Frank Field’s piece in today’s Telegraph about the difficulties facing the next British government is well worth reading. He outlines, more lucidly and – ahem – frankly than any other politician I have read just how royally screwed our economy is; and how drastically any incoming administration is going to have to cut public spending if it is to repair our finances.
He cites the shocking figure from the Institute for Fiscal Studies that the recession “has wiped out nearly five per cent of our total wealth.” This, he depressingly explains, “means the country is permanently poorer, and will take well over a parliament just to restore its lost wealth.”
Then he tells us why this recession is unique:
“In all previous recoveries, tax revenues have been quickly restored. Not so this time. The Government admits that, even with the economy growing once again, there will still be a gap of £80 billion in 2013 between revenue and spending.”
He goes on to explain why the Brown/Darling quantitative easing programme is merely putting off the hour of reckoning when Britain faces bankruptcy:
“Britain is borrowing proportionately more than any other major economy, and lenders have a galaxy of countries from which to choose. When the Government is unable to print any more new money to buy its own debt, the market will insist on higher long-term interest rates. This will not only make it more difficult to sustain an economic recovery, but it will increase the cost of servicing this debt.”
Finally, he comes up with two very useful ways an incoming administration can rein in public spending.
First, through pensions reform:
“A truly reforming government could set itself the task of abolishing pension poverty by building up a compulsory funded scheme around the current pay-as-you-go state pension. It would mean that today’s workers would have to put more of their pay into savings, but they would own their own assets, and gain a guarantee that no one would retire into poverty.
“Such a reform would see the current £15 billion spent on means-testing for pensioners fall to almost nothing over the decades. Simultaneously, the Government should announce that its only goal in pensions was to secure that decent minimum for everyone, phasing out over a similar period the almost £40 billion taxpayers currently spend each year on subsidising pension savings.”
And second, by slicing several juicy steaks from David Cameron’s most sacred cow, the NHS:
“A similarly radical approach must be imposed on the NHS. While productivity has improved by 23 per cent in the private sector over the past decade, in the public sector it has actually fallen. If the same productivity improvements had been delivered by the NHS, for example, the exact same level of service could have been bought for £26 billion less.
“The radical alternative to an across-the-board cut in NHS services is to insist on the productivity increases that have already been delivered across the private sector. Labour has in the past been almost exclusively concerned about how much money is going into a service. The new politics will focus exclusively on outputs.”
You’ll be reading all this and nodding your head and going: “Oughtn’t all this to be bloody obvious?” And you’re dead right. Nothing Frank Field says in the piece is exactly new or original. But what’s such a breath of fresh air – and why so many of us on both sides of the political divide so love the man – is its clarity, directness and freedom from cant.
Frank Field, let us not forget, is a Labour MP. Yet he has managed to articulate truths which seem to be quite beyond the expressive powers of anyone in Cameron’s Conservative party.
“Bribing voters with their own money is no longer an option,” he says.
Yes, exactly! But how many times have you ever heard any of Cameron’s lot try to articulate the moral and intellectual case against tax and spend?
Seldom, I’m sure. Probably never, because anyone who tried to do so would be quickly gagged under Cameron’s “Don’t say anything that makes us sound like remotely like Tories,” policy.
Yes, sure, both Cameron and Osborne have been dropping one or two hints of late about the necessarily tough fiscal measures they’re going to have to adopt on getting into power; on the amount of hurt they’re going to have to inflict on the electorate.
But what they’ve signally failed to do is indicate they’ve remotely understood the scale of the problem. (If they did, they wouldn’t be talking about ring-fencing spending on the NHS).
Nor does it appear to have occurred to them that, though a cut in public spending could initially be a painful thing, it could also have the most enormous side benefits – not just in restoring public finances but also in freeing citizens from the shackles of the overweening state.
Looking at the list in the papers the other day of some of Cameron’s bright new Conservatives to watch out for, my heart sank, as it so often does these days when contemplating our future leaders.
“You lot,” I thought to myself (and I’ve known some of them personally since Oxford) “Do not have an effing clue. You’re still of the mindset which thinks the most dramatic problems facing the Tory party are things like its stance on homosexuality and green issues.” But the public has moved on; so has the economy. I despair, I really do.