Belfast Telegraph

Dominic Lawson: Osborne isn't making cuts for the fun of it

Leaderless they may be, but Labour MPs are able to agree on a common line to use against the Government's deficit-reduction plans.

They argue that the public expenditure cuts to be announced later today by the Chancellor George Osborne reflect not necessity but desire bordering on the sadistic.

Every one of those standing for the vacant leadership, including the notionally least left-wing of the candidates, David Miliband, makes the same point: the Tories – with their Liberal Democrat partners as "useful idiots" – will be cutting public services because such action gives them a private thrill of satisfaction, rather than because they think it is in the national interest.

There is one small sense in which Labour is on to something. If there is a visceral dividing line between Left and Right, it has always been that the latter tend to the view that the money people earn is their own, and should not be confiscated by the state without very good reason; the Left, by contrast, traditionally feel that the state has first claim on all income earned by its citizens, who should be grateful for whatever is left to them.

You can usually tell if someone thinks this way – he will rarely say it outright – if he refers to any tax cut as a "hand-out" or a "giveaway". In fact, if George Osborne does increase to £10,000 the threshold at which income tax becomes payable (part of the original coalition deal with the Lib Dems), he will simply be returning to sender – in this case the lowest-paid.

Such action, however, will only add to the budget deficit – an unprecedented one for the United Kingdom, in which we as a nation are borrowing one pound in the debt markets for every four pounds the Government spends. In fact, the Exchequer is borrowing more and more in order just to pay the interest on its existing debts, an untenable position for a nation, as much as it would be for any individual.

More than 20 years ago, when I was a proper reporter rather than a mere pundit, I visited some of Liverpool's council estates as a part of an undercover investigation into the private debt-collection business. Two things surprised me. One was the fact that much of the debt had been incurred in the purchase of very advanced (for the day) entertainment systems, which even those on more than modest earnings would have struggled to afford. The second was that when these debtors were offered the chance of rescheduling their payments, at extortionate rates, they would agree if they thought they had the faintest chance of meeting just the first week's instalment.

Of course, I wanted to urge them to tell the debt collector – there and then – that he could keep the leather sofa/illuminated flashing whatsit; but that wasn't in the deal. They were living way beyond their means, but could not contemplate an expenditure cut if it meant any loss of amenity. Obviously, there were many more on these estates who were much better able to handle their budgets: they provided no business for the debt collector and the financial agencies he represented. I suspect that they would be the sort of people more able to grasp the nation's current predicament, and what needs to be done about it.

The neo-Keynesians regard all such analogies as deeply jejune. Nations are not like individuals, they argue: for a start, they can always borrow at a good rate from international markets. The sudden threat of a lenders' strike to the sovereign state of Greece is allegedly what shocked the Liberal Democrats into supporting the Tories' plans for immediate deficit reduction; but the former Chancellor Alistair Darling had sensed this possibility before the general election. He was reported to have told his Cabinet colleagues that no one can tell for certain when a sovereign debt crisis would start, but when it happens, it is sudden and precipitate: "The ice seems solid the moment before it cracks."

Ten days ago, Darling – now ex-Chancellor – added that he regretted not being able to make clearer how Labour would have brought the deficit under control: "I wanted to show more examples of what we could cut ... but there's a perfectly good counter-argument which says that you would never have got a fair hearing for it ... there was a more limited appetite for that than you might think."

Gordon Brown, for one, certainly had no appetite whatsoever for such economic realism – he had long ago crossed over into fiscal la-la land; but that was not the only point Darling was trying to get across in his accustomed oblique style. He was also indicating that it is very difficult indeed for a government to signal dramatic cuts in expenditure – and even more so actually to carry them out – without becoming profoundly unpopular with the public as a whole.

This, however, also shows the inherent absurdity of the repeated assertion by Mr Darling's colleagues that the Conservatives are actually relishing what they are about to do. Believe it or not, Tories are politicians too; and I have never met a politician who does not seek popularity above everything else. David Cameron and George Osborne would like to be liked by the electorate, every bit as much as did Tony Blair and Gordon Brown. They know that cutting public expenditure by significant amounts is a guaranteed path to unpopularity for any government. They also know that even the right-of-centre newspapers will be screaming with outrage at the results of some of the measures which will be carried out as the part of the deficit-reduction programme: the removal of child benefit for the middle classes (so-called) and the cuts in the defence budget, just for starters.

Now, why on earth would any politician actually enjoy being the recipient of the fury which such measures will arouse, right across the electorate? Why, above all, would David Cameron – the least abrasive of politicians – welcome the inevitable vitriol and even hatred it will engender, when his mission had been to shed the "nasty" reputation the Conservative Party had acquired under Margaret Thatcher?

Now, I realise that it is difficult for Labour's leading lights – especially while they are vying with each other to prove to their own internal electorate just how good he or she would be as leader at clobbering the Government – to admit that the Conservative-led coalition is trying to act in the national interest. I can also see that after being booted out of government, they might as well make the most of the right of oppositions to be thoroughly unreasonable and even irresponsible. Thus, after being asked last week what he would do to cut the deficit that he acknowledged as excessive, David Miliband argued that as he was now in opposition he had no obligation to suggest any particular measures at all. It would just be the pantomime villain Tories versus caring Labour: the 1980s all over again, but with the weird twist of the Lib Dems as – to quote the charming John Prescott – "collaborators".

George Osborne will declare at the despatch box today that it is only because of the Labour government's abandonment of the principles of sound economic management that he is coming to the Commons with an emergency Budget, barely seven weeks after gaining office. The fact that he is right about that will not necessarily make him any the less hated. This is something else the opposition understands very well, and will seek to exploit not just today, but for the months and years to come.

Belfast Telegraph

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