Voters won't resent necessary Tory austerity if the pain is shared across the private, public and political sectors

It was a significant weekend.  Polls confirmed the likelihood of Tory victory.  David Cameron abandoned his support for extra state funding of political parties.  The Tory leader also announced a hardline on bank bonuses.  The biggest political news of all, however, was the defection of David Freud to the Conservatives.  It was welcome for two main reasons: (1) it confirmed the increasing sense that the Conservatives are the government-in-waiting and (2) it reassures those who worried that the appointment of Theresa May was a sign that the Tory leadership was backsliding on welfare.

Welfare reform could not be more important to getting Britain back on track although an important post on the FT's Westminster blog points to worrying performance shortfalls from the current Freud reforms.  A recent CCHQ analysis concluded that there were just under five million Britons on out of work benefits. Since that data was published official unemployment has risen by a further 250,000.  Real unemployment is therefore over five million. As a member of George Osborne's team puts it: "They achieved precisely nothing on unemployment with a decade of growth."

Welfare reform is going to be one of the keys to solving Britain's £100bn fiscal nightmare (see the Bankrupt Britain report we published yesterday).  The Telegraph's James Kirkup is expecting the Tories to opt for tax rises to reduce the borrowing.  Significant tax rises risk flattening the recovery.  There has also to be significant spending control.

The public out there get it.  They know the UK economy is stuffed without significant austerity measures.  Iain MacWhirter in The Herald lists the cuts he is expecting.  I believe that David Cameron and George Osborne need to level with the British people about the scale of what is going to be necessary.  There's something incredible about saying that Labour has ruined the economy but pledging to largely continue with the £219bn spending splurge of the last fifteen years.  Tory strategists fear that voters will punish the party that gives them the bad news.  I disagree.  They'll hate the necessary measures but they'll respect the party that is honest with them if, if, if the pain of adjustment is fairly shared acoss the private, public and political sectors.  That sharing of the pain of the recession is the central requirement.

Tim Montgomerie

Comments

[Ross Warren]

Tim I think your right. As long as we don't make the error of expecting just the unemployed and those on benefits feel the painful effects of this very steep downward fall. So I would hope that D.C.'s embrace of the concept of the ONE NATION will be demonstrated by cuts or at the very least a freeze on the pay our MPs get. Not backsliding on welfare must not become an excuse for unreasonable behaviour. The truly Sick, rather then the lazy and feckless should continue to have our support. Children still deserve to be protected from the worse of economic failure. If we are seen from day one to be a strong but fair administration then we have every reason to hope for a second century of near permanent rule. There may be no serious alternative to conservative rule, that should not be our excuse for shortsighted judgements and furthering unlevel playing fields.

[Mark Fulford]

The credit card generation will always put off the bad news until tomorrow. Yes, that is appalling short-sightedness but, in terms of electoral calculus, I think the strategists have it right and Tim’s suggestion would cost votes.

[Sally Roberts]

Tim I agree with you too. The public are not fools - they know we are in for a great deal of pain and far better for a Party to be honest with them whilst at the same time stress that whatever needs to be done is being done for the long-term good, than try to pull the wool over peoples' eyes and run the gauntlet of the People's anger when the truth comes out as it inevitably must!

[Steevo]

It just might succeed Tim. Its a good thing Labor doesn't have a charismatic leader to promise "change and hope."

[Edward Huxley]

I agree that people will put up with hardship if they think the pain is shared, as in the war. What we need is for our politicians to set an example; take a cut in salary, reduce their gold plated pensions and perks.

Will it happen? Don`t hold your breath.

[GB£.com]

" David Cameron abandoned his support for extra state funding of political parties."

He did no such thing! You keep misrepresenting this.

He very clearly qualified his statement by adding that if a 50k cap is introduced, he believes there is room for more state funding, which has been his position for 3 years.

Just to remind you from your own article:
"I have always argued that if you can deliver that, then there might be some legitimisation of some limited state funding"

So no change at all since he proposed additional state funding in March 2006.

[Ross Warren]

"legitimisation of some limited state funding" can you blame Tim for putting a spin on this. After all excepting any state funding opens up a real can of worms. Are the BNP entitled to a cut, what about the SWP and the loonies. I suppose it would open up the prospect of single issue parties set up mainly to milk the state. No, to any sort of public funding of political parties is the only sane way forward.

