We don't want "massive spending cuts", Mr Osborne, just a little moderation

George Osborne was on Andrew Marr's programme earlier and quite rightly noted that Britain is one of the least-well prepared nations for the looming worldwide slowdown.  "Other Finance Ministers", to quote Mr Osborne, were discussing how to use their surpluses to help their economies negotiate the forthcoming turbulence.  That wasn't an option for Britain that ends its 'years of plenty' with horrendous levels of public and private debt.

Mr Osborne went on to defend the fact that the Tories are matching Labour on spending - at least until 2010/11:

"The options for dealing with the budget deficit in the short-term would either be massive public spending cuts or big tax increases and I don't think either of those are sensible given the economic downturn that the world is facing."

That's not a fair characterisation of the options.  Those of us wanting the Tories to constrain spending - like ConservativeHome, the IoD, the TaxPayers' Alliance and The Telegraph - don't seek "massive public spending cuts".  We do, however, believe that spending growth should be more modest.  Labour is planning 2% growth.  A 1.5% growth rate would at least create some possibilities for reducing borrowing and for economy-stimulating tax relief.

The growth of the state under Brown really has been "massive".  A table reproduced by Fraser Nelson over at Coffee House outlines its scale.  Britain's state has grown faster than every other OECD nation from 2000 until 2008, with the solitary exception of Korea.  Government spending as a percentage of GDP equalled 37.1% in 2000 and will be an eye-watering 44.8% this year.  If this spending had been used to lubricate necessary reforms to welfare or to our public services it would be half-acceptable but it hasn't.  We don't want "massive cuts", George - just a return to some moderation.  Is that so much to ask? 

Comments

[Umbrella man]

ConHome: "We don't want "massive cuts", George - just a return to some moderation. Is that so much to ask?"

Yes it is!, so long as the Tory high command remains awestruck by New Labour.... remains mindstuck in the mid 1990s.... still reading Gould's Unfinished Revolution.... still unaware that the public mood has changed on tax'n'spend.... is not aware how seriousl;y uncompetitive Britain has become.

[Tony Makara]

So many government programmes could be closed down such as the failed New Deal and Surestart's communist-style communal babysitting centres. When Ronald Reagan was confronted with many expensive showpiece government programmes left by the Carter administration he was ruthless in cutting back on the unnecessary programmes while at the same time maintaining essential government services. If government programmes are not cut back money can never be freed up for essentials like supporting the supply-side during economic downturn. Now the economy is contracting Mr Osborne should study the Reagan approach and show the true meaning of prudence and good public finances.

[David]

"Those of us wanting the Tories to constrain spending - like ConservativeHome, the IoD, the TaxPayers' Alliance and The Telegraph - don't seek "massive public spending cuts"."

Has Osbourne said that? Not from your quote.

"We don't want "massive cuts", George - just a return to some moderation. Is that so much to ask?"

Since what Osbourne has said is that he neither wants massive spending cuts, nor massive tax rises, he ssems to be calling for just that moderation?

What exactly is your point? Why are you picking fights that clearly aren't there?

[David]

"still unaware that the public mood has changed on tax'n'spend"

Has it? As far as I can see, while people are no longer prepared to stump up for greater levels of taxation, they still respond negatively to claims that the Tories will slash spending.

[Editor]

Osborne is matching Labour on spending David.

I'm saying we should have slower growth.

That's my point (and the point of the IoD, TPA and Telegraph).

[Editor]

Who is proposing that we "slash spending" David?

See this TPA polling for evidence of the public's mood changes on tax.

[Moral minority]

Osborne's office has repeatedly briefed against The Taxpayers' Alliance as being right-wing extremists. Osborne has no experience of working in a private company. He is out of touch and out of his depth. Business organisations have no confidence in Boy George. Cameron must move him and give his job to David Davis who has real business experience.

[Editor]

That's unfair MM; this ComRes polling shows growing business confidence in Osborne-Cameron.

