Tuesday 26 October 2010

The Comprehensive Spending Review

An awful lot has been written about the comprehensive spending review, so much so that it’s quite hard to think of anything new to say. However, I did actually listen to George Osborne’s speech and because it was supposedly the start of the roll back of the state it was important enough to be worth a comment.

And I did feel real anger about the review: not at the cuts, but at the reaction from various Labour politicians and commentators complaining about the increase in unemployment that will follow. They are the ones who wrecked the economy, leaving the UK with a massive debt burden. They are the ones who recklessly signed contracts they knew could not be afforded, leaving defence in particular in a mess. They are the ones who have left a blighted underclass without access to education and social skills to let them escape. They are the ones who left more people unemployed than when they came into office – as indeed every Labour Government has. Let’s repeat that: the people criticising the coalition for putting jobs at risk are the people who every single time they come to power make more people unemployed.

The comment I enjoyed most came from Giles Coren in the Times (I can’t link to it because of the Times firewall, presumably designed to devalue the worth of its authors by limiting their exposure). The heading was Let the Posh Boys Sort it Out; in summary it was saying that there is some relief, having watched a supposedly meritocratic group make a complete mess of things, in seeing some people born to rule getting a grip. I’m not sure if he was being ironic or not but he has a point.

One of Alan Johnson’s criticisms of the speech was the reaction of the Tory backbenchers appearing to relish the “cuts”; I’d certainly agree that Osborne was unnecessarily partisan in what should have been a sober assessment of the situation. Some of us do delight in seeing the state become less important, and in the sound of interest groups bleating about the problems that will arise from them having less money to waste. But that is a Tory, a partisan, perspective: there is also a wider national interest at stake which is much more important. I’ve written many times before about the need to get a grip on spending because of the size of the interest burden which flows out of the country and because of the requirement to keep finding other people to fund our borrowings. Proving that we can sort ourselves out is crucial to that and it is why something on the scale of the CSR was essential.

Other brief thoughts:
- There’s a lot to criticise - aircraft carriers with no planes, reducing spending on Scotland by less than the rest of the country – but it is a great achievement to have got agreement within a coalition to do as much as they have;
- The LibDems may be unpopular now, but as the “cuts” start to work they will get some of the credit and will be back as a credible third party by the time of the next election;
- As again many have written, these are not “cuts”, they are reductions in the growth of spending. Cuts would have been desirable had the economy been in a better state. Because confidence is poor the reductions are probably as much as is possible.
- It would have been easy – as Labour did a couple of times – to reduce capital spending keeping running costs unchanged. But the review has kept a number of infrastructure projects in place, as well as investment in longer term intellectual capital. This reinforces the coalition’s desire to support private sector growth.
- The long term success of this Government will be driven by its ability to reform the welfare system by simplifying it and creating an incentive to work. The CSR provided some first steps in this direction – a sign of intent – but much remains to be done.
- There is a debate about whether the "cuts" are fair. “Fair” can mean many things. It’s as Lewis Carroll said. The coalition will hope that most voters share their meaning of the word: early indications are that they do, but it's subject to change. In the end this will depend on the performance of the economy.

Overall a pretty good start.