[david1]

The idea that the voters won't, hate a Tory government as long as the, 'pain' is shared equally, is absurd, 'cos the pain won't be shared equally.

The press will soon be full of stories of junketing politicians and rich business men with Tory connections, sunning themselves on their yachts.

The government will be held to account for their behaviour, and will be found wanting.

[GB£.com]

"Are the BNP entitled to a cut"

No, all parties with less than 2 seats before the election are handicapped by Cameron's proposal, which is still live today despite the spin attempts here, limits the funding to parties that won at least seats at the last election, thus acting as a strong protection for the status quo, making it much harder for new parties to succeed.

It is equivalent to the X-factor giving additional support to contestants who did well in the previous series rather than simply basing it on the current votes.

It stinks.

[Malcolm Dunn]

I agree too. Things have changed since 2005-06.The situation must be obvious to anyone with any knowledge of our current predicament and it's difficult to see that any politician offering false reassurance to the nation being taken seriously.

[Jack Iddon]

I think the people in general are still waiting to identify those greedy and self serving people who caused this terrible situation!!! I still don't understand how, if what we are told is true, American financial institutions can conceal bad debt by wrapping it in good and selling it on as good investment. Is that not deception, is that not fraud? Are the ex directors, and many still in place not also culpable. Is it not criminally negligent to be as cavalier as they were with the savings of others that trusted them? When this mess is cleared up people will accept austerity. People will know that the financial industry has been cleaned and sanitised and will understand. Until that particular boil has been lanced, and nobody not Cameron or Browne shows any enthusiasm for it, not until ALL those responsible or culpable have been removed from the system, starting with Browne anybody who is willing to accept it is a fool, you can't change a culture which is what is necessary and leave the same people in place.

[Jack Stone]

If you go to the country promising things are going to get worse for everyone you will lose. The solution is don`t make wild promises of jam tomorrow but at the same time don`t make the voters feel they are like turkeys voting for christmas.

[David_at_Home]

I agree with GB£ that state funding of political parties stinks.

If parties are funded by the state they will licensed by the state and thus be controlled by the state. There will rules such as “diversity” and adherence to other politically correct criteria. Above all, it would be a tool to ensure that the same political class, comfortably installed at the top the Labour, Conservative and Liberal Democrat parties, can rule us for ever without challenge (except, perhaps, by a revolution).

We already have too much state funding for the established parties – MPs/MEPs allowances are far too generous and there are numerous “charities” and quangos pushing political agendas, funded by both the British state and the EU.

We cannot go on like this. The public knows that many of the Banks have been corrupt (morally and possibly legally) and sees politicians, both Labour and Tory, as part of the same rotten establishment (the rise of the LibDems in the polls, though undeserved, is probably because they are perceived as being less dishonest). Unless the next government is seen as being above suspicion and determined to clear the corruption out of public life, then our very democracy will be shrivel and die.

[Sarf Lunnon]

We should propose an across-the board cut of (say) 5% in all salaries of public sector employees (yes, including nurses and Forces, MPs, local government and quangos) as a national 'sharing the pain' programme to match the job losses and pay cuts being taken in the private sector. Perhaps a minimum level of say £15,000 salary, and perhaps those over £50,000 take a 10% cut. This would save billions - I reckon perhaps £10bn.

Many companies are cutting salaries - I doubt if more than a handfull will be increasing them this year. As a comparison, in the recession of 1991 a small but successful engineering company of which I was a non-executive director cut salaries by 8% in return for no more redundancies, with the unanimous support of the staff. The Chief Executive went without his company pension contribution for a year (worth 15% of salary) and we NEDs took a 50% slash in our fees. That company is now 5 times the size it was then.

[pp]

Cameron needs to tell the people what they want to hear - it is the only line they will accept.

No taxpayer funding for political parties.

Taxpayers already pay far too much for the machinery of government. There should be no new spending, and a massive reduction in current spending.

Party funding by the taxpayer is wrong -- if individuals (including MPs) want to support the party out of their (taxpayer funded) pay, thats fine - similarly I expect to be allowed to decide what happens to my money.

Similarly, as someone who works in the wealth-creating private sector, I should not suffer for public sector excess.