[David Sergeant]

"What exactly is your point? Why are you picking fights that clearly aren't there?"

Posted by: David | January 27, 2008 at 17:41

Yes editor, this seems a good question. I really can't get how some rightwing people seem to look for reasons to attack the party leadership. (A recent one being hysteria over Cameron on his bike at red lights.) Since about 1990 we've made Labour's job so easy.

[David]

"Osborne is matching Labour on spending David."

Until 2010/11, according to that. So that will be one year of a potential 5 year parliament, if we have an election in 2010, the last available slot.

And only massive spending cuts have been set aside, which means your idea of /slower growth' is still in the mix. As I said, your seem to be fighting where there is no fight.
I just wonder why.

"Who is proposing that we "slash spending" David?"

Labour, the usual suspects. And that still causes problems. You can't ignore that when trying to run a successful electoral campaign.

[Tony Makara]

The public sector has to be trimmed right back and all pseudo-government bodies abolished. Any reductions in taxation should go first and foremost into supporting business to help our economy. Instead of wasting money on gimmicky government departments the emphasis must be put on supporting the supply-side. De-clutter government, de-regulate business, destroy the culture of wasteful government spending.

[David]

"See this TPA polling for evidence of the public's mood changes on tax"

TPA comes up with low tax poll find shock. Next you'll be telling me the TUC has got a poll suggesting support for 'investment' in public services.

And I note that even the TPA poll's figure comes with the caveat of "if Britain reformed public services and cut waste". One has to convince the electorate you will do that first, not put the cart before the horse.

[Editor]

David Sergeant: I think the attack on Cameron about red lights and bikes is ridiculous. I'm with Sam Coates on that one.

David: "Until 2010/11, according to that. So that will be one year of a potential 5 year parliament, if we have an election in 2010, the last available slot."

And that's my point. I don't expect GO/DC to abandon the commitment to 2010/11 - only not to renew it. I was very clear.

Of course Labour are going to accuse of slashing spending but my point is that the public mood is changing. They see huge waste and may be very amenable to a political party that tells them that it will bring some discipline to a government budget that has mushroomed.

[Tony Makara]

"the public mood is changing"

Editor, dead right. Its a case of 'that was then and this is now' Labour's spending plans simply cannot be afforded during an economic downturn.

[Alex Swanson]

I really can't get how some rightwing people seem to look for reasons to attack the party leadership. ... Since about 1990 we've made Labour's job so easy.

No, it's the leadership that's made it easy through incompetence, cowardice, lack of principle and lack of effort. The fault of the Right has not been in attacking them - on the contrary, it's been in showing too much loyalty to people who neither deserve nor appreciate it.

[David]

"I was very clear."

Sorry, but the preamble just talks about 'unfair characterisations' (the irony...) and demanding 'moderation', which by implication suggests it is not on offer. It's simply confrontational, despite the fact that moderation is clearly on the agenda. There is no fight here, yet you seem to be trying to pick one.

"the public mood is changing. They see huge waste and may be very amenable to a political party that tells them that it will bring some discipline to a government budget that has mushroomed."

No, they will be amenable to a party that they believe will do that responsibly, not just one that tells them it will. Remember, Labour had it's own review into government waste, and did bugger all. It's a pox on both houses at the moment, which can only be solved by being sensible and sensitive to public concerns.

[Editor]

Tories are promising to match Labour on spending until 2010/11.

I think that matching shouldn't be renewed beyond then because I think we need to at least start reducing the size of the state.

You call that "confrontation". You are entitled to your view.

[Old Hack]

Perhaps we might do better suggesting to GO that we set some sort of link to GDP? In other words

a) We will not let public spending rise faster than growth in the economy.

b) We aim to cap spending at no more than XX% of GDP?

We may not need to u-turn, but we could qualify and remain both responsible and committed to good public services.

Frankly its time for an economic policy that both blunts Labour's attacks AND has some cojones.

