Sunday, March 21, 2010

It's the Economy

I once saw a Chinook fly like the one in the picture. It had done a rolling landing, with its nose in the air, paused, reversed and then taken off backwards and gradually raised its tail until this 20 tonne monster was hanging in the sky, nose down and facing me. I remember clearly this sense of utter disbelief that such a thing was possible.

I feel the same way when I listen to our leading politicians discuss the economy.

We have so much government debt in the UK that the interest bill alone is almost £30 billion pounds a year. This will continue to increase until we stop spending more than the government gets in income.

So we need to do two things: reduce spending and increase income. The only challenge is how to do these without harming the economy further.

On reduced spending, it's time for the Tories to back off their pledge not to cut the NHS. It's the fourth largest organisation (by employees) in the world. There has to be significant inefficiency in there and turning a blind eye to it does no-one any good. The only budget that should be sacrosanct is Defence, and that should last only as long as we have a major commitment in Afghanistan.

It's also time to change the terms on which people get unemployment benefit. Those claiming this benefit should earn it, literally. They could work two days a week for the government, using whatever skills they have. That way, at no incremental cost, the government gets a great deal more done, whether surgery or street sweeping. It would improve the quality of life of everyone in the UK. In times of hardship, this is an obvious win.

Many people in private enterprise go without pay increases in tough years. I know in the 1990s I had no salary increase for three years, as did most of my colleagues. It's time to impose the same stringency on the public sector and, while we are about it, to get rid of unaffordable final salary pensions. They have been unaffordable in the private sector for years and there is no magic which makes them affordable for civil servants.

Raising more tax is a challenge. In the short term you can aggressively tax the highly-paid and profitable companies but if you do, in the long term they will leave. In other words, it's self defeating.

The alternative is not difficult: make it attractive for businesses and high-earning people to stay in the UK and, indeed, attract other businesses here as well. We have the most complicated tax laws in the Western world. That raises the costs of doing business here. We need to do away with 90% of this and make the UK a place where it is easier to do business. Bring tax down and attract business to the UK.

Two weeks ago Matthew Parris wrote that the first thing a new Tory government should do is pass a "Blanket Repeal of Legislation (Failure of New Labour, 1997-2010) Bill". As he explains "The effect of the Act will be to repeal en masse and at a stroke all new legislation brought in since the fall of the Conservative government in 1997. The only exceptions will be those measures which, by affirmative resolution of both Houses, Parliament votes to rescue."

Yes! Yes! A thousand times yes!

While we are about it, can we get rid of an enormous amount of duplicated effort countrywide? We do not need each of 389 local councils to create a policy on racial equality. It's the law. Get on with it. The same goes for the many of policies and practices in local government. We really don't need every council to have its own system of voter registration, email, benefits management or a dozen other matters. For heaven's sake, stop wasting time and let's get those bins collected and schools run well.

In short, and I am aware this is a long blog entry, if we want to cut the cost of government we need to stop waste - huge amounts of waste.

I remember clearly standing by and doing nothing other than goggle in disbelief while the Chinook flew at an impossible angle. It was being run by professionals who knew what they were doing. But I won't stand by and gape in disbelief at politicians, who appear astonishingly inept, doing little to fix the economy.

In 1992, Bill Clinton devastatingly used the line "It's the economy, stupid" in his election campaign. It's time UK politicians listened.


Anonymous said...

Clearly our two governments have a lot in common.

Slim said...

I suspect the EU would find a way to stop us doing the right thing though, and continue to drag us down with them (IMO). Now there's another problem to add to Matthew Parris' idea box.

Mark said...

"Failure of New Labour, 1997-2010"

Now that is funny.

Seriously, Sean, come to our side of the Atlantic and speak some of your common sense to the spendthrifts over here.

Anthony said...

A few people reading this will wonder why the defense budget is sacrosanct, and not the NHS. Could you please elaborate on that point?

Sean Haffey said...

Been away a while on holiday.

>Mark. I love the USA but your lot are almost as bad at wasting money as Labour. Our children will pay.

>Anthony. The defence budget should be protected just so long as we have a substantial number of combatants at risk in Afghanistan. Every month there is another story about lives lost because of poor equipment; to cut the defence budget in these circumstances would be criminal. But I bet we could find waste in the Ministry of Defence and use some of that on looking after our soldiers.