We have limited but clear options
So the OBR now forecast a growth slowdown and the squeeze on real incomes is set to continue, at least, into the next decade. Allied to this our national debt is above £18tn and the balance between government revenues and receipts remains in negative territory. To compound it all our productivity is the lowest in the G7.
Faced with these challenges we have limited but clear options. The left under Corbyn has made clear their preference will be nationalisation and a programme of public investment funded by borrowing. The institute of fiscal studies estimate Labour plans would raise government debt interest to £2bn a year.
Of course Labour will claim this borrowing will pay for itself which, if so, raises questions as to why previous borrowing has not achieved this outcome. We are frankly in a mess of our own or rather our government’s making. Both Tory and Labour have embraced an economic fallacy that spending more and more of our money delivers both economic success and social justice.
You see the results of this in high debt, low productivity and falling living standards. It seems to me that the choice we have is limited. The Tories have accepted Labour’s justice agenda which boxes them into a spending promise war they can never win. A massive political error.
Mrs May is no leader, that much is clear. Leading is about setting direction and deciding. She is reactive not proactive. She lost the Tory majority without once seriously picking apart Labour’s dangerous borrowing and spending plans. She survives only due to Brexit expediency.
What is needed is a developed vision of lower government spending and borrowing which denies the assumption that our taxes are well invested. The numbers raised above, raise big challenges for this view.
The question is what must the state provide and what is down to us? Only by allowing people to keep more of what they earn can we move in this direction, and also creating an economy of high skills is the only real way to raise disposable incomes.
A recognition that businessmen and women not politicians and economists who create wealth. Until policy both grasps this truth and policy reflects it there will be only failure and decline. Labour will cast us downward at a faster pace but that is the only difference.
The Tories need a whole new vision. They certainly need a new leader who wants to argue for market, voluntary and democratic solutions. Big state v small state, a debate is long overdue.
Martin Bristow
Wolverhampton
