There was an interesting Financial Times editorial today on “the central fact of British politics, the fiscal deficit”. It bemoans the forecast that the (current account) deficit will be £87 billion this year, after 4 years of “tight fiscal policy”. This crisis “demands candour and big thinking from the main political parties” yet it is being met “by ambiguity at best and outright dishonesty at worst.” The FT is not very happy with the Tories who should be offering a contrast to Labour’s “delusion”.
“Instead they crow about an economic recovery that is yet to show up in the public finances.”
The FT identifies a problem in “The boom in low-paid work, and the ever rising income tax threshold, have not done much for receipts.”
Cameron and Osborne are “said to be toying with the idea of further incursions into welfare but these are not much more ambitious than anything Mr Balls has said.” So the FT wants to stiffen their resolve. It points out that “the popular reaction to austerity has never taken off”. “Voters dislike the cuts but in a grudging and resigned way.” That “paralysing strikes, civil disorder” and “a government on the edge of collapse” have not happened is, apparently, because nobody can pretend that they were lied to. However,
“That might not be so true in the next parliament. If the main parties keep up their conspiracy of obfuscation until polling day, voters will feel betrayed when they see services withdrawn and taxes increased in the subsequent years. The quiet consensus behind fiscal consolidation might disintegrate long before the work is completed.”
The Tories gathered in their conference must lift their sights from the “political flotsam” of MPs defecting to UKIP and sexual scandals “and tell the country what to expect after 2015”. The FT demands that Osborne’s speech today must “include large and specific savings, not symbolic gestures”.
As for Cameron’s speech on Wednesday, there is, apparently, a debate among his advisers “over whether it should radiate optimism or tell harsh truths”. He should “plump for honesty”.
“The contours of the state will change in the coming years. People reliant on government for their income might lose out. Public services will have to do what they hate most: reform. There is no reason why this vision cannot be squared with optimism. There is nothing sunny about a country lying to itself about what it can afford. Britain will be stronger for weaning itself off of borrowing, but it needs leadership to get there.”
Surely the FT here is not following the advice it is giving to the Tories. What they are really saying is that austerity must continue far into the future and cut deeper. It would be quite a feat to “square this with optimism”, unless, of course, you were amongst the richest sectors of British society. The problem for the Tories is that Osborne’s line of ‘the medicine is working’ contradicts the real life experience of large swathes of the population struggling to get by month to month. If Osborne doesn’t “crow” about the “success” of his strategy then he would have to admit that it was wrong. Hell will freeze over first.
The Tories, notwithstanding Labour’s woeful leadership, face the task of increasing their vote on 2010 in order to win a majority. With defection of MPs to UKIP, and the probability of at least one UKIP victory in the by-elections, the atmosphere of crisis and lack of confidence in their leadership will be deepened. The disenchantment amongst their ranks with the ‘liberal’ Cameron leadership is underpinned by an issue which could well break the Tory party apart; the question of whether it should support continued membership of the EU or withdrawal. Telling the electorate they have to face up to more pain (unless they are rich) for years ahead may not constitute a winning message for the Tories, even if the Financial Times thinks it would be more ‘honest’.
September 29th 2014