PUBLIC SPENDING: WILL WE EVER FACE REALITY?

TME  (Total Managaed Expenditure) in real terms 1948-2020

The debate about welfare cuts  misses the point. This graph is the point, the key: the Blair Bubble. Growth in GDP and growth in spending (which are of course closely linked) took off dramatically under Blair. We got used to big spending increases year after year. By 2008, we had much better public services than ever before.

If it had continued to rise at this rate, spending now would be about £400bn a year, or 50%, higher than it is. We’d have the most wonderful services, even the NHS, and/or much lower taxes.

But the Bubble burst. It had to. It wasn’t based on sustained economic performance. A lot of it was about asset inflation, massive and unsound debt, and speculation.

We’ve now lost most, though not all, of the ‘extra’ growth of the Bubble. But worse off, because we don’t have any realistic hope of securing even the pre-Blair growth rates. Why? Because services that have been defunded after growth bear scars that they wouldn’t have if the growth hadn’t happened, and because of COVID (which wasn’t our fault) and Brexit (which was) have done profound and lasting economic and social damage. And worse is coming down the track : war, declared not, with Russia, without American help; Trump’s malignant idiocies; the economic dominance of China; an ageing, and unfit, population; and serious economic damage from climate change.

The responses of both Left and Right are rooted in the lost world of the last century: tax the rich, or cut taxes and cut the State. Both predicated on a quick return to previous levels of growth. Neither is a solution to the problems we now face.

By all means tax the very rich – electorally impossible to take much off the merely comfortably off. The use of the UK as a safe haven for the international mafia is deeply unattractive. The existence of extreme personal wealth is morally offensive. But it won’t help us as much as its exponents think. The extremely rich have the best accountants, and they, and their wealth, are very mobile. Morever, a 1% wealth tax likely produces no more in year 2 than in year 1. It’s a one off.

Cutting taxes means cutting spending. But welfare, and public services, have already been cut, and cut again. It’s simply not socially possible to cut the big spenders further, the NHS and social care, and war will cost a very great deal. We've just seen what happens when Govenrment tries that.

So the politicians have no solution. In fact, there is no ‘solution’, if by that you mean, affording what we think we are entitled to.

What to do, then? I don’t know, but some of it is clear.

Ruthless prioritisation. To quote from an early age of austerity, ‘the language of priorities is the religion of socialism’ (Bevan). (Incidentally, this is one of those sentences where you can move the nouns randomly around and it still sounds good). Separate the essential from the nice to have. Find what saves most suffering, builds most strength for the future. New homes, not new prisons.

Cut funding when demand falls. With less crime, we need fewer police. With fewer schoolchildren, fewer teachers.

Do more with less. Degrees in two years, not three or four, studying largely from home by remote link, or commuting to a local uni, studying 10 months a year not 6. Less fun, but you get a degree, and it’s 60% off.

Tackle problems at the roots. Unhealthy diets cause much long term illness. Henry Dimbleby’s Ravenous described the causes and how they can be tackled, at relatively little cost to the public purse.

Work for the longer term. UK politics has become reactive, and very short-term But most of our problems require very long term thinking and long-term planning. And act ahead of time. Climate change and global tensions are going to massively disrupt the global food trade on which we rely so heavily. Instead of set aside or organic farming, we should be getting ready to farm more intensively, and building food reserves.

Look under the bonnet. Why do infrastructure projects cost much more and take much long in the UK than elsewhere? And what can be done about it? Likewise, why are so many people of working age not in the labour market, and what can be done about that?

Slaughter sacred cows. We need more not fewer immigrants with the right skills who are prepared to work. Other hand, it's unrealistic to promise that everybody in the world who feels oppressed in the country they're in, is welcome in the UK.

Maximise revenue. Simplify the tax system, enforce the law.

None of this is possible – yet. We are too used to the lure of simplistic, or ideologically driven, solutions. Or to blaming someone else for our problems – foreigners, banks, the poor, the rich. And above all, blaming each other. We haven’t the imagination or the guts to see things as they are. Yet.

I used to think we’d face reality once it became too awful to ignore. Maybe. But I’m no longer sure.

On the MAGA example, we’d rather commit slow, stupid suicide than do what’s necessary to save ourselves.