Peter’s Riddell’s excellent columns are always worth a read. In today’s Times Peter reflected on the debate about George Osborne’s spending plans. Our response to parts of his article are in italics below…
"The Tory blogosphere and the party Right have become excited by reports that David Cameron is about to drop his pledge to match Labour’s public spending plans. This is wrong: no such shift will occur but that does not mean that the Conservative leadership is committed to following Labour’s commitments for ever. It is all a question of timing, a crucial nuance that has become lost in the sound and fury."
We’ve never campaigned for the pledge to be dropped – only for it not to be renewed beyond 2010/11 – certainly not renewed for another three years. It would be too politically awkward to drop. We understand that.
"Spending plans, and hence the scope for tax cuts, have become the main point of contention between the leadership, and Tory activists and widely followed sites such as conservativehome."
Largely true although we are also interested in reducing the level of borrowing – for all the reasons set out by Michael Fallon.
"The official policy is that the proceeds of economic growth should be shared between increasing spending on public services and lower taxes. This means that public spending will fall as a share of national income after the recent sharp rises. This is the approach that the Government is now planning to follow, with spending due to increase annually by 2 per cent in real terms over the three years from this April. This is less than half the rate of growth so far this decade."
But what if growth doesn’t equal 2%? Will we support higher taxes or even higher borrowing to maintain 2% growth in public spending? Shackling ourselves to 2% annual growth in public spending may not be consistent with ‘sharing the proceeds of growth’.
"George Osborne argues that, since Labour has accepted the Tory
analysis, Labour will follow the Government’s new plans for the next
three years. This is not nearly enough for the Tory Right, according
to a conservativehome survey suggesting that about two thirds of
activists want an even slower growth of spending. Mr Osborne regards
this as unrealistic in the short term, especially at a time of great
uncertainty about the economy. Any downturn and rise in unemployment
will anyway boost expenditure."
It’s actually more than two-thirds, Peter. 77%
want slower growth in public spending. The way to deal with
"uncertainty about the economy" shouldn’t be a fatalistic surrendering to the
gloom. The contrast between inaction on this side of the pond and the hyperactivity on the other side of the Atlantic does Britain no credit. We should be finding ways of relieving the burden on the
economy’s productive sectors. Slower growth in spending would, for
example, allow us to cut corporation tax, scrap Labour’s CGT raid and
avoid the need for taxing non-doms.
"In political terms, the Tories want to neutralise the Labour
arguments about cutting and slashing spending that Gordon Brown and his
allies would undoubtedly deploy. Moreover, most criticisms by Tory
spokesmen about the Government’s record on defence and law and order
carry the implicit message that higher spending is required on the
armed services, the police and prisons: commitments that Mr Osborne has
so far resisted. It would be impossible to accommodate much extra on
these items if overall spending growth were cut to, say, 1.5 per cent a
It’s a fair point about possible Tory
spending commitments but we could propose that we’ll cut the overall
growth in spending to fund economy-boosting tax relief and introduce
other measures – like a freeze on civil service recruitment – to pay
for better-equipped soldiers and more police officers.
"This is where timing matters. The Tory pledge was devised last year
when a general election was in prospect this spring but since a contest
is now unlikely until May or June next year at the earliest, a
Conservative government would not come to office until the second of
the three years in question was already under way, and it could be much
later. Moreover, the Tories have said that, like Labour, they will
reexamine the final, 2010-11 year, in a review in 2009."
All true, Peter, but the Tories shouldn’t be following
three-year plans or five-year plans. Our objection to the pledge
wasn’t just the inappropriate me-tooism but the length of the pledge.
We need to start sharing the proceeds of growth at the start of the
next parliament – not three years in.
"So the real argument is about the stance the party will take next
year or later for the period after 2010. Labour will be keen to play
the “cuts” card against the Conservatives. Mr Cameron, sensibly,
remains cautious, not least because of doubts about the economy over
the medium term. So he has not ruled out sticking to Labour plans
beyond 2011. Critics on the Right underestimate the extent of the
slowdown in spending growth now under way and the difficulty of
squeezing more in the short term."
The "difficulty of squeezing" the state… that is what really annoyed us Peter!
What about the ordinary Britons out there whose disposable income is
flat or falling? See here. They’d love 2% of growth.
"But they are correct that the party needs to develop a more
coherent strategy on the size as well as the structure of government.
The Tory pledge on spending for the next two years is a holding
Fair enough and we are using these two years to make the case
for a more fundamental reappraisal of tax’n’spend priorities. Every
year, as we slow the growth in the size of the state, Conservatives
should be offering bankable commitments to reduce council tax and other
"This debate is far from over."
100% agreed on that!