Sunday, May 03, 2009

So We're All Agreed Then


Save the country - get hated

Tyler's Sunday papers are agreed on two things.

First, Cam will have to make some swingeing cuts to public spending - even bigger than Thatcher/Howe.

And second, he hasn't given us any serious account of how he's going to do it.

Indeed, there is still doubt that he understands the scale of the problem, something that could have dire consequences for confidence in the international bond markets. As Liam Halligan says today:

"Because the current Tory leadership spouted such vapid nonsense on the public finances for so long... Cameron now needs to demonstrate he "gets it". Repeat after me, David: "the Tories WILL implement a painful round of cuts GOING WAY BEYOND Sir Geoffrey Howe's Budget in 1981".

But that's easier said than squared up to: for those that don't remember, the 81 Budget was the one that galvanised the entire UK economic establishment (including one M King) to write to the Times formally declaring Thatcher/Howe to be stark raving bonkers and embarked on a plan to incinerate Britain (see this post).

The S Telegraph editorial urges Dave to risk Maggie's unpopularity, and says:

"Public spending will have to be drastically cut. Identifying what to cut, and how to replace rigid state provision with alternatives that make more efficient use of taxpayers’ money, represents the biggest political challenge for David Cameron’s Conservative Party. The Tory leader needs to think about how to achieve those goals at least as profoundly as Mrs Thatcher’s party did...

He will also need to inform the electorate, before the election and in considerable detail, exactly how he intends to do so...

...if he is to have any chance of success, he will have to pursue policies which generate as much anger, bitterness and unpopularity as those of the “Iron Lady”.

Similarly invoking "the Spirit of Maggie", the S Times urges Cam to cut public spending by 20% - around £130bn pa. That's way beyond even the 10% we've talked about, but the ST cites the 20% cuts imposed by the cash-strapped Canadian government in somewhat comparable circs in the 1990s:

"It worked. The economy, freed from the burden of too much state spending, grew faster than most western economies. Hard as it may seem to make such cuts here, savings will have to be made. Britain is at a crossroads, as it was in 1979. The risk is that we continue to head in the wrong direction."

Now, it is painfully obvious that cuts on this scale cannot be delivered simply by axing a few computer programs and trimming the pay of fat cat quangocrats. Something far more drastic will be required.

As we've blogged many times, we've finally reached the point where fundamental public sector reform is no longer a nice-to-have: it is absolutely vital if our schools and hospitals are to continue functioning.

Because since 1997, this government only managed to keep our public services going with humongous dollops of taxpayer cash. Few serious commentators would argue that public service standards have significantly improved over the last decade, yet public expenditure increased by getting on for 50% in real terms (eg see this post).

And now, the money has run out.

Well, no. It's worse than that.

The money hasn't just run out - we are actually racking up huge new debts. And they will have to be serviced and repaid, constituting a substantial additional drain on our public finances (see this post for how debt interest payments could treble, to £90bn pa, by 2013-14).

Spending has to be slashed - that's non-negotiable. The real question is HTF can we do more with less?

There is only one hope.

All together now:
  • break up the public services, decentralise, introduce choice and competition
  • school vouchers, and schools competing independent of local and central government - the Swedish model
  • social health insurance, with competing providers - the Dutch model
  • fiscal decentralisation - virtually anyone's model from the developed economies
  • directly elected officials - the Sheriff Joe model

As Janet Daley writes today, the time for posturing and positioning is over.

We are facing another of those grievous ordeals.

It's time for Mr C to get real.

1 comment:

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