There is now sufficient evidence from economic data to come to a more sophisticated conclusion about Osborne’s programme than the narrow political ping pong of cut or less cut. Broadly the cut side of the plan is right and on track. The state is too big, many quangos and agencies are either pointless or dysfunctional (as the care home scandal demonstrated) and the whole thing is failing to deliver anything really useful measured against the terms of its cost. Additionally the cost of all this is a burden on business, industry and the private sector workforce, who jointly have to pay for it and get little in return. It is like a hiker having to carry a rucksack which is part filled with rocks.
So slash and burn is right. What is not right is to suppose that everything else will take care of itself. To compensate for the slow down initiated by the cutting, there must be stimulus for the area earmarked to take up the slack. This is not really happening. It is not about bank loans. It is about tax rates, red tape and incentives. So far the Coalition’s policies in this field are far from robust. Indeed the new energy tax was wholly misconceived and has already led to a shut down of one of our North Sea gas fields. We do not mind getting rid of bankers, but to curb our own energy production so that we have to buy in is mad.
It will not be possible to stimulate the level of growth necessary to cope with our debts unless we do more to make business easy. That means flexible employment, light employment regulation, low corporation tax, high personal tax thresholds and fewer statutory demands for such things as paid paternity leave, which are covered in moral glory but impossible for small businesses to afford.
When Cameron thinks about dropping folk from his Cabinet (re-shuffling is useless- a dud at one thing will be a dud at another) he might think it wise to make space for John Redwood. Yes he is a right winger, but horses for courses and we are, sadly, in that kind of race. We cannot afford to lose. It is much tighter than we think. New reports that Moody’s are threatening to downgrade the US unless it stops its political squabble, shows how little room for manoeuvre the Anglo-American economies now have.