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The Government needs David Laws back round the Cabinet table

By Paul Goodman
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Easy relations between the Coalition partners began to break down in earnest after the AV referendum.  But the man who made them look almost natural had left the Government well before it took place.  And he is back today in the Sunday Telegraph, making a case that David Cameron wouldn't dare to put, presuming that he accepts it in the first place.

David Laws says that the share of the economy accounted for by the public sector should be cut to 35%. As the paper points out, this now stands at almost 50%, and in recent history has been about 40%.  In other words, this Liberal Democrat MP wants this proportion to come in lower than Mrs Thatcher managed.  Even a 40% figure, he says -

“...would have shocked not only Adam Smith, William Gladstone, and John Stuart Mill, but also John Maynard Keynes and David Lloyd George. The implication of the state spending 40 per cent of national income is that there is likely to be too much resource misallocation and too much waste and inefficiency.”

Mr Laws thus calls for tax cuts funded by a bigger public spending scaleback - the same mix that Tim Montgomerie and I have been advocating on this site.  He wants “lower marginal rates of tax at all income levels”, a simplification of the tax system and a “substantial” rise in the personal income tax threshold.

Philip Booth set out the lurching idiocies of our marginal tax rates recently on this site.  Simplification would begin to deal with the tax complexities exploited by the Jimmy Carrs of this world and that consume so much of each year's Finance Bill.  My only doubt about Mr Laws's prospectus is the stress he places on taking people out of tax rather than lowering rates.

ConservativeHome has its fun with the Liberal Democrats - the Curse of Clegg, the "yellow b******s" riff (though this was not originally our phrase, but that of a Tory MP).  It goes almost without saying that this site wants a Conservative Government, not a Coalition one - and that the party should prepare for this end.

Nonetheless, we are unlikely to become the sole party of government after the next election if we haven't made a success of being the main party of government in this one.  And that means striving to make it more than a series of compromises over a long list of disagreements - NHS reform, Beecroft, the ECHR, GCSEs (the Sunday Times (£) reports a deal over the latter today).

To their credit, the Liberal Democrats have played their part in helping to scale back spending on public services.  The return of Mr Laws would help to shift the Government from being one of Austerity Alone to one of Austerity-And-Growth, Eurozone crisis permitting.  It would become more likely that cutting the size of the state would become agreed Coalition work.

The Mail on Sunday reports that the Prime Minister will tomorrow urge further welfare savings.  In doing so, he will not only make a case that is right in itself, but carry out a little "reverse differentiation" - since the measures and tone of the speech will suggest that Tories are tougher on wasteful, damaging and poverty-perpetuating welfare spending than Liberal Democrats. Good.

But as well as raising the possibility of a blue government after 2015 this returns us to the troubled here-and-now of the Coalition.  Those welfare savings are needed now.  That means voices other than Tory ones arguing for lower spending as well as lower taxes.  It means a Commission on Better Spending.  It means David Laws back round the Cabinet table.


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