Vince Cable: Cutting public services in order to retain public value…

Talk to a Tory of any standing and bring up the subject of Vince Cable and they all mumble something about him being in the wrong party or wishing for some kind of pact with the Lib Dems so he can be the next Chancellor. There is – comparatively speaking – very little confidence in the shadow Chancellor George Osborne, at least at the base. Cable launched this paper he’d written for the think tank du jour in London at the moment, Reform, not just on the need for fiscal cuts, but how they might be managed to least affect those services deemed necessary for the smooth running of society…

This is precisely the kind of work the Tories should have been doing over the last three years, but have thus far seemed unable or unwilling to get to grips with (at least within the public domain), given the inevitable tightening that’s going to be foisted upon the next UK government(s), regardless of their political colouring… These paragraphs from the executive summary demonstrate a foresight which is missing from a Brown administration knackered from dealing with targeted daily attacks on their key figures, and frankly being too long at the centre of power… and the young turks of the Conservative party, who seem determined to test Blair’s old trick of dominating that diurnal round of news to the point of destruction…

The emphasis for fiscal consolidation must fall on controlling public spending, not higher taxes: to commit to additional tax revenue raising from the outset undermines any commitment to setting priorities in spending.

This process will be painful and difficult. It will involve real cuts in many areas and will mean that the big budgets – health, welfare, defence and education – must be tackled. There should be no “ring fenced” areas of
spending. Existing spending has to be justified, not simply assumed to be necessary and trimmed at the edges.

The traditional method of “salami slicing” with across-the- board cuts to all services without any priorities being set, causes considerable damage to valued services. Instead, a systematic process of selecting high and low priorities for public spending is needed. Radically decentralising decision making to local government through transferring revenue raising powers would help achieve better value for money. Engaging democratically elected politicians in the choices would inject democratic accountability.

The debate should not become distracted by a focus on “efficiency” savings. No doubt public administrators can be made more conscious of costs and efficient management, but it is not credible to believe that greater “efficiency” is a panacea, not least because it has been invariably promised and not delivered in the past.[emphasis added]

This is a game politicians right across the UK are going to have to learn to play… And they are, as they in the Belfast vernacular, going to have to ‘grow some’ and level with the wider electorate about what’s facing us all… As Matthew Taylor noted back in May:

…we are unable to have a grown up conversation about the challenges which politicians can only resolve if we work with them: notably, public spending restructuring, population ageing and climate change. We the citizens are stuck in a bad place; increasingly unwilling to be governed but not yet willing to govern ourselves.

That will not go down well with the green ink brigade who tend to think in terms of storming the Winter Palace and getting rid of ‘public service’ altogether…

Good that Cable’s setting new terms for the public debate… Bad that, barring a miracle, it’s more likely he will have absolutely nothing to do with how the next UK government sets about reforming government…

Anthony Seldon, Tony Blair’s authoritative biographer noted at a Total Politics panel yesterday that upon his arrival at number ten the former Labour Prime Minister signalled that “he intended to head up a reforming liberal or Attlee style government, but in the end he gave us Iraq and target setting…”

Cable’s more modest targets fit the current demand for a reductionist Zeitgeist… But his worthy suggestions will also demand of political leaders that they keep open channels to a populace more used to politicians who have over-promised and under-delivered…

Whether they’re in Westminster, Holyrood, Stormont, or even Leinster House…

, , , , , ,

  • Comrade Stalin

    Talk to a Tory of any standing and bring up the subject of Vince Cable and they all mumble something about him being in the wrong party or wishing for some kind of pact with the Lib Dems so he can be the next Chancellor.

    I’ve heard this a few times. I don’t think it’s Vince who is in the wrong party, but them. Vince’s (controversial) proposals on taxing the very wealthy properties, and nationalizing the banks, do not sit at all well for the non-Wet Tories.

  • Glencoppagagh

    “There should be no “ring fenced” areas of
    spending”
    How right he is. Cameron’s (and presumably Osborne’s) dripping wet attitude to the NHS is an abject and indefensible surrender to electoral priorities in the classic New Labour mode.

  • It’s more his ability to get positive comment in the news compared to the dislike that Osborne creates they like. I don’t think his actual policies do much for the average Tory. I can’t imagine any Tory actually wanting bank nationalisation unless it means lots of SNP/ Labour voters in Edinburgh losing their jobs. In practice Cameron will be not nearly so ‘wet’ as he pretends. I doubt very much, for example, that he will keep foreign aid at its present level.By the way cuts that don’t affect the English, such as those considered to hospitals in Belfast, will be very popular so I would suspect you will get more ( unless of course you vote Tory).

