The Budget II
The British blogosphere is a very strange thing. I can't find one comment about the budget, which presumably is of great importance to the future political direction of this country. Samizdata had a pre-budget report, 'Gordon Brown is a great fat sweating thieving spurt of the devil' but other than that nothing (I await the avalance of 'you obviously missed...'.I made some comments below, which perhaps were a little rushed. Nevertheless they seem to be right -- this was an intensely political budget, which took all the Conservatives' good ideas (without 'hat tipping' them) of efficiency gains mainly, and rejected all the Conservatives' other policies, i.e. tax cuts based on cuts in defence, transport, law&order and other non-education and health spending.
Thus, as the political journalists say, the 'battle lines' have been drawn. The problem the Conservatives will have is that they now don't have efficiency savings to put towards tax cuts (note this argument relies not one bit on whether those savings can actually be made, as that will only be known after the election). Thus in order to keep their policy of a) reducing deficit, b) maintaining health and education spending, and c) cutting taxes, they are going to have to impose stricter cuts (i..e actual nominal cuts rather than just real cuts) on the rest of the spending.
This is not politically possible. Already their policy on cutting defence spending whilst we are at war has been (in my view wrongly) strongly criticised within the party. Thus I expect the new policy of a) reducing the deficit will quietly be scrapped. The problem here is that their main line of attack, as seen from Howard yesterday, was over the deficit, e..g 'this credit card chancellor'.
The only logically consistent policy will be to scrap (b). They could do this, saying that they were sticking to Labour's 2003 spending plans. But it wold be brave.
Martin Wolf, as usual, says it rather better:
"These commitments can be challenged on the basis that public spending is intrinsically wasteful. But this argument for cutting the ratio of public spending to GDP is persuasive only if the opposition plans to take important areas of public spending out of the public sector. To keep priority areas within the public sector and then cut spending in real terms is to ensure that the public has neither the freedom to spend its own money on the services it wants nor the ability to enjoy adequate public spending on them. This is the worst of both worlds. Since in one area where the Conservatives had the opportunity to support a shift in responsibility to individuals - namely student fees - they insisted on complete socialisation instead, their credibility is in tatters."
posted by Matthew @ 3/18/2004 08:17:00 AM
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