First, a disclaimer. I am not very informed about UK party politics or about how our parliamentary system works. I know people who are much more informed in these matters (but I won’t link to them because they have party affiliations and I don’t want to advocate a particular party).
But I do want to talk about political principles. This is the first in what I expect to be a short series, where I want to tackle the very fundamentals that we vote on.
The key issue underlying much of the electioneering this time around seems to be the deficit. Every year, Britain spends about £100 billion more than it receives in tax and other income. As a result our cumulative national debt is rising, and currently stands somewhere north of £1.5 trillion. That’s about £24000 per person, and increasing. Paying the interest on this loan costs the country £40 billion per year, which is going on for £700 per person. It’s not a sustainable situation in the long term.
What to do?
The most fundamental choice is whether to reduce the deficit or not. (Note: politicians sometimes talk about reducing the debt. That is not what any of them are actually proposing to do in the short term. They propose to reduce the rate at which the debt is increasing. The Conservatives claim they will run the country at a surplus by the end of the next government.)
Arguably the most important contribution that the Green party have made to this election campaign is to establish that reducing the deficit at this time is a choice. It’s not something that is imposed on us by inescapable economic necessity.
Everyone accepts that continuing to grow the national debt indefinitely is unsustainable — and simple maths shows that this is correct, as eventually a point would be reached where the entire GDP would be required just to keep up the interest payments. The question is when to deal with the deficit. Most parties want to do it now, but the Greens’ position is that the world at large is still in recession and this is the wrong time to be dealing with a structural problem. Better to ride out the global recession with the country in a healthy state, they argue, then return to the problem of the deficit when conditions are better.
I think that option deserves some scrutiny — even if it only turns out to be to demonstrate that it’s a bad idea. It disappoints me that hardly any attention has paid to it — perhaps because the clowns at UKIP have been successful in steamrollering the debate with their anti-foreigner rhetoric, leaving no time for substantive issues.**
Can the Green approach work? I don’t know, and I’m not sure anyone really knows. That’s why I want it to be discussed.
All the mainstream parties, though, seem to agree that the deficit needs to to tackled, and that it needs to be done now.
How can you reduce the deficit? There are two ways. Since the deficit is the difference between revenue and spending, you can reduce the deficit either by increasing revenue or by decreasing spending.
Decreasing spending means cuts in public services, an approach known as “austerity”. That is the path that our Tory*-LibDem coalition has pursued for the last five years, and it’s the reason why libraries are closing, the NHS is not sufficiently funded to cope with our ageing population, and astronomical numbers of people are having to turn to food banks. One of the surprises from the LibDems, who are usually perceived as in the centre or somewhat to the left, think that the way we address the deficit should be just over 50% spending cuts.
The other option is increasing revenue, which means raising taxes. The LibDems think about half of the deficit reduction should come from increased taxes; the Tories, who of course were the majority party in the government just ended, think that none of it should, and that whatever else happens, taxes should not be raised. They are so committed to this that they even want to bring in a law making it illegal to raise taxes for five years.
One of the disappointments of the present political landscape is that there is no major party that offers the alternative of tax rises as the way to address the deficit. Traditionally, this would have been the Labour party’s position, but since the rise of Tony Blair’s “New Labour“, its policies in this area have grown closer and closer to those of the Conservatives*, with the lamentable result that UK politics has become more about personalities and less about identifiable differences in policy and ideology. Now we have a situation with Labour shadow-ministers claiming that if they form the next government they will be tougher on benefits than the Tories.
Whether you prefer the Tory or traditional-Labour approach, it has to be a bad thing that the electorate is no longer offered a choice between these approaches. It’s also a surprising state of affairs, given that most people when polled think that the richest should pay more tax. The best that can be said is that among the big three parties, Labour and the Lib Dems are less committed to a no-tax-rises policy than the Conservatives.
So there you have it: the three ways to deal with the deficit are:
- Put the problem off until the global economic situation is better (Green Party)
- Spend less money by cutting public spending (Conservative)
- Raise more money by increasing taxes (traditionally Labour and LibDem, but not so much now)
Those are all the options. Every possible response to the deficit is some combination of these three approaches.
Up to this point I have tried to be purely descriptive and uncontroversial. Hopefully no-one will need to disagree with much that I’ve said. But I want to finish this piece with my own opinion. If you’re not interested in opinion but only in facts, then now would be a good time to tune out.
My opinion, then.
Cutting public spending, including benefits, disadvantages the poorest people in a society — the people who have nothing else to fall back on (otherwise they wouldn’t be on benefits in the first place). Meanwhile, increasing taxes disadvantages the richest people in a society — the people who are earning enough to be taxpayers.
Put in those terms, this seems to me like a stark moral choice. It’s better that rich people should pay from the much they have, than that poor people should pay from the little they have. So if we’re to address the deficit now, I favour doing so by raising taxes while maintaining public spending at its present level — or better still, increasing it to its level at the start of the last government. (I say that even though I personally would lose out much more from tax rises than from spending cuts.)
I would be interested in hearing the reasoning behind opposing views.
[Read on to #2: what is government spending for?]
* Note for Americans: in UK politics, “Tory” is for some reason the nickname of the Conservative party; so Conservative and Tory are used interchangeably. The Conservative party (with a capital “C”) tends to have values somewhat aligned with those of political conservatives (with a small “c”) in the USA, but the correspondence is very far from perfect. Basically, when dealing with UK politics, it’s probably best to forget what you know about the meanings of “conservative” and “liberal” from US politics.
** Exception to my no-party-politics rule: I’ll make no effort to hide my contempt for UKIP, who are not so much a serious political party as a dirty-foreigners-are-to-blame echo-chamber, led by “man of the people” Nigel Farage, who was educated at a public school*** and worked as an investment banker.
*** Another note for Americans: for historical reasons, “public school” in the UK means the very most exclusive and upper-class of the private, fee-paying schools. What you call public schools, we call state schools, and the vast majority of children attend them.