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Don't believe the right-wing commentators who say this isn't going to hurt

By Tim Montgomerie

John Redwood is at it again in The Times (£) today. Dominic Lawson was doing it in yesterday's Sunday Times (£). Fraser Nelson in the News of the World. On Friday City AM's Allister Heath was having a go. And on these pages George Bridges was encouraging ConservativeHome readers to believe that "the latest CPS analysis suggests spending will only return to 2009 levels".

I understand the arguments and they aren't unimportant. In Wednesday's Comprehensive Spending Review George Osborne will only be reversing a fraction of the spending splurge seen during the Brown/ Blair years. The Coalition is only doing what many private businesses have already had to do in the way of efficiency drives that have succeeded in delivering 'more for less'.

Nonetheless, I still think the argument being made by these centre right commentators is the wrong argument and is in danger of making the Right look out-of-touch with the real world.  The cuts will amount to "just a scratch", was the headline above Lawson's piece (£). The fiscal retrenchment may not be as blood-curdling as some cartoonists portray but it is going to hurt - at least for a few years - and it is going to hurt some people a lot.

Ken Clarke, according to reports, is going to lose a third of his budget for prisons and legal aid. Investment in social housing may be cut by 80%. Child benefit is being restricted. Rail fares may rise by 30% to 40%. We already know that tution fees are on course to more than double. The list will be a lot longer by the end of Wednesday and the measures contained in June's Budget - like the increase in VAT to 20% - haven't even yet hit.

The reasons why it is almost pointless to compare nominal spending totals and conclude that it isn't going to hurt are numerous...

  • Public sector inflation - the rate of inflation in much of the public sector (not least defence) is higher than the average growth in prices.
  • Ringfencing - so many big budgets (NHS, international development, pensions, EU contribution) have been protected (some foolishly) that the cuts in other budgets have to be deeper. Over on ThinkTankCentral Andrew Lilico of Policy Exchange warns of "unpalatable" and "challenging" cuts because of the ringfencing.
  • Interest rate charges - although George Osborne's tough, early action has cut the long-term interest rate on Gordon Brown's borrowings by 1%, the servicing charges are still taking up a bigger share of total UK spending and that's money that can't be spent on police officers or local services.
  • Rising pension entitlements.
  • Infrastructure - Britain's transport and energy infrastructure needs to be renewed after Labour's years of neglect.
  • Cutting waste still hurts - that public servant who wasn't doing an effective job is still about to be fired and that will hurt and cause ripple effects. He or she will also be defended by public sector unions as muscular as the manufacturing and mining unions of the 1970s.
  • And a final reason... Media reporting - The BBC and Channel 4 (here and here) are discovering a vigour for defending public spending that they never displayed when it came to defending the taxpayer when tax after tax was levied over the last thirteen years. They are - by intellectual laziness rather than political malice - going to present the cuts as awful without presenting much upside.

That should be the primary task of centre right commentators - presenting the upside. Rather than trying to suggest that the cuts won't be very painful we should be making the case that the cuts are necessary if Britain is to avoid an explosion in interest payments. Necessary for Britain to avoid dramatic tax rises that will hurt families and make it impossible for our exporters to compete in the world. That the cuts are necessary to eliminate waste. Necessary to ensure a fair pay deal between the public and private sectors.

We are at the beginning of the most important week of this government. We should be fixed on the prize of building a reformed, smaller state. Britain will be better able to flourish economically and better able to afford world class public services if George Osborne succeeds in reform as well as eradicating the deficit. That prize should sustain us through the valley of cuts. The denial about the pain to come must stop.

6pm: Matthew d'Ancona agrees that John Redwood is understating the pain.


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