Over the past decade (or whatever period you want to look at), I have created wealth and people have freely chosen to reward me for it - I owe noone anything. If people choose not to pay me, I have no call on anyone other than myself.

Whereas the public-sector have taken a good chunk of the wealth I (and others) have created and squandered it, the private sector are not given a choice over whether to carry that burden, they dutifully hand over their taxes and continue to keep these people in a style that is often better than that they can afford for themselves - they owe us everything.

Squeeze the wealth consuming public sector, and let the wealth creating private sector tell you when we think they are the right size, and then we may be willing to take some (more) pain -- it is unlikely to be soon.

[Oberon Houston]

Don't agree Tim, think this is wishful thinking. We need to message our plans very carefully otherwise we could walk into a bear trap on this. The public have merrily voted for the party that wishes to spend spend spend, and the timing of their acceptance to cut cut cut is crucial.

Note that I don't dissagree about the need, but we need to play smart politics on this.

[steve foley]

I don't see this working.

Now if Cameron was to do a Franklin Roosevelt and promise a REAL "New Deal" as he did in the USA and not the cheap travesty of same that Blair/Brown instituted then this might be a good strategy. However whilst "Blood, toil, tears and sweat" may have worked for Churchill when we were in real and imminent danger of being invaded by the Nazis and all classes of people had to unite in the common cause of protecting our nation and way of life, I cannot see this appealing to "Joe and Jean Public" in 2010 especially if the Economy is improving a little by the next Election and Brown goes to the country on a "Let me see this through" ticket where he too says that things will still be a bit tough and hard decisions may have to be made. Faced with such an approach voters may well opt for the devil they know and keep Labour in office.

I am not suggesting that Cameron takes a "Happy days are here again" approach and makes promises that there are no hopes of delivering, I can think of President Herbert Hoover speaking of "Two chickens in every pot, a car in every garage" whilst his citizens lined up at soup kitchens. He should however have clear, positive and definite policies which are different to those of Labour and if there does have to be any negative note of "Pain" in his manifesto then to ensure that like Pandora's Box there is also Hope.

[Ross Warren]

"We should propose an across-the board cut of (say) 5% in all salaries of public sector employees (yes, including nurses and Forces, MPs, local government and quangos) as a national 'sharing the pain' programme to match the job losses and pay cuts being taken in the private sector. Perhaps a minimum level of say £15,000 salary, and perhaps those over £50,000 take a 10% cut. This would save billions - I reckon perhaps £10bn."

I understand what you are saying and part of me desperately wants to agree. The danger is that such a cut could cause a deflationary spiral. I would recommend a freeze on wages for the same groups. Not as quick a response perhaps but safer if we hope to avoid quantitative easing and a run on the pound.
It will be a lot easier to sell a freeze than a cut ,and in fact they will amount to much the same thing if sustained for two or more years. Sharing the pain is far preferable to me, and I hope most people, rather than sacrificing the unemployed and the low paid at such a time. Of course we can only hope that the private sector will also be as willing to freeze their remuneration packages. We should be clear that in the best intrest of a quick recovery all of the employed will have to tighten their belt. Of course such things sound very resonable but I know a lot of people will object and would prefer somebody else to bare the pain. That's human nature. Before somebody pipes up, No I am not a commie-pinko , just a One Nation Conservative who believes in fairness.

[david1]

I'd remind Ross of what happened last time.

In September 1931, as part of its attempts to deal with the Great Depression, the new National Government launched cuts to public spending. The recommended cuts in spending on the navy were translated into a 10% pay cut (matching 10% cuts across the board for public sector workers) for officers and senior ratings, and for all junior ratings on the "new rate" of pay (introduced for new entrants from 1925). A 10% cut would cause great hardship to the already poorly-paid ratings. Those ratings below Petty Officer who had joined before 1925 would also have their pay reduced to the new rate; this amounted to a cut of 25%. On top of this, many working-class sailors shared the sense of betrayal felt in the labour movement at Ramsay Macdonald's split with the Labour Party and his formation of a new government with the Conservatives

I can't believe he's serious.

[steve foley]

David, there as also a Mutiny in the Fleet at Invergordon and one of the lasting results was to take the £ off the Gold Standard.

[GB£.com]

81% of ConHomers voted here to oppose any additional state funding.

71% of the public rejected additional state funding (ICM poll April 2006 reported here).