  • Further comment. There are some comments about the Lord Mayor of Doncaster ( elected as an English Democrat ) making cuts and getting a lot of support. Seems he is very critical of Child Social Services spending and is looking to cut management there. Of course this is the bedrock of Labour Party support so again I suspect similar cuts will follow. Not something the politicians in Northern Ireland ( especially Sinn Fein) appear to be very fond of.

  • Mike

    Mick

    “There is – comparatively speaking – very little confidence in the shadow Chancellor George Osborne, at least at the base”

    I think you need to update your view of George Osborne’s standing. Over the weekend for example he received fulsome praise from the Times editoral, and from Peter Oborne in the Daily Mail, for making the right call on public finances and sticking to it despite the attacks he and Cameron took from various sides.

  • Frustrated democrat

    I think you will find that Cable’s support is waning fast in his own party and in the wider public after the debacle of the Mansion Tax and other gaffes.

    On the other hand Osborne’s support is waxing fast as he is now being proved correct on public spending and on his general finance proposals, despite huge opprobrium from all quarters when he originally proposed them.

    Cable’s time in the sun is over, Osborne is moving out of the shadow.

  • Mick Fealty

    Guys,

    I am only reporting what I hear people say, and the substance of Cable’s paper.

    I don’t for one minute reckon Cameron’s going to dump Osborne for Cable or that Cable would reciporcate unless there was a substantial quid pro quo. So long as Brown stays put the Lib Dem’s future will be in the long term.

    All I am saying is that if Cameron wants results he needs to take heed of what Cable is saying rather than what Osborne is not saying.

    It will never be more popular to cut government than now… they just need to do it cleverly, rather than the way it was done in the early 90s, which set the UK up for Labour’s massive spending spree.

  • John East Belfast

    FD

    “On the other hand Osborne’s support is waxing fast as he is now being proved correct on public spending and on his general finance proposals, despite huge opprobrium from all quarters when he originally proposed them.”

    Exactly – it was Osborne who was calling for Spending Cuts long before both Labour and Lib Dems and he got hammered for it. Lib Dems cane next followed by Labour just last week when Brown had to admit it when Darling made him face up to reality.

    I think Cable has got a lot of good press due to his sage type analysis of the current financial problems as he is an economist by profesion. However Economists are as much use to the economy as weather forecasters are to the weather and it doesnt necessarily translate into him being a good Chancellor.

    I have heard him talk on TV about other high tax policies including abolishing completely Higher Rate Pension relief and also making the higher rate kick in earlier.
    The last thing I heard him say was make Capital Gains Tax on a par with income tax.

    He is no friend of the entrepreunerial business class and hence no Tory Chancellor.

  • Glencoppagagh

    John
    I don’t think that removing or restricting a tax relief is necessarily at variance with Conservative values even though it might upset Daily Mail readers. The only object of relief on pension contributions should be to encourage people to make adequate provision for old age and not to enable the highly paid to defer or avoid income tax.
    Harmonising capital and income taxes would reduce distortions in capital markets by removing the preference of many investors to receive returns in the form of capital rather than income (dividends).
    CGT should also be reformed to as to distinguish business assets from purely financial assets.

  • John East Belfast

    Glen

    “I don’t think that removing or restricting a tax relief is necessarily at variance with Conservative values”

    Payment of your own money into your Pension is effectively Deferred Income. There is a much greater chance that Higher rate Tax Payers now will be higher rate taxed Pension receivers. In other words it is a basic injustice that you would only get Basic Rate Tax Relief on Income you didnt take and then pay Higher Rate tax when you do receive it.

    Add to that the fact that the entrepreunerial classes have to provide their own Pension (often from widely varying annual Incomes) whilst the political class who are setting the legislation are looking forward to unbelievably generous and mostly state funded provision then the situation is even more inequitable.

    Money taken from your own Income for your future Pension should be relieved at your highest rate of tax. It would be outrageous to remove that basic tenet of Pension provision.

    Regarding Capital Gains Tax the reason there is a differential between it and Income Tax is because it recognises the element of risk that is associated with a capital gain.

    The bottom line is that a business owner like myself is not going to work 50 hours plus a week and take a second mortgage out on his house to fund a business if the Govt is going to help itself – to what will be 50% – of the gain. Sorry we arent going to do it.

    The removal of the 10% CGT via Taper Relief was (only somewhat helped by £1M of Entrepreunerial Relief at 10%)a kick in the teeth already.

    The Govt should be encouraging wealth creation – even the Labour Party recognise that. Cable will drive the country into the ground if he thought that increasing CGT to 50% as per income would help.

    He is nothing like a Tory Chancellor.