Magazine article The Spectator

The Spectator's Notes

Magazine article The Spectator

The Spectator's Notes

Article excerpt

John Howard, four times Prime Minister of Australia, is one of the great men of our time -- direct, amusing, patriotic, moderate but tough-minded. He finally lost an election this year, which had the good effect of giving him some time in London recently.

One of the Howard lessons is that when you get into office for the first time you must have a very nasty budget straightaway. Only at the start will you have the moral authority to tackle the vast public spending you have inherited.

Mr Howard has been telling this to our own Conservatives. They know he is right, but they do not altogether like hearing it. Gordon Brown's solution is to pretend that there is nothing seriously wrong with government spending, so if the Tories win next time the problem will be even bigger than it is today.

What should be cut, and what other ways of raising revenue should be considered? Some cuts popular with those who know include regional development authorities, education maintenance allowances and the preposterous amounts spent on Scotland, Wales and Northern Ireland. Another problem is the vast spending on overseas aid. The Conservatives, unfortunately, are committed to it, for goodygoody reasons, but perhaps they could redirect it so that, contrary to the present law, it can be permitted to advance British interests.

I would also throw in the windfall (see last week's Notes) of abolishing the London Olympics. The biggest public sector problem is pay, which is probably best dealt with by breaking it down to departmental budgets, so that each has to decide whether to keep pay levels down or sack people. Then there is the possibility of spreading VAT to everything, including children's shoes, newspapers and food, which would mean that the same revenue could be raised by dropping the rate from its current 17.5 per cent to 12.5 to 13 per cent.

Alternatively, the tax could be kept only on existing items, but the rate pushed up to 20 per cent, imitating, less dramatically, what Geoffrey Howe did in 1979, when he all but doubled the rate. The Tories will not tell you much about this, for obvious reasons (note the hole in David Cameron's speech on the economy this week), but theirs will be the worst public spending inheritance since 1979, so, if they want a second term, cuts there must be.

With public sector pay, start at the top.

In the regular Civil Service, pay is probably not excessive. Sir Gus O'Donnell, the Cabinet Secretary, is paid about £255,000 per year. It is the people brought in from outside to various quangoes, agencies and authorities who really scoop the pool. My old friend and pillar of the modern establishment, Adair Turner, has just been made chairman of the Financial Services Authority, for which he will be paid more than £480,000, whereas the Governor of the Bank of England, Mervyn King is entitled to less than £400,000, of which he has decided to accept only £297,919. The chief executive of Ofcom, Ed Richards, for no obvious reason, received £417,581 in the year 2007/8. The director-general of the BBC, Mark Thompson, gets £816,000. Cut, cut, cut.

As I write, it is not known whether Max Mosley has defeated the News of the World in court, but if, as this column hopes, he has, it will be the second time in his life that he has benefited from the paper. When his parents were imprisoned during the war, the young Mosley boys (Max was three months old) went to live with their aunt Pamela (née Mitford) in Oxfordshire. …

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