Magazine article Public Finance

Having Your Cake

Magazine article Public Finance

Having Your Cake

Article excerpt

THIS PARTY CONFERENCE season is like no other, said the BBC's political editor, Nick Robinson, the other night. Instead of competing with promises of goodies to come, politicians are trying to show who can be toughest, pledging the most wide-ranging cuts.

Don't believe it. Voters are not suddenly ready to don hair shirts, accepting wartime-style austerity. Nor are politicians ready to give them the unvarnished truth. The prize goes to the party that can convince voters it will bring back the good times quickest and do so without inflicting significant pain.

In 1997, New Labour promised 'compassion-lite': more help for the unfortunate without loss to anybody else. Now, the Conservatives promise 'austerity-lite': less public spending and, therefore, lower taxes or at least no tax rises - without deterioration in services such as education and health.

New Labour insisted the miracle could be performed by economic growth, the Conservatives by 'greater efficiency'. The problem comes when you get down to specifics. Ed Balls, the children's secretary, has offered £2bn in cuts to schools. This won't result in larger classes, he assures us, but in fewer 'senior staff. Even they won't suffer much since their jobs will disappear, mainly through 'natural wastage'.

Heads and deputies, he proposes, could work across school 'federations' - which, to some of us, sound like a return of the split-site comprehensives of 20 or 30 years ago, which were roundly denounced. Yet, politically, Balls has chosen wisely. A poll by Ipsos Mori for the Royal Society of Arts, carried out earlier this month, shows larger classes would be hugely unpopular. Nor are most voters willing to accept fewer police officers, charges for visiting GPs or fees for hospital stays. As for increases in income tax, VAT, fuel duty or council tax, forget it.

If politicians want to balance the budget and bring down national debt, according to the poll, they will have to make savings through fewer education programmes in prisons (which, in total, cost less than £200m or about 0.1% of the 'black hole' in the Treasury's accounts) and refusing NHS treatment to smokers.

Alternatively, they could try raising more money from business tax, inheritance tax and fines. …

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