From prudence to penury

Article by Professor Philip Booth published in Parliamentary Monitor, March 2006

In 1997 Gordon Brown needed to reassure the electorate that he would be prudent by promising to implement the Conservative government’s spending plans. George Osborne, with no such need, is in danger of associating himself so closely with the current government’s promises that he will not be able to begin the urgent work of reducing the size of an increasingly voracious state should he become Chancellor of the Exchequer.

It is quite appropriate that the Conservatives concentrate on the problems of the less well off as they try to broaden their support. However, it is a mistake to think that the less well off are somehow a special category of people who benefit from tax and spend and a big state. If they are serious about helping the poor, the Conservatives must be serious about cutting the size of government.

The proportion of national income consumed by government has now increased to the EU average of 45%. The results will be predictable – lower growth and fewer employment opportunities. Also, when public spending rises above about 35% of national income, it is no longer a case of taxing the rich to help the poor: the poor fall into the net of taxation too. Most statistics on levels of tax ignore much of the burden that falls on the poor. A young man with children, working a full year on the mi