Post-Corona, the Tories will have to buck up their budget ideas

Published by freemarketconservatives on

BY TOM HARWOOD

It seems almost unbelievable that the budget was less than a week ago. The moment in the political calendar that almost everything had been building up to for months has fizzled out without much of a trace in just a few days. Since Wednesday we have seen more than a dozen MPs self-isolate, American travel bans, and a rhetorical step change from the government when it comes to tackling coronavirus. Sweeping legislation is now expected in days to deal with the new pandemic.

While minds and conversations are rightly dominated by this impending sociological, economic, and biological crisis – it is important to not simply skim over what would otherwise be the premiere political issues driving debate. 

We endured a fantasy budget.

Aside from the Chancellor’s enormously cheeky get-around of excluding coronavirus related spending from fiscal rules calculations, the claimed economic backdrop to this budget was a lie. By claiming that this was a budget that fits within the Conservatives’ fiscal rules, the Government is attempting to take the public for fools.

The OBR’s accompanying numbers flatly refused to take in to account the severe effect coronavirus is having on the global economy – extraordinarily forecasting modest economic growth in the UK this year. That is simply not going to happen.

To some extent it would have been preferable for the Government to admit that in this extraordinary year they will not meet their fiscal rules, and give a cast iron read my lips guarantee that they would next year. The Chancellor claiming this bloated budget somehow stayed inside his fiscal lines makes it harder to believe that next year will be any different.

The UK is already hurtling towards recession, as last quarter’s parliamentary paralysis prompted zero growth is now to be complimented by enormous supply chain issues, a global halt to travelling, and a workforce that is soon to be largely confined to places other than work.

It beggars belief that this was the backdrop to which it appeared to be claimed that mythical economic growth would allow (non-coronavirus related) government spending to eek within his fiscal limits. This is pure fantasy economics. Not that this country’s useless Loyal Opposition raised that point at all.

It fell to former Chancellor Sajid Javid to stand up for fiscal responsibility from the back benches, taking on the role of that friend who lets his mates know when they’ve had too much on a night out. Saj gently suggested to our spend-happy government that they can’t go on like this. His statement emphasised that “the fiscal rules that we set out in our manifesto are important. Sticking to those rules in normal times is what separates us from the parties opposite.”

He is right. Whilst coronavirus changed the context of this budget, there were deeply worrying signs that future statements from this Chancellor will find yet more excuses to wave fiscal discipline out the window. 

A fresh faced Rishi Sunak delivered a speech in response to Osborne’s 2015 Budget in which he stood against profligacy, tax, and debt. Younger Rishi stood up for the next generation who will be burdened by such a policy, and championed the importance of a government that lives within its means: “No more spiralling debt at the taxpayer’s expense. No more passing the debt to the next generation… For too long, Governments have got that back to front, spending first, ignoring how much is coming in, then letting borrowing endlessly make up the difference.”

Next time he should follow his own advice.

Tom Harwood is an award-winning journalist and commentator. Follow him on twitter: @tomhfh


1 Comment

Jag Patel · March 17, 2020 at 8:34 am

What is clear from the Chancellor’s budget is that those who have been arguing for money to be borrowed by the government, at a time when interest rates are a record low, and spent on infrastructure projects have won out.

Of course, such a move is a great idea so long as this borrowed money is paid back over the next several years.

But the fact of the matter is that it will simply be added to the burgeoning national debt (currently at £1800bn and set to rise exponentially) and only paid-off during the lifetime of today’s millennials, their children and grandchildren – thereby transferring the burden onto future generations. It is morally wrong to foist debt onto citizens who are not yet born and force them to pay the price for the irresponsible behaviour and excesses of those in charge of public policy today.

It is not so much hesitancy on the part of the governing elite that has been stalling decisions on key infrastructure projects hitherto, but a lack of confidence in the ability of civil servants to agree taut commercial contracts with private sector players which will secure best value for money over the long term.

Notwithstanding the vast array of upskilling programmes put in place by conservative governments over the last 10 years to elevate the skills and capabilities of its technical and commercial staff in Whitehall, the reality is that they are still woefully ill-equipped to deal with the private sector, not least, because they have not spent a single day of their lives in the private sector – and yet, they have been put in charge of spending taxpayers’ money to the tune of £284bn per year to buy goods, services and labour from the private sector.

Which means that they are at risk of being duped into spending taxpayers’ money on poorly conceived projects – only for this to come to light many years later, when some Select Committee of the House of Commons produces a report on its findings.

Additionally, there is concern in some quarters that government/industry forums which are the formal mechanisms for discussing these sorts of issues will be hijacked by those with superior negotiating skills like big business, to swing spending decisions in their favour – at the expense of other groups like small and medium-sized enterprises, who are seen as the lifeblood of the UK economy and should rightly be given equal access to publicly-funded contracts.
@JagPatel3

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