Fisking Peter Riddell

Peter's Riddell's excellent columns are always worth a read.  In today's Times Peter reflected on the debate about George Osborne's spending plans.  Our response to parts of his article are in italics below...

"The Tory blogosphere and the party Right have become excited by reports that David Cameron is about to drop his pledge to match Labour’s public spending plans.  This is wrong: no such shift will occur but that does not mean that the Conservative leadership is committed to following Labour's commitments for ever. It is all a question of timing, a crucial nuance that has become lost in the sound and fury."

We've never campaigned for the pledge to be dropped - only for it not to be renewed beyond 2010/11 - certainly not renewed for another three years.  It would be too politically awkward to drop.  We understand that.

"Spending plans, and hence the scope for tax cuts, have become the main point of contention between the leadership, and Tory activists and widely followed sites such as conservativehome."

Largely true although we are also interested in reducing the level of borrowing - for all the reasons set out by Michael Fallon.

"The official policy is that the proceeds of economic growth should be shared between increasing spending on public services and lower taxes. This means that public spending will fall as a share of national income after the recent sharp rises.  This is the approach that the Government is now planning to follow, with spending due to increase annually by 2 per cent in real terms over the three years from this April. This is less than half the rate of growth so far this decade."

But what if growth doesn't equal 2%?  Will we support higher taxes or even higher borrowing to maintain 2% growth in public spending?  Shackling ourselves to 2% annual growth in public spending may not be consistent with 'sharing the proceeds of growth'.

"George Osborne argues that, since Labour has accepted the Tory analysis, Labour will follow the Government’s new plans for the next three years.  This is not nearly enough for the Tory Right, according to a conservativehome survey suggesting that about two thirds of activists want an even slower growth of spending. Mr Osborne regards this as unrealistic in the short term, especially at a time of great uncertainty about the economy. Any downturn and rise in unemployment will anyway boost expenditure."

It's actually more than two-thirds, Peter.  77% want slower growth in public spending.  The way to deal with "uncertainty about the economy" shouldn't be a fatalistic surrendering to the gloom.  The contrast between inaction on this side of the pond and the hyperactivity on the other side of the Atlantic does Britain no credit.  We should be finding ways of relieving the burden on the economy's productive sectors.  Slower growth in spending would, for example, allow us to cut corporation tax, scrap Labour's CGT raid and avoid the need for taxing non-doms.

"In political terms, the Tories want to neutralise the Labour arguments about cutting and slashing spending that Gordon Brown and his allies would undoubtedly deploy.  Moreover, most criticisms by Tory spokesmen about the Government’s record on defence and law and order carry the implicit message that higher spending is required on the armed services, the police and prisons: commitments that Mr Osborne has so far resisted. It would be impossible to accommodate much extra on these items if overall spending growth were cut to, say, 1.5 per cent a year."

It's a fair point about possible Tory spending commitments but we could propose that we'll cut the overall growth in spending to fund economy-boosting tax relief and introduce other measures - like a freeze on civil service recruitment - to pay for better-equipped soldiers and more police officers.

"This is where timing matters. The Tory pledge was devised last year when a general election was in prospect this spring but since a contest is now unlikely until May or June next year at the earliest, a Conservative government would not come to office until the second of the three years in question was already under way, and it could be much later.  Moreover, the Tories have said that, like Labour, they will reexamine the final, 2010-11 year, in a review in 2009."

All true, Peter, but the Tories shouldn't be following three-year plans or five-year plans.  Our objection to the pledge wasn't just the inappropriate me-tooism but the length of the pledge. We need to start sharing the proceeds of growth at the start of the next parliament - not three years in.

"So the real argument is about the stance the party will take next year or later for the period after 2010. Labour will be keen to play the “cuts” card against the Conservatives.  Mr Cameron, sensibly, remains cautious, not least because of doubts about the economy over the medium term. So he has not ruled out sticking to Labour plans beyond 2011.  Critics on the Right underestimate the extent of the slowdown in spending growth now under way and the difficulty of squeezing more in the short term."

The "difficulty of squeezing" the state... that is what really annoyed us Peter! What about the ordinary Britons out there whose disposable income is flat or falling?  See here.  They'd love 2% of growth.

"But they are correct that the party needs to develop a more coherent strategy on the size as well as the structure of government. The Tory pledge on spending for the next two years is a holding exercise."

Fair enough and we are using these two years to make the case for a more fundamental reappraisal of tax'n'spend priorities.  Every year, as we slow the growth in the size of the state, Conservatives should be offering bankable commitments to reduce council tax and other hated taxes.

"This debate is far from over."

