Thursday, April 8, 2010

When is a public spending cut not a public spending cut?

When it's an efficiency saving.

A big row has blown up over what to do with the budget deficit, and in effect we are now seeing a clear difference between the parties. Labour would rather raise tax (NI) in order to preserve higher levels of public spending. The Conservatives would prefer cut public spending in order not to have to raise tax.

The reality is that they are both actually stating their position as honestly as an election campaign can allow. But this reality is muddied by the insistence on cuts being about 'efficiency'. Efficiency savings are still cuts on public spending - the claim is that you can spend less, and deliver the same quality service. In the long run, there is a debate to be had, but in the short term it basically means firing people, so it's a bit dishonest to complain about NI being a 'tax on jobs' when your plan its to fire public sector workers. And to claim that private sector businessmen are the best people to pronounce on this is silly - of course they would rather cut public spending than have to increase their payroll contributions.

In any case, why should we think  that businessmen have some kind of magical ability to identify what is best for the economy? Their job is to make a profit (preferably without the help of the taxpayer), and they are happy to do that at everyone else's expense if we let them. The Tories' efficiencies guru is in the private healthcare business, whose market share has shrunk over the last few years because of Labour's huge increase in health spending, which has cut waiting times enough for private insurance to seem a bit of waste of money. If we 'cut inefficiencies' in the health service, the chances are private insurance will become more attractive. Is this in our interest or Peter Gershon's?