And yet ConHome is happy to make a clearly untrue statement, that was contradicted by Cameron's own words to overlook the fact that Cameron has not changed his position on State Funding since he published his proposals in March 2006.

Cameron is taking a 'hard line' with banks whilst quietly keeping his own plans to sign the political class off on permanent state benefits.

Tim, please tell me what has changed in Cameron's official position since the publication of the Conservative Party's proposals for the funding of political parties (March 2006 Andrew Tyrie MP) that supports your "abandoned" claim?

Are you prepared to correct that statement as I am sure there was no deliberate attempt to mislead readers?

[David Belchamber]

"Tory strategists fear that voters will punish the party that gives them the bad news. I disagree. They'll hate the necessary measures but they'll respect the party that is honest with them....".

I don't think that the voters will punish the conservatives if we give them the bad news i.e the true facts now, Tim. I think they might if we leave it until after the elction.

You have pointed out that CCHQ has just confirmed: "Real unemployment is therefore over five million".

According to Brown et al it is 1.97M - as compared to over 3M when the wicked tories were last in power! We will get more and more support if we show Brown's deceitfulness with facts and figures - and not only the unemployment ones.

[Jack Iddon]

I agree with almost all that has been said in support of truth now and the electorate will accept whatever measures are necessary. Truth is essential. But why doesn't anybody believe they are being told it? Not by Browne or Cameron. There must be a binding commitment to a thorough investigation and a sanitizing of the entire banking and financial system. And, where necessary prosecuting corruption, collusion and culpability. What is irritating many folk is the seeming ease and unaccountability of those to blame, they simply say sorry and walk away to enjoy life their unjustified millions. That is one massive reason why people will object to austerity.

[Seymour Major]

There seems to be a dispute here between the "dont spell it out too graphically" camp and the "tell them now because people expect bad news and we will retain credibility"

What is important is that people know there will be an end to this mess and a future that we can look forward to. Provided that vision for a brighter future can be projected properly, I think people will accept the austerity.

Have a look a this article which I posted on 2nd February. I would not mind a few comments

http://torystoryni.wordpress.com/2009/02/02/david-cameron-…t-of-the-blitzdavid-cameron-may-have-to-tap-into-the-spirit-of-the-blitz/

[A Reformed Labour Voter]

Well said David Belchamber

Everyone I talk to agrees - the only way to sort this out is to settle up for Labour's obscene debts and live within your means - which means cuts in public services. The electorate are adults so treat them accordingly.

We will also have to rebuild our economy. How are we to earn a crust in the Global Economy?
As Jim Rogers commented recently, the Oil is running out and Financial Services are in ruins; in addition we may well have a currency crisis on our hands.

But the British people are at their best when up against it. And we are still the most innovative nation in the world.

So this is the gargantuan task in front of Mr Cameron and his team. I guess they would all say that they got in to politics to make a difference. Well it looks like you're going to get your chance.

[Alan S]

This is a really important debate.

The key fact is that sacrifices and pain are going to be necessary.

The key decisions are:

(1) When to tell people
and
(2) Who should feel the pain.

I very much like the concept of a "political sector"

Such a sector is different from the public sector. It is MPs, councillors and quangoes. They are subject to different regimes of accountability and must be seen to be leading the way in absorbing the tough times.

[Ross Warren]

Thanks David1, what you say demonstrates how unfair an across the board cut would be.

[Marjorie Baylis]

Although it goes against instinct, I think when we come to government, the Chancellor should cut personal taxation (and some how limit personal borrowing on credit cards) and abolish stamp duty on all house purchases. This would help with the housing market and therefore help that very large body of businesses that are dependent on property (DIY/White goods etc etc). It would also help provide a small feel good benefit which would encourage people to start spending again, which will be good for business, create more tax and more employment and once again more tax. There are so many areas where we will be able to cut spending in government, it is difficult to know where to start.

Just roll on the day when that can happen, that is all I can say - this lot must go!

[steve foley]

It is possible to limit expenditure on Credit Cards. This was the case in the 1970s under the Wilson/Callaghan Government. Minimum repayments were then 15% although this was cut to 5% the year before the 1979 General Election, much good did it do Labour then.

