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osborne-budget

George Osborne has said we need £25 billion more spending cuts. He’s right. He says he wants to cut £12bn more from welfare spending by 2018. On that I think he’s wrong. Much press coverage of this has questioned his suggestions of achieving welfare spending cuts whilst continuing to protect pensioner benefits such as the winter fuel allowance (with a rather odd discussion of “intergenerational fairness” – peculiar given the bashing pensioner savings are taking from QE and low interest rates), or why it is further spending cuts instead of more tax rises that we need. But that’s not the right question.

The real question is this: why are we proposing to extend into the next Parliament the madness of slashing every budget except the budgets that in the 2000s rose the most – health and education?

Apparently David Cameron feels he cannot break his pre-election pledges not to reduce NHS spending or pensioner benefits in this Parliament. I don’t see why those were any more important pledges than his pledges to cut inheritance tax or to renegotiate our position within the EU this Parliament – both of which he broke. But I see clearly that he cares much less about breaking promises to his allies than promises to those that hate him. Whether morally defensible or strategically astute, that’s how he has chosen to conduct himself, and he doesn’t seem likely to change in that now. But why is he now proposing to repeat such absurd pledges??

I don’t see this as especially a left-right thing at all. Why is it any more “right-wing” to keep NHS spending shielded from cuts and cut working-age benefits levels than it would be to shield working-age benefits levels and cut NHS spending? I presume it is a vain attempt to counter some narrative that “Tories always cut the NHS” – even though Thatcher and Major increased NHS spending faster than any of the Labour governments before them. It is policy driven by voter management, not by any plausible construction wherein not cutting NHS spending is the right thing.

Let’s consider this: under what conceivable policy argument is it better that NHS spending be frozen in real terms and benefits levels cut as much as they have been this Parliament, rather than NHS spending cut by £1 billion and benefit levels cut marginally less? Anyone can see that the decision to freeze NHS spending in real terms, rather than cut it by, say, £1 billion, is entirely a consequence of the political pledge than NHS spending would not fall in real terms. There is not the slightest defence (nor could there be) to provide a policy rationale for that.

Once we grasp that there is no genuine policy reason for NHS spending not to be £1 billion less per year and spending in other departments to be cut by £1 billion less, we can start to grasp how the NHS spending freeze pledge has distorted other cuts decisions. Since NHS spending went up by more than any other budget in the 2000s, there was a strong case that NHS spending should be cut by more than other departments from 2010 – it has, after all, been able to get by with much lower resources much more recently than had other departments. But even had it had only the same cuts as other departments, the vast bulk of that £25 billion further spending cuts requirement that George Osborne has noted would not exist.

Why do those who oppose benefits cuts not complain more of the shielding of NHS spending? I presume it must be because they would object to NHS cuts as well. But if there are two sets of things you dislike, would you rather have a little bit of each or all of one? Usually the thought is that the pain of unpleasantness is less acute if it is spread around more. Economists would say we prefer “balanced baskets” to extremes.

If those who object to welfare cuts really consider those cuts not occurring (or being less) a priority, they need to argue for cuts to something else – the NHS and schools and perhaps also overseas aid (though that budget is much smaller than the first two, so there is less to be gained from cutting it). If they don’t complain that welfare levels cuts are coinciding with other departments being shielded from cuts, we can reasonably conclude that they don’t consider avoiding welfare cuts a priority relative to maintaining NHS spending.

The same will apply if you object to cuts to, say, defence spending. Don’t assume that faster economic growth means there will be some option of not cutting – that’s not on the agenda.  If you don’t want your favoured budget to be cut then argue for something else to be cut instead. That something has to be the NHS and schools. We’ve been crazy to shield them from cuts this Parliament. Please don’t let that madness persist into next Parliament.

76 comments for: Andrew Lilico: If you object to welfare cuts or defence cuts, you have to argue for NHS and schools cuts

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