By Andrew Lilico
Ed Balls and others have been calling for the Government to consider a "Plan B" for some months. Placards at the march over the weekend proclaimed that "There is an alternative". Some on the government side have denied that there is any alternative to the Government's programme. But they are wrong. There is an alternative: deeper and faster cuts. And that is not an implausible alternative – it is precisely what will happen:
- if the economy does not perform as well as the government hopes. Many commentators seem to imagine that the consequence of the economy not doing so well, and thus becoming smaller with welfare bills rising, would be slower cuts! Eh? Aside from its being obvious that if the economy is smaller we will be even less able to afford Gordon Brown's bloated state, we can see internationally in the examples of Greece, Ireland, Portugal, Spain and elsewhere that once economies do worse than expected, the consequence is the government being forced to announce even more cuts. Which government in a developed economy facing a fiscal crisis has ever found financial markets unwilling to purchase its bonds, and responded by announcing that it would therefore sell even more such bonds than would otherwise be necessary, and found that made markets more willing to buy?
- if the government were to back-track on its programme, since the financial market panic that would ensue – if not this year, then by 2013 – would lead us to seek some form of international bailout, of which the quid pro quo would be our accepting even deeper cuts.
- if the Simon Heffers, Fraser Nelsons and Allister Heaths of this world – with their perfectly sensible and plausible arguments – were to win the day. I have done hundreds of television and radio interviews about the need for spending cuts. I have often been paired with someone else in debate. But always – without fail – I am paired with someone wanting less cuts than me. But the reality is that the level of cuts I have advocated and that the government has implemented are the minimum required. I lie at one extreme of this debate – the high-spending extreme. But the press does not seem to grasp this at all. I didn't make many friends for myself on Saturday evening on FiveLive by describing the discussion about not doing cuts as "a bit of a bore". But it is, frankly. The debate between cutting and not cutting was over, in practical terms, more than a year ago. There's not the slightest chance of material back-tracking now. Even if Ed Miliband were to be ushered into Downing St tomorrow the new government wouldn't shift the plans by more than three or four billion pounds. Any more than that and see (2) above.
There are two plausible alternatives to what the Government is doing (overall – there are, of course, all sorts of alternatives to the distribution of the cuts announced, such as cutting the NHS and cutting defence less). These are:
- cutting spending more;
- raising tax less in the early years (obviously one could not reverse the tax rises already instituted, but it would be plausible, for example, to accelerate the rise in the income tax threshold taking more people out of tax and reducing the income tax take).
The sooner we get on to debating the genuine alternative to the Government's programme – more spending cuts, less tax rises – and get away from absurd nonsense discussions about "Robin Hood taxes" and "closing the tax gap", the better.