[David Belchamber]

One problem about making prounouncements about tax and spending at this stage is that the tories really have no clear idea of the state of the nation's books, particularly with all Brown's off-balance sheet initiatives.

For this reason and also to prevent the usual hysterical yapping from the likes of Ed Balls about "the tories cutting tax and slashing essential services", it is probably prudent to commit to this government's funding in the short-term - but only for crucial areas such as the NHS and education.

In a way there is an argument for copying two points about USA elections (i) they are fixed term and (ii) because the incoming president does not take up office immediately, s/he is given some breathing space to recover from an arduous election, to form an administration and to find out the true state of the books.

[Jake]

The British government leaks money in every direction . When it is not leaking it , it
sprays it .

On this particular plicy area though it is language that counts .

Don't use theirs , use your own .

ie harp on about "sensible housekeeping"

and similar words

which encompass a possible huge change in direction of policy !

[Editor]

David Belchamber makes a really good point.

Osborne isn't just in error for matching Labour on spending but for handcuffing a Tory government for a long period.

When he comes to renew the policy - if he does so - he should certainly not do so for more than a year.

[Yet Another Anon]

The options for dealing with the budget deficit in the short-term would either be massive public spending cuts or big tax increases and I don't think either of those are sensible given the economic downturn that the world is facing.
There are arguments for having a freeze of the Control Total and using any extra money in revenue for cutting the deficit and funding tax cuts.

This would merely mean shifting priorities to increase spending on some areas such as Defence, National Security, Policing, Transport, R&D, International Development while cutting the rest overall (although within that naturally still allowing for some increases in particular programmes funded by more radical cuts in others).

There is a tendency for government to start off trying to reduce PSBR and over time gradually watering the commitment down - the Conservatives had some success in the 1980s in doing it, initially after 1997 Labour had some success, it's a bad start to be looking at entering office and merely maintaining a deficit, it was also one of the major reasons the Conservatives lost in 1997 which was that having managed restraint in the 1980s to a great extent, under new leader John Major the National Debt was rapidly doubled in size, to cut the National Debt in the long term requires a certain amount of ruthlessness, but whatever level of spending a government commits to the country benefits ultimately from lower interest repayments through a National Debt, otherwise a bigger debt means higher interest repayments meaning that more money is simply going on servicing debt.

Cutting public spending also would set a good example to private sector organisations and individual people encouraging them to live within their means.

[Tony Makara]

David Belchamber, I agree. George Osborne should promise to maintain essential spending but explain that a full audit needs to be undertaken on the assumption of power. Who can predict with any certainty the state of the economy by the time of the next election.

[Yet Another Anon]

George Osborne should promise to maintain essential spending but explain that a full audit needs to be undertaken on the assumption of power.
Essential spending is only a part of desirable spending, essential spending amounts to what is neccessary to defend the UK's borders and maintain internal security and policing, beyond that everything else is not essential for the continuance of the UK as a state, but may be considered to have social or economic benefits, or be favoured out of political expediency.

It is essential though that public spending is cut as a proportion of GDP in order that taxation can be cut and the public finances improved generating economic growth.

[oxymoron]

When government departments are told to cut spending they will cut services rather than curbing overemployment to increase productivity. This is done partly deliberately of course to make the Conservatives look bad and get socialists back into power as soon as possible.

Plus when spending is cut the employees' response will automatically always be to go on strike.

I am quite convinced that local government workers do less work for their pay and have greater job security than I do for doing similar work in the private sector but I am still expected to be endlessly sympathetic to their demands.

[Matt Wright]

Getting the balance right is the key and we know that Labour will try to portray us as cutting key services. Other than that there is a growing feeling amongst the public about taxes. It is hitting strivers very hard and the enterprising culture that our party encouraged when in power has been choked back badly.

