By Paul Goodman
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Tim issued a reminder at the start of the week that there is currently a big debate about tax. He also pointed out that George Osborne isn't playing a big part in it.
But isn't the current debate the wrong way round? Shouldn't it be about how to cut spending further, rather than how to raise taxes still higher?
There are urgent short and longer term reasons for turning it the right way round as swiftly as possible.
In the short term, preserving Britain's triple-A rating is at the heart of the Chancellor's political and economic strategy. It follows that if this comes under further and pressing threat he will have no alternative but to cut the rise in spending still further in order to ensure that interest rates stay low and our ratings are preserved.
So a big debate about spending would help Osborne.
In the longer term, the rise of the east and the decline of the west is unmissable. We are spending more than we can afford: Britain's total public and private debt has more than doubled in the last 20 years or so. You cannot tax-rise your way out of a competitiveness problem – nor tax-cut or supply-side reform your way out either without simultaneously taking action on the spending side.
So a big debate about spending would help the electorate to wake up and smell the real world.
Here are just ten of the questions that should be part of it. Can we really afford to –
- Increase the NHS and overseas aid budgets more rapidly than those used to pay for – say – schools, policing and defence?
- Raise the retirement age as presently planned, rather than faster?
- Contribute regularly in a major way to wars far away from the European theatre and our own shores?
- Give the right to council housing for life, regardless of changes in circumstances?
- Make non-means tested payments such as the state pension and child benefit – or free bus passes and winter fuel payments for all pensioners?
- Staff big Government departments that are of arguable merit, such as BIS?
- Continue to fund such a large proportion of our healthcare through the public sector and so small a one via the private, voluntary, independent and charitable ones?
- Subsidise wind turbines as at present?
- Leave, say, RBS, the Royal Mail, Network Rail, the BBC, British Waterways, the Tote, the Forestry Commission – and a mass of property – in the hands of the state?
- Pay benefits at national rates regardless of local costs?
So how can the debate to be shifted from tax to spending? Senior Conservative backbenchers – David Davis, John Redwood – are already trying to shift it. Today, Liam Fox writes in the Financial Times that "there is a strong argument for further spending reductions".
The former Defence Secretary points out that "despite a 25 per cent devaluation of sterling, UK exports to Asia in the last three years have grown at a slower rate than those from Greece and Spain". He wants spending cuts to finance tax cuts. So why won't Osborne make the same case?
The answer is bound up with his role in the Government. Osborne is a political strategist rather an intellectual adventurer. He surfaces twice a year in the Commons to make big statements about deficit reduction and new methods of achieving it before plunging back into the depths.
So this Chancellor won't transform himself from a submarine into an icebreaker – opening up new and risky territory for discussion. But he and David Cameron don't have to change their way of working to get the debate going. Osborne should announce in the budget the formation of –
- A Commission on Affordable Spending. Such a body would look at Britain's long-term spending challenges and how to tackle them. On the political side it could include, for example, Lords Lawson and Lamont, senior former Labour politicians such as Alan Milburn and James Purnell, Andrew Tyrie (if membership was judged compatible with his role as Treasury Select Committee Chairman), Frank Field and David Laws. It would make recommendations to which the Government would respond.
Such a Commission would obviously be a Government-led one, containing members of other political parties (as well as people who aren't members of a party at all). The Party should seek simultaneously to further the debate itself through backbench committees and the CPF.
And since Osborne won't himself act as an icebreaker, that role is open to another senior Cabinet member, such as Ian Duncan Smith. Or Owen Paterson. Or Michael Gove. Or Philip Hammond. Or a senior non-Cabinet Minister such as Chris Grayling or Nick Herbert.
The job best fitted to the role is that of the Party Chairman. But in any event there is a political opportunity here waiting for an enterprising Minister to grasp it.
We have a commission on high pay. But what we really need is a commission on lower spending.