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Showing posts with label UK. Show all posts
Showing posts with label UK. Show all posts

Tuesday, June 08, 2010

Why Cameron wants to cut

| Julian Glover | Comment is free | guardian.co.uk
There's a handy line from Lord Macaulay's History of England that is occasionally wheeled out to explain why the instinctive old Tory belief in balanced budgets is wrong. Harold Macmillan used it once, to justify his government's high borrowing. "At every stage in the growth of that debt it has been seriously asserted by wise men that bankruptcy and ruin were at hand," Macaulay wrote and Macmillan said. "Yet still the debt kept on growing, and still bankruptcy and ruin were as remote as ever."

Or, in cruder language, never mind the deficit, feel the growth. It's always nice to be told that a problem isn't really a problem after all, and that charge faces David Cameron today just as it faced his Tory predecessors 200 years ago: a reckless enthusiasm for keeping spending down that has nothing to do with sound economic management.

The difference, of course, is that the debt is bigger, the state is bigger and the alternative cure to cuts might be a dose of hyperinflation and high interest rates. It was inflation – not just growth – that despatched Macmillan's debt as a problem but that brought an unpleasantness all of its own in the 1970s.

Even so, Cameron knows he must be seen to wield his knife with reluctance. That is why in his speech this morning the prime minister trod a tricky line between suggesting cuts were an unfortunate consequence of Labour profligacy, and sounding as if they were something he actually wanted. He went out of his way to say: "We are not doing this because we want to, driven by theory or ideology." Strictly speaking, he's telling the truth. He talked the country intelligently through the reasons behind what is to come. But he cannot escape a question: if the national accounts were in better shape, would he still want the state to be smaller?

The answer must be yes: he is, after all, a liberal Conservative, deeply sceptical about the effectiveness of government. But it is easier to justify cuts on the grounds they are an economic necessity, than because they will prove a purging cold bath for the national soul.

There isn't an inevitable contradiction between these two points of view. When Cameron says: "We need to do this … the overall scale of the problem is even worse than we thought," he means it. And when he says: "We will carry out Britain's unavoidable deficit reduction plan in a way that strengthens and unites the country," he means that, too. He does not think a smaller state means a diminished society or a weaker economy – indeed he thinks the opposite – and I agree with him about that.

But it's a matter of instinct, as much as facts. Lots of people – Labour MPs and voters – will disagree. And lots of economists – but not all – think state spending and borrowing is the only thing keeping the UK economy alive. For them, Cameron's proposals are terrifying. They see him as an ideologue. He, in return, thinks they are driven by a misguided and lazy theory, which will leave Britain poorer. He explained why today. But this debate isn't just about economics. It is the collision of two philosophies of the state.