[Alan S]

That we are even arguing about this is depressing. Labour increases the size of the state from 37% to 45% of GDP and the Tories say "more! more!". Is there any IMPORTANT difference between Labour and the Conservatives anymore?

[Malcolm Dunn]

Even with the massive tax revenues Brown has received this year his government will still borrow more than 40,000,000,000,000 pounds this fiscal. If we have a recession the situation will only get worse.Surely the first priority should be try to balance the budget?
We also need to say where there will be cuts. Vacuous claims of 'oh of course we will just cut waste' will not be enough. Also there are seveal depts that will need significant increases in spending such as prisons, defence and border security surely no Conservative would object to that?

[Moral minority]

Edotor, that Com Res poll is several weeks old. That poll says that less than half of business leaders have confidence in Osborne. That's hardly a ringing an endorsement when confidence in the Government is plummeting. Osborne remains an electoral liability despite the fawning of the Cameroon crony comentators.

If William Hague was Leader, we would be 15 to 20% ahead in the polls. We have a paid a high price for Ffion's unrealistic and premature ambitions in 1998.

[graeme archer]

one area I would like to hear the party talk more about is the unfairness of public sector pensions. Eg I am very supportive of the police officers in their current row with the govt. But one forms the impression, from media interviews with officers, and from talking to friends in the force, that public sector workers have no idea how lucky they are wrt their pension arrangements, what it would cost those of us in the private sector to pay to a private scheme to match them, or just what one would pay to avoid the decades of retirement insecurity: am I paying the right amounts into the right schemes etc etc. I noticed it with the way the BBC cover the recent stock market falls; as though it's just fictional money that affects only city rich boys or the government in some I'll-defined embarrassment, when, of course, it's deadly serious to those of us on middle incomes who've been watching the painful progress of their pension pots this last decade. The media say constantly that buy-to-let is driven by city bonuses. I don't think so. I think it was driven by middle England terrifed it would never have enough to retire on.

[Moral minority]

I would be be grateful if Graeme Archer could write grammatically and spell properly.

[David Belchamber]

Alan S at 19.26, I think that your comment is an exaggeration:

"Labour increases the size of the state from 37% to 45% of GDP and the Tories say "more! more!".

I believe we are pretty united in wanting a (much) smaller state and I have not really noticed anyone asking for even more spending.

We have to cut back on the squandering of taxpayers' money which is the hallmark of Labour governments, not just Nulab. Brown became (after a couple of years of sticking to tory spending plans) a typical tax and spend socialist chancellor.

[christina speight]

Where on earth does the blog think a "2% growth" is coming from? Or any growth at all for that matter.

For heaven 's sake wake up. We're on the edge of a precipice right NOW. Tax cuts are impossible across the board but massive reallocation is the name of the game - just to keep afloat. It's Brown's fault not Osborne's

[Yet Another Anon]

Even with the massive tax revenues Brown has received this year his government will still borrow more than 40,000,000,000,000 pounds this fiscal.
£40,000,000,000; £40,000,000,000,000 is actually £40 Trillion and even the US Federal Government doesn't borrow that much.

[Chris Paul]

GOO will not have to worry about this thankfully. DC will never be PM. And BJ will not be Mayor. Buffers for the bullers.

GOO regularly fibs and distorts as second nature. But unlike his fawning fans he knows when he's fibbing and distorting and as a result he will not promise much.

[Moral minority]

Osborne has no core Conservative beliefs. I remember him, when he advised Hague, arguing for renationalisation of the railways as it would be electorally popular. And we trust him to reduce taxes?

[Matt Wright]

Graeme is right, a big upward push on house prices and borrowing was the Brown pension crisis which meant people desperately invested in property.

[Alex Swanson]

I believe we are pretty united in wanting a (much) smaller state

The leadership doesn't appear to be.

[James Maskell]

Osborne plays the typical Cameroon trick of misrepresenting those who have an alternate view to him. After so very long time in his position, hes still too inexperienced for Government. I wouldnt feel safe with him as Chancellor.

