The three main political parties claim to be ‘progressive’ but disagree on how, when and where to make cutbacks
At last the political parties are having the right argument: how, when and where to cut public spending to get Britain out of the red.
The Conservatives have abandoned their previous commitments to match Labour’s spending plans for the first two years of the next parliamentary term. Labour politicians are finally using the C-word – ‘cuts’ – and Liberal Democrat leader Nick Clegg has called for an era of ‘progressive austerity’, admitting the need for potentially ‘savage cuts’.
But the parties disagree on the how, when and where. In terms of ‘how’, the Conservatives plan to hold Cabinet-level discussions immediately after taking office. They are considering spending a whole weekend on the public finances, and getting agreement on departmental spending cuts before making the Cabinet appointments. The idea is to take some of the departmental jostling out of the equation. And a very good idea it is too.
The LibDems will make some big specific cuts – to identity cards, the Trident nuclear weapons system and defence spending – and then hope that more local accountability will bring down spending.
Labour is harder to read, not least because its political strategy (if that is not too kind a word) is unclear. The truth is that few ministers expect to have to enact any big cuts before the election: better to let the Tories do it.
There are differences on ‘when’, too. Labour and the Liberal Democrats want to keep fiscal policy fairly loose through 2010. They rightly fear that turning the screw on spending or pushing up tax too soon will slow down the recovery and perversely make it a longer haul out of the red because of the negative impact on tax revenues.
The Conservatives want to start digging earlier. They are worried that unless the bond markets are quickly convinced that the UK is taking the tough steps necessary to get the debt down, they will start to demand higher interest rates or even turn away altogether.
Some of this is political rhetoric intended to highlight the size of the deficit, and it has been effective. Even taxi drivers now parrot the anti-Labour line: ‘They didn’t fix the roof when the sun was shining.’ But there are also genuine differences in the macroeconomic mind sets of the main parties.
Perhaps the biggest differences, however, are on the ‘where’ question. Now all the parties agree that spending needs to be cut – and, though they whisper this one, taxes will need to go up. The question is where the axe will fall.
The Conservatives have said they will look hard at ‘middle-class welfare’, benefits that go to all regardless of income. On the table will be child benefit, the £400 annual winter fuel allowance for pensioners, childcare tax credits and higher education.
The LibDems are thinking along similar lines: this is what Clegg meant by ‘progressive austerity’.
Labour remains strongly committed to ‘universality’, fearing that if the middle classes don’t get much out of the welfare system, they will become even less willing to pay for it.
I think this is mistaken. People don’t want to pay more tax than necessary, especially now. Persuading people that the money is being used to meet real need is a better strategy – and funding the bourgeoisie is not the way to do that.
But the same arguments should apply to taxes too: if taxes have to rise, the better-off should shoulder much of the burden. LibDem Treasury spokesman Vince Cable’s ‘mansion tax’, though clumsily presented, is along the right lines.
Meanwhile, Labour has raised the inheritance tax threshold and the Conservatives are still formally committed to raising it further.
On both tax and spending, there remain huge uncertainties in the main parties’ plans. Between now and the election, more clarity will be needed. All three parties now claim the ‘progressive’ mantle and recognise the need for austerity. Who then has the best plan for progressive austerity?
Richard Reeves is the director of Demos
www.demos.co.uk
If the readers here haven’t already realised, so-called ‘progressive conservatism’ is a re-labeling of the political credo of neo-conservatism, as abbreviated to ‘neo-con’. Its completely discredited in the US, as proven by the election of President Obama, and its now crawled its way over here.
They’re trying very hard to disguise it, but at its heart is just the “We’ll say anything” desire for power.
For me, the primary difference in the parties that overides all this ‘progressive conservatism’ and ‘progressive austerity’ garbage is that …
1 Labour reduces spending due to changed circumstances, and financial necessity.
2. Liberals…, I don’t really know much about them , except what their economics person has said…., and that long before it became politically expedient for all those creepng and crawling around the Conservatives, the Liberals were talking about reforms, sustainabiliity..
3. If you prod a Conservative with a barge-pole, out will pop…. “Cut public expenditure.” Brain not required. Macro-economic incompetents, and the primary architects of what eventually has come home to roost as the current mess. I understand that their proposals, on regulation, to ‘hand it all over to the Bank of Enlgand’ have drawn groans of “Oh , Jesus” from those competent in the subject.
Got to say, I’ve never heard a taxi-driver speak quite in the way that Reeves describes.
Demos ? Wasters. If you’re interested, check out the blog on their site http://www.demos.co.uk . I’m a bit all over them at the moment. I really do feel that, in the guise of a standard 4 yearly election, what I’m looking at is a very unhealthy grab for power by those who have least earned it.
And no, I believe that the Conservatives have not remotely won an election yet, I believe, as a citizen, that I deserve better than that bunch. A PR man, for crying out loud. A long, long, way from Barack Obama isn’t it ?
rgds
Andrew