100% agreed on that!

Comments

[john]

Riddell is, as usual, bang on - I'm afraid this is possibly one of the least successful fiskings I've ever seen.

[Tony Makara]

"cut the overall growth in spending to fund economy-boosting tax relief"

This is so important. Look to Reagan in 1980. Carter left some dreadfully wasteful public programmes, I won't call them public services because they didn't provide a service for anyone. The same applies today with so many of the government-by-gimmick programmes. Lets support the people who can make a difference, the people who create jobs, the people who really run our economy, British business, deregulation and considerable tax relief, must be the priority. Don't let Labour set the Conservative agenda.

[David]

"Riddell is, as usual, bang on - I'm afraid this is possibly one of the least successful fiskings I've ever seen."

Indeed, particularly as this

"Shackling ourselves to 2% annual growth in public spending may not be consistent with 'sharing the proceeds of growth'."

works both ways, i.e. we shouldn't shackle ourselves lower increases or decreases in spending either.

[christina speight]

I should not get too excited about Riddell. There is a team of thoroughly Blairite-New Labour writers on the Times and Riddell is the least obvious but most insidious of all. His game is to frighten the party into not proposing a winning gambit.

Your rebuttal of him is like the curate's egg - good in parts but not robust enough.

It is high time that the party grasped the fact that the economy has been wrecked by Brown and any pledges to match the extravagance of the wrecker are totally out-of-order now. We are in a new situation which needs a new response.

[Peter Riddell]

Tim,
This is an important debate which you are rightly stimulating. Just a few comments on your response to my piece in The Times.
First, the debate so far has underestimated the extent to which the growth of public spending is already due to slow down, from over 4 per cent annually in real terms to 2 per cent from this April, on the Brown Government's own plans. To reduce this slowing growth rate even further in the short-term will be very hard to achieve. Just look at the protests already being heard about public sector pay. I realise that conservativehome has focussed on not renewing the spending pledge beyond 2010-11, but some have argued for a change in the existing pledge.
Second, there is a need for clarity about new spending commitments on defence, law and order etc, and the scale of possible savings. There are a limited number of times you can use the savings from scrapping ID cards and RDAs.
Third, it is sensible to plan public spending on a two or three year basis, as the Conservative leaders of local authorities will fully testify.
Overall, my doubts are entirely about the timing of a change in public spending plans, and the need to think out a coherent stragegy for slowing the growth of spending, deciding what the state should or should not do, and how it should be financed. In the short-term, some proposals, such as extending choice in schools, may cost more before savings are obtained.
There are no short-cuts, just look back to the Thatcher/Howe/Lawson years which eventually saw a substantial change in the boundaries between the public and private sectors. But it took time. So contrary to Christina Speight's conspirary fantasies, I do not have a game to frighten the Conservative Party into not proposing a winning gambit. Based on my long experience, I am sceptical whether, in the short-term, an abandonment of the Cameron/Osborne approach would be such a winning electoral gambit.

[Malcolm Dunn]

I don't always agree with him but I thought Peter Riddell's analysis very coherent. I do agree though that the case for lower spending in certain areas needs to be made soon and a plan to obtain much better value across the board must be a key part of Osborne's strategy.But certainly if Osborne changes tack now it will be politically dangerous, economically extremely difficult as Riddell notes, and will indicate that Osborne can be pushed around by the prevailing wind as Darling is.

[Northernhousewife]

Malcolm is right - and not for the first time.

[thaggie]

Riddell is a hideously boring writer. He always seems, to me, to suck the interest out of a story, downplay the differences between the parties (or any agents on different sides of a dispute), deny any form of speculation, and generally try to sound sober to the point of wrongheadedness.

We all know what the story is here; Cameron and Osborne have been under pressure to renege on their pledge, see the sense in reneging on it themselves, and will most likely get to the point where they will renege. End of.

He also characterises 77% of the party (which he underestimates as 2/3's) as being the 'Tory right'. A better name for them might just be 'Tories'.

[Jake]

Wrong to get hooked on this whole pledge thing .
A series of minor qualifications over time in little noted speeches
+
emphasis on "good housekeeping"
+
general tone of " we will do what is right for the economt as we judge it at the time"

should be enough to lose it .

(Lesson for the future - always keep your options open and NEVER pledge yourself to anything belonging to the opposition )

[anthony scholefield]

Riddell is always pushing the living dead in the form of the EU and the ghastly Heseltine Howe Hurd Patten etc.
He has always been a big advocate of the bogus benefits of immigration.
It is now becoming normal and indeed fashionable to say that the UK shoul;d exit the Eu and that mass immigration from the Third world was an economic and social madness-about to be proved to the hilt in thecoming recession-but the Riddells will still chunter alomg promoting the dead ideas of dont make me laugh'liberal conservatism'.