[Iain]

" We're on the edge of a precipice right NOW. Tax cuts are impossible "

But spending is possible, like the £825 million being given to India in Aid, the increase in our Aid budget to £10 billion, Parliament has just vote another billion or mre to the EU.

[passing leftie]

While the Tories have this policy, they are in no position to criticise Brown.

"We think his public spending is reckless, and his taxes too high. We will continue to follow these policies while in office."

Incidentally, I thought the Labour promise to follow Tory plans was damaging and unnecessary, too.

[Malcolm Dunn]

They are in every position to criticise Brown Passing Leftie. Osborne has the flexibility to cut wasteful and unecessary spending programmes and divert funds to those areas which need it.
The Labour promise in 1997 was helped them win the election hopefully this will do the same.
'Osborne has no Conservative beliefs'. Have you anything useful to say at all Moral Minority?

[passing leftie]

They are in every position to criticise Brown Passing Leftie. Osborne has the flexibility to cut wasteful and unecessary spending programmes and divert funds to those areas which need it.
The Labour promise in 1997 was helped them win the election hopefully this will do the same.

Labour would have won anyway by a landslide - the Tory era was finished. It was not necessary to promise this.

So Osborne can shift state money around anywhere - but not into tax cuts, where - let's face it - you'd really like to see the money go.

Incidentally, Moral minority, as well as your typo, you are using the subjunctive past tense incorrectly in your statement. "Would have" and "could have" should be used only in the clause that states the consequences.

"I would be be grateful if Graeme Archer could write grammatically and spell properly."

I suspect the irony is lost on you.

[Malcolm Dunn]

I apologise for my typically hopeless English in my last post Passing Leftie. Being male and therefore completely unable to multitask I shouldn't talk to clients on the phone and try to write anything coherent at the same time!

[Passing Leftie]

I apologise for my typically hopeless English in my last post Passing Leftie. Being male and therefore completely unable to multitask I shouldn't talk to clients on the phone and try to write anything coherent at the same time!

Putting aside your crude sociobiological determinism, I wasn't faulting your grammar. I don't have a leg to stand on when it comes to grammar and spelling myself.

It was Moral minority's snide remark about Mr Archer which I objected to. If you throw stones...

[Adam in London]

It seems that nearly everyone on this thread believes that government's only spending commitments occur in the actual financial year it happens to be in. That's completely wrong. Government moved over to the 3 year spending rounds years ago (that's why Brown wants to move public sector pay deals over to a 3 year cycle). Osborne recognises this, and is simply saying he won't bugger the whole thing up by ripping up the 3-year agreements mid-way through the cycle. Secondly, and perhaps more importantly there are PFI, PPP and Defence contracts which we are committed to. You can't just stop paying a PFI contract - you have to buy yourself out of it. Our liabilities may force increases in spending in some areas, where the first payments won't have begun, because they were agreed on the understanding that the funds would be forthcoming from the Treasury.

Finally, Christina Speight is quite correct to raise an eyebrow or two at the assumption that growth next year will be 2% - we are heading for a global slowdown where there is precious little left in the UK toolbox meaning we could face a full blown recession. Thank goodness the Editor isn't running Tory economic and fiscal policy.

[Yet Another Anon]

Government moved over to the 3 year spending rounds years ago (that's why Brown wants to move public sector pay deals over to a 3 year cycle).
There are decisions being taken all the time that affect spending, some spending may have to be accepted as it is, but other spending could be changed - changing how or whether new staff are hired, scaling back spending programmes or even cancelling them - this may well leave costs, but it can still produce savings. Spending commitments occur over various lengths of time and not just 2or 3 year spending plans, there are 10 year commitments that have been made and 15 year commitments, PFI projects and franchises - but all these things can be reviewed, some may involve contracts and therefore renegociation to make any changes, some agreements not legally binding, by past ministers will be need to be torn up.