Cameron is wrong: the spending cuts are ideological

The Prime Minister says the cuts are not due to his “ideological zeal”. Here’s why he’s wrong.

In his New Year message, David Cameron attempts to rebut the charge that the government's spending cuts are ideologically driven.

He writes:

I didn't come into politics to make cuts. Neither did Nick Clegg. But in the end politics is about national interest, not personal political agendas. We're tackling the deficit because we have to – not out of some ideological zeal. This is a government led by people with a practical desire to sort out this country's problems, not by ideology.

Here are three reasons why he's wrong.

The coalition could have taxed more and cut less

There was an alternative to George Osborne's £81bn spending cuts: higher taxes on the richest in our society. The Chancellor has chosen to reduce the deficit through a 59:41 ratio of spending cuts to tax rises in 2010/2011, rising to 77:23 by 2015/2016 (see Table 1.1 in the Budget).

But as the graphic below from the Economist shows, most deficit reductions have involved a far more even split between tax rises and spending cuts.

Deficit-reduction

The coalition's deficit reduction programme relies more heavily on spending cuts than all but two of the largest OECD fiscal consolidations.

A higher level of tax rises on top earners would have enabled a more progressive programme of fiscal consolidation (the cuts are, by any measure, regressive) and, as I explain below, a less economically reckless approach.

The coalition could have raised more revenue through a tax on land value (69 per cent of which is owned by just 0.6 per cent of the population); a genuine crackdown on the £25bn lost each year through tax avoidance; a tougher, not a weaker, bank levy; and higher, not lower, corporation tax.

The decision to rely on punitive spending cuts to reduce the deficit was a political choice, not an economic necessity.

Spending cuts harm the economy more than tax rises

Economists are agreed that the government's spending cuts will hit growth harder than tax rises would. As Duncan Weldon explains at the excellent False Economy, the fiscal multiplier (the effect on GDP of a tax rise or a spending cut) proves as much. The Office for Budget Responsibility's own multipliers (see Table C8 in the Budget) show that the cuts will reduce growth by significantly more than the coalition's tax rises.

As the shadow chancellor, Alan Johnson, noted in his pre-Spending Review speech: "We know from the Office for Budget Responsibility's own figures that a spending cut hits growth twice as hard as a tax change – three times as hard when it's capital spending."

The government's decision to ignore such economic evidence is the result of an ideological preference for spending cuts.

The cuts are permanent, not temporary

When asked by a Fire Brigade worker last summer if funding would be restored once the deficit has been addressed, Cameron replied:

The direct answer to your question, should we cut things now and go back later and try and restore them later, [is] I think we should be trying to avoid that approach.

The Prime Minister's insistence that we should try to "avoid that approach" reveals an ideological attachment to the small state and to low levels of public spending. The result will be permanently shrunken public services.

The cuts will reduce public spending from 47.3 per cent of GDP in 2010/2011 to 39.8 per cent in 2015/2016 – equivalent to reductions made by Margaret Thatcher between 1979 and 1990. But for many on the right, this is just the beginning of their long war against the active state.

George Eaton is political editor of the New Statesman.

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Appreciate the full horror of Nigel Farage's pro-Trump speech

The former Ukip leader has appeared at a Donald Trump rally. It went exactly as you would expect.

It is with a heavy heart that I must announce Nigel Farage is at it again.

The on-again, off-again Ukip leader and current Member of the European Parliament has appeared at a Donald Trump rally to lend his support to the presidential candidate.

It was, predictably, distressing.

Farage started by telling his American audience why they, like he, should be positive.

"I come to you from the United Kingdom"

Okay, good start. Undeniably true.

"– with a message of hope –

Again, probably quite true.

Image: Clearly hopeful (Wikipedia Screenshot)

– and optimism.”

Ah.

Image: Nigel Farage in front of a poster showing immigrants who are definitely not European (Getty)

He continues: “If the little people, if the real people–”

Wait, what?

Why is Trump nodding sagely at this?

The little people?

Image: It's a plane with the name Trump on it (Wikimedia Commons)

THE LITTLE PEOPLE?

Image: It's the word Trump on the side of a skyscraper I can't cope with this (Pixel)

THE ONLY LITTLE PERSON CLOSE TO TRUMP IS RIDING A MASSIVE STUFFED LION

Image: I don't even know what to tell you. It's Trump and his wife and a child riding a stuffed lion. 

IN A PENTHOUSE

A PENTHOUSE WHICH LOOKS LIKE LIBERACE WAS LET LOOSE WITH THE GILT ON DAY FIVE OF A PARTICULARLY BAD BENDER

Image: So much gold. Just gold, everywhere.

HIS WIFE HAS SO MANY BAGS SHE HAS TO EMPLOY A BAG MAN TO CARRY THEM

Image: I did not even know there were so many styles of Louis Vuitton, and my dentists has a lot of old copies of Vogue.

Anyway. Back to Farage, who is telling the little people that they can win "against the forces of global corporatism".

 

Image: Aaaaarggghhhh (Wikipedia Screenshot)

Ugh. Okay. What next? Oh god, he's telling them they can have a Brexit moment.

“... you can beat Washington...”

“... if enough decent people...”

“...are prepared to stand up against the establishment”

Image: A screenshot from Donald Trump's Wikipedia page.

I think I need a lie down.

Watch the full clip here:

Stephanie Boland is digital assistant at the New Statesman. She tweets at @stephanieboland