[Marian]

Marjorie Baylis

I would love to see some tax cuts, and abolishing the stamp duty would be a positive move. However unless we quickly build a lot more housing any such help will quickly be wiped out by a return of housing price inflation, which is a result of our overcrowded nation and a massive shortfall in supply. Of course building a lot more homes would also boost the economy and so I favour it.

We will have to see if Tax cuts are possible when we get into power, Labour in the meantime seems commited to spending as much as it can lay its hands on.

"Just roll on the day when that can happen, that is all I can say - this lot must go!"

I agree for so many reasons it would take a day just to list the most pressing..

[David Belchamber]

"but they'll (the voters) respect the party that is honest with them..."

Headline from the Independent on 13 June 2006:

"Why the real rate of inflation is twice what the official figures tell us".

Headline from the Telegraph dated 20 March 2008:

"The real cost of living is twice as much as the official figures".

Each Saturday for some months, the Telegraph has been running an item: "The real cost of living index", which currently is negative but which reached 9.5% in mid June 2008 (RPI at 4.2% and CPI at 3%) and 10.3% by the end of the month (RPI at 4.2% and CPI at 3%). It stayed at above 10% for quite a while.

I would have preferred the conservatives to have highlighted these differences at the time but this information could still be used now.

[Bexie]

I would agree on credit card purchases being limited to at least 10% to ensure that people do not end up in the state of either having to organise their payments or else paying mostly interest only on the debt.

The one sided credit card contracts also need to be reviewed.

We may also need to look at the way capital purchases are regulated. (Cars, large furnishings etc).

[John Richardson]

Mr Montgomery,

Reading your report , I can almost hear you saying "We must make tough choices" ,
or even
"Tough on fiscal defecits , tough on the causes of......"
Without a Patriotic , Christian political entity , Britain is finished.
For example , have you considered how immigration is set to vastly increase during the global 'downturn'. Welfare State Britain will become even more attractive than it is now.
What level of fiscal rectitude will mitigate against this ?
Who reading these pages thinks Cameron et al have the brains , nerve & instinct to govern ?
Our future looks increasingly bleak.

[THE ESSEX BOYS]

Voters will accept a level of state funding for political parties on the following basis:
1. That duplication and wasted direct mail and media advertising be eliminated and therefore costs greatly reduced. Greater emphasis on lower-cost internet options would supplement the message as would increased free tv coverage from the networks.

2. Crucially, that there are reductions in the number of MPs to 500 by 2014 and 300 by 2020. Plus elimination of the excesses in perks, home and travel allowances etc even if salaries rise by say £10,000 pa. Reasonable restrictions on MP's outside business interests will give them more time and focus to cover a bigger constituency.

If the Conservatives go further with this new-found hardening of the central message being demonstrated by DC they must emphasise the sheer waste of the Labour years and force Brown into trying to defend the indefensible. Not only is this 'the right thing to do' in the minds of most of us...it is tactically extremely sound.

Furthermore we must stop talking about 'job creation' and 'retraining' in the abstract.
Clearly many out of work (short and long-term) cannot retrain in IT skills etc and need less challenging jobs of the kind that were lost in factories, mines and offices in the days of nearly-full employment.
We continue to advocate a COUNTY SERVICE FORCE divided into:

A. Military & Police training (joining up optional thereafter)

B. Environmental - rebuilding, refurbishing, tidying, coastal control etc

C. Welfare, humanitarian and charitable causes including care of the old, infirm and handicapped.

Standard pay will be based on minimum wage but merit increases and promotion will be possible. Most of the funding will come from the current huge Welfare & Benefits budget. Admin staff will come from culling central and local government non-jobs.
Work will be available full or part-time to take up slack from the reduced working week that many employers must introduce to avoid going under.
Control at the County, rather than central government level, will direct effort relevantly (and close to participants' homes as far as possible) and give better control.

Our research shows there is 95% voter support for such a plan...so please LET’S JUST DO IT!
Posted by: THE ESSEX BOYS | February 16, 2009 at 13:11

[pp]

We need *MORE* MPs not fewer.

It is the only way to keep the 'parties' in order -- there must be too many people for them to control directly.

Their pay should be substantially less - but we need more of them.

I would also like to see the end of 'state funding' as a phrase, it should always be referred to as *taxpayer funding*.

And when *taxpayer funding* is mentioned, there should always be a clear explaination of why the the taxpayer should be forced to pay, rather than letting them choose.

