My expectations of politicians, those “insidious and crafty animals”, are low. (Like Hayek, I find that over the course of a long life they have steadily gone down.) But in this general election campaign the performance of all three main parties has still managed to disappoint. They have refused to spell out in any detail how they propose to eliminate the huge government deficit, which is unprecedented in peacetime.
The British government’s deficit this year is expected to be about 12 per cent of GDP, nearly as high as Greece’s. Assuming that about half has been caused by the recession, we need to find another 6 per cent of GDP (around £90 billion a year). I accept George Osborne’s line that about 80 per cent should come from cutting government spending and 20 per cent from tax increases.
Where could the government raise an extra £18 billion in tax? Raising Value Added Tax by 2½ per cent to 20 per cent would raise about £12 billion. And adding 1 penny to the basic rate of income tax, I think, would raise about £6 billion.
That would leave a need to cut about £72 billion from government spending, around 10 per cent. In my view, there can be no sacred cows: I wouldn’t “ring-fence” anything.
The government has been grossly irresponsible in failing to undertake the three-year Comprehensive Spending review when it was due, last year. The Chancellor pretended there was too much uncertainty, but that is a pathetic excuse.
I’m sceptical about “cutting out waste”, though I dare say there’s plenty of it. The trouble is it’s not always easy to identify “waste”, to cut it out, or to stop it creeping back in again. So most of the reduction would have to come from the government stopping doing some things it is doing now. What Keynes called the “non-agenda” of government.
As I haven’t got the details, I can’t say precisely what government spending I would to cut. But it’s scandalous that none of our leading politicians, seeking election, has spelt out the details either. Their attempt to deceive the British people fools nobody, but it is a disgrace. No wonder so many people choose to vote, in effect, for “none of the above”.