[christina speight]

Peter Riddell - didn't expect to find him here or would have really laid into him :-) - with his sidekick Webster and the other one whose name escapes me has been peddling Blairite ideas over the 12 years I've been publicly analysing his pieces. I have found his arguments over this time persuasive but dangerous.

What he is doing now is sensing that the wind is changing and he's trying to steer the Tories into the nearest approach he can get away with to the pollcies which have got us into the dreadful mess we're in now . He doesn't acknowledge that the policies he has espoused have led us in a time of easy growth into a massive deficit and no leeway to use our reserves now that harder times are here.

We've devalued the pound by 9.5% against the euro, thus massively increasing inflation. Our taxation as a percentage of GDP has risen against our European competitors. The credibility of the City has been put at risk and what is worse the government has now been caught in cooking the immigration figures and the inflation rates.

The idea that an incoming Tory government should be saddled with promising to indulge in the same crazy economics as have got us us into near disaster is patently absurd.

There’s no getting away from it, our whole future is in the hands of lunatics. Whether they are just the normal products of our dumbed down education, or snorting too much cocaine, or merely had their brains addled in their youth with cannabis, is useless now to speculate.

But something must explain the way that financiers have taken leave of reality, how government departments are “not fit for purpose” (we used to be proud of the best civil service in the world!), and crazy theories of man-made Global Warming have panicked half the world and are costing us billions.

Heaven help us - because nobody else can - certainly not Mr Riddell's recipe of masterly inaction. That would be right up the arch-ditherer's street but I expect better from the Conservatives.

[Edward Huxley]

I don`t know about Osborne`s spending plans, but have little faith in a man who apparently needs more than £500,000 to run his office. and that`s just when in opposition.

As Treasury spokesman Philip Hammond has said that talk of tax cuts is "barmy, seems to me that if elected, the Tories will be little better than Labour.

[Are you thinking...at all?]

"But what if growth doesn't equal 2%? Will we support higher taxes or even higher borrowing to maintain 2% growth in public spending?"

So is Conservatove Home's position that the percentage increase in total Government spending must be smaller than actual GDP growth in each and every year (rather than merely being smaller than the economy's trend rate of growth)? Does this mean you think the Party should commit itself to cutting departmental spending mid-year if growth forecasts are reduced and cyclical spending rises?

[Alan S]

Good job Mr Editor.

[Editor]

To 'Are you thinking... at all?': No it isn't. Over a cycle I could see years in which spending growth might be larger than actual GDP growth but I hope that that would be exceptional. The point is decisions should be taken on an annual basis. I don't want to make commitments years in advance. All I say at the moment is that committing to 2pc growth for three years gives the Conservative Chancellor inadequate freedom and is an inadequate response to the growth in the size of the state. Boosting the economy through targeted tax relief should be a bigger priority in the immediate future than matching Labour and the biggest peacetime increase in the size of the British state.

[Are you thinking...at all?]

Thanks for taking the time to reply, Tim -appreciated.

Just to be clear: You say decisions should be taken on an annual basis. Does this mean you would be happy to go into an election where Labour have specific spending plans stretching two or three years into the future and the Shadow Chancellor can't say whether he would spend more than this (which might be consistent with sharing the proceeds of growth, depending on what Labour announce), less than this or the same amount?

[Londoner]

As well as thanking the Editor (per the post @ 11:18 today), I would like to thank Peter Riddell for (a) taking views expressed on this site seriously enough to make them a subject of an article and (b) coming on here to respond to comments.

Whilst I tend towards the more robust approach in these matters, at least in inclination if not necessarily tactically, I think some of the ad hominem attacks on Riddell are unnecessarily discourteous. I have not read enough of him over the last 10 years to know how supportive he may have been of New Labour's unsuccessful policies, but it's not really that relevant to considering what he is saying now. To imply that a senior journalist who has been good enough to engage in debate with this site is some sort of party political stooge is unworthy.

Recently I took the Times Mon-Fri for a few weeks to try it out (dissatisfied with the Telegraph). I thought it had become a very poor newspaper generally, and have now moved onto the Guardian for the time being, which is much better despite its politics. But the one regular political column that was consistently high quality and interesting in the Times was Peter Riddell's - the only issue being that they seem to tuck him away in obscure places (not tabloidesque enough in style I guess).

So if he comes back to read further comments - thank you. And why don't you move to a more serious newspaper like the Telegraph, Guardian or FT?