And when you explain why I should be forced to pay for something, I should also be given a clear explaination as to why people are not forced to pay me!

[Adam in London]

I think you're unduly optimistic Tim.

For a start there is only a need to cut £100bn if you raise taxes significantly. Without that extra revenue coming in the needed cuts rises to an eye-watering £185bn.

Secondly, I don't think that the public are going to be particularlly supportive. We'll be taking a flamethrower to public spending (whether it's a £100bn or £185bn) and giving them precious little in return, as the savings will be used to pay off the debt. We will lopping off somewhere between a third and a quarter of public spending, and even if you cut stamp duty or IHT people are still going to notice that their income tax and national insurance hasn't dropped by a quarter or a third.

We need to prepare ourselves for the possibility that in order to save the country, the Conservatives may need to make themselves unelectable for a generation again. Does our patriotism run that deep?

[mike stallard]

The huge question is this: are the British people able to take the cuts or are we now so effete that any form of pain is anathema?
Austerity for all is on the way, so we shall soon see.
I had a meal last night with an Australian School teacher. She told me that there was to be a two day strike for more pay in the near future. So Invergordon is quite likely - or the miners' strike, of course.

[Super Blue]

"If you go to the country promising things are going to get worse for everyone you will lose. The solution is don`t make wild promises of jam tomorrow but at the same time don`t make the voters feel they are like turkeys voting for christmas".

Jock Stale used to use cliches a lot but now he avoids them like the plague.

[pp]

The public need 'genuine honesty'.

Can you imagine maggie fiddling expenses? Can you imagine maggie calling for restraint and thinking about her next pay rise?

Having trusted blair and been ripped off beyond belief the public aren't in the mood to take austerity advice from anyone who can't lead from the front. And the feather bedding of MPs virtually excludes them from that role!

And thats not the half of it - not only must they lead from the front and be believable, they need to have the credibility to ensure that everyone below them follows suit (and the public know it and believe it)

What does an MP tightening their belt look like - does anyone know?

[TomTom]

and some how limit personal borrowing on credit cards

That is easy. Simply impose an interest-rate ceiling as the US had pre-Reagan.If you cap credit card interest rates the lenders will be more selective in choosing customers. Currently they expand credit card issuance to reduce the proportion of bad debt and charge high interest to cover the losses.

It is worth remembering too that not all areas of the country have benefitted from the credit boom of the past 10 years...ironically some areas with Labour MPs have fared very very badly economically

[Adam in London]

pp,

before we get too pious we perhaps ought to remember that Mrs Thatcher, for all her qualities, wasn't free of scandal - notably around the al-Yamamah arms deal and her son getting a cut (about which she refused to answer questions citing political and commercial confidentiality).

[rugfish]

Are British unemployed not poverty stricken ?

In this climate of lay offs, recession and job hunting, where an unemployed man or woman are struggling with the same mortgage payment, the same utility costs and the same food needs but with a Job Seekers allowance of £60.50 per week or £242 per month, versus their former income. Then it seems to me to be a ridiculously low amount given that the government's own figures say that the minimum level of income required is around £12,000 (£1,000 per month).

This article by Chad Graham - Feb. 15, 2009 12:00 AM from The Arizona Republic http://tinyurl.com/dzhf2b describes unemployment benefit in America and complains about the amount they get on 'unemployment', yet American unemployed receive far higher levels of benefit than unemployed in Britain.

Quote: "As the recession worsens, more Arizonans are running into a scary economic reality once they start receiving unemployment: the state's rock-bottom benefits. At most, a laid-off worker can collect $240 per week. That amount ranks behind every other state except for Mississippi ($210 per week) and Alabama ($230 per week), according to the U.S. Department of Labor. But many Arizonans are not getting that full amount. The average worker is receiving $219.98 per week or slightly less than $880 per month. Unemployment is based on wages earned during a one-year period".

$880 Dollars by todays exchange equals: £619. This means that a British unemployed worker would receive £377 per month LESS than his equivalent unemployed in America.

That's £377 less for mortgage or rent, utilities and food, so why do the government and other politicians give the unemployed such a hard time? Is it their fault we're in a recession?

[Bill Cash]

I just stopped by your blog and thought I would say hello. I like your site design. Looking forward to reading more down the road.