response, conveniently forget that Keynes also called for budget surpluses to be built up in the good times. The UK ran a budget deficit of 3pc at the height of the boom when Germany, Spain etc were running surpluses of 5pc. Expanding public spending faster than the rate of economic growth, as Labour did from 1999, was wholly unsustainable. It is also worth noting that Brown was quite happy to accept the taxes paid by the City in the boom to help him spend, spend and spend – despite what he may say about the City now.
Peter
I’d love to know where the straw man was – because there isn’t one
Of course we need not cut spending if we wish – it’s a political choice as to what we want to do
We can continue with the services we need
Of course we’d cut out aircraft carriers and identity cards
And we’d cut a lot of waste out of the NHS by pretending there is autonomy and that GP surgeries are independent contracting parties
And we’d stop the absurd waste of time of 24,000 schools each having to develop independent health and safety policies when one central one would do. And all the associated nonsense hat goes with ‘market thinking’ within the state sector. Including PFI.
But let me be unambiguous – of course the UK is better off for the spending by the state in the last decade. Better health services (overall), better education, less poverty, and more.
And we can continue with that. And 95% of people would benefit. That I know.
The 5% have the wealth and object. I know that too.
And we could tax to create those surpluses – after all, our tax rates are low.
So of course a social democrat agenda is affordable. It’s just making the right choice.
And it will take less than 100 days for people to realise the Tories are bankrupt if they win the next election – bankrupt of ideas that is
The outcome will be no cut in state spending – and tax increases- whoever wins. Bank failure guaranteed that.
Richard