25th May, 2010

Yesterday, as I cycled through Hyde Park, I saw a heron flying.   Are herons auspicious, or ill omens? 

Yesterday, too, the Coalition announced its £6.2bn of cuts.  Note, said George Osborne, it’s a little more than we said.

Some concerns:

1) Can you call it £6.2bn if you are also going to say you are “reinvesting” £500m from the same pot?

The answer must be no.

I thought I was being unduly churlish, that there had to be some good and proper reason for the way the figures were being presented.  So I checked the Treasury statement in detail.  But I could see no explanation in the official document for quoting the gross figure instead of the net one, which is of course £5.7bn.

I can only guess at the reason: to suggest that the Coalition is working with care; that it has a heart; that it can make cuts but that it can also divert money where it thinks it should go.  To suggest that the Coalition isn’t JUST about cuts.

Or, more cynically, to distract us from the simple fact of the cuts.  If so, it has worked.  I’m really confused, and forgetting my top-level reactions.

2) Things can get sometimes get better – by themselves.

Growth is up a fraction higher than forecast, at 0.3% instead of 0.2%.

No great celebration there. (But no credit to Labour, either, I notice.)

But what about the state of the deficit, which, according to last week’s figures from the Office for National Statistics, is huge at £156bn, but lower than projected, by a whopping £11bn?  Even recent predictions had it £7bn higher, at £163bn.  So we are £7bn-£11bn better off than the Tories thought we were during the election.  In fact, we are £18bn better off than projected on the raw figures, which include some gains on government-held bank shares.

If £6bn was exactly the right amount of deficit reduction, this has already happened, by itself.

Forgive me for thinking that £6bn is the magic figure only because it was the figure talked about during the election, and that it has no other meaning whatsoever.  It so happens that Heron was the name of the Greek mathematician who first recognised the phenomenon of the “imaginary number”.  This £6bn certainly has an imaginary – or at least, imagined – quality to it.

No one doubts that the deficit will need to be dealt with.  The issue is how hard, how fast.  There is nothing necessary, or exact, about £6bn now.  Unless, that is, you are ideologically wedded to cuts you think you can get away with (because you’ve already sold them).

3) I don’t mind the Tories being ideologically in favour of cuts.

I just wish they’d be a little more up-front about it.  As someone once said, they love making cuts; they do it for sport.  They believe in a small state, rolling back its frontiers so that the private sector can flourish.  They have an either/or philosophy of the relationship between public and private sector, which you can debate.  Personally I think the financial crisis makes a powerful case for fearing the unfettered market.  It makes a text-book case for the need for governments to act, both to calm markets and then to reflate them; to spend when the private sector is too scared.  If the Bank of England’s role is sometimes ‘lender of last resort’, so government’s role, sometimes, is ‘spender of last resort’.  Government, on occasion, is for big boys with nerves of steel.

But George Osborne constantly feels the need to refer to our calamitous Labour debt, the mess he has to clear up.  We can debate what kind of mess we’d be in if the Tories had presided over the banking crisis – their refusal to act would have produced carnage – but that’s not the point.  We can debate whether the cuts are necessary or wise while the recovery is so fragile, and past experience in Japan and in the Great Depression shows the pitfalls of cutting too deep, too early – but that is not the point.  We can debate whether the UK’s debt is really equivalent in nature to that of the so-called ‘PIGS’, but that is not the point. 

The point is that whatever the deficit, the Tories would be cutting.  It’s what they do.  They don’t like big states.  In this respect, the modern Conservatives are entirely unreconstructed.

To be fair, the rhetoric is not buried.  On Radio 4 yesterday, my friend Jim Naughtie allowed (or encouraged) Osborne to rattle on, and it soon became clear that he believes in “a smaller state and a bigger society” and “it’s about the state doing things it’s good at doing and not doing things it’s not good at doing and in the end this is about all of us taking greater responsibility for our lives and the society that we live in.”

Or, in other words, “yes there’s a stinker of a deficit, but ‘in the end’ this is about our ideology.”

I have to say I respect his honesty on this.  When he’s not up-front it’s because he can’t resist taking a pop at Labour and “the biggest deficit in Europe”.  Or it’s because he innocently conflates the problem of the deficit with the ideology behind his solution.  It’s not because he’s covering his real beliefs.

What’s really disappointing is that, I’m afraid, I think the LibDems are lying.

4) UnconVinced

Vince Cable appeared on Newsnight last night and claimed, like Nick Clegg on Sunday, that he had changed his mind on the need for cuts now.  During the election, he had many reasons (five, in fact) why the Tories were wrong to advocate cuts in 2010.  But now he’s changed his mind.

Fair enough.  But why?  Because he had to compromise as part of the coalition deal?  No.  Because of the crisis in Greece and the anxieties over “sovereign risk”.  The anxiety in the markets has spread across southern Europe, and could travel north to our door.

Greece.  That’s what made Vince think we needed exactly £6.2bn (or is it £5.7bn?) of cuts.

I don’t mind the argument.  I just don’t believe it is the reason.  Until now I didn’t subscribe to Nick Robinson’s line about Vince “not looking comfortable” in the coalition.  But seeing his body-language and listening to his voice on Newsnight, I changed my mind.  I think he’s lying. 

It pains me to say it.  It is not very generous of me to think it, let alone write it.  And I have no evidence beyond a reading of body language.   But if and when it comes online, look for yourself. 

Nor can I explain, if I am right, why he lied.  I wouldn’t mind (what I take to be) the real argument – that compromise with the Conservatives was necessary to win power, and this was one of the casualties.  I don’t know why he didn’t feel able to say that.  What am I missing?*

5) I’ll tell you one thing I’m missing: the New Politics.

I thought that one of the benefits of hung parliament and coalition was supposed to be more transparency, more compromise, less mudslinging, more decency in politics.  I thought that was what the LibDems stood for.  I thought the Coalition was going to deliver us historic reform – and surely that must start with the rhetoric.

Alas, we’re not seeing much New Politics so far.  George Osborne and Dave Cameron (see today’s defence of the Queen’s Speech) cannot open their mouths without talking about the dire legacy they have inherited.  At one point, Osborne even justified his cuts package as a way of “avoiding Labour’s job tax in 2011”!  Nick Clegg complained on Andrew Marr’s programme on Sunday that now that they’ve “seen the books” the Labour mess is much worse than he feared.  No mention that the figures are £7bn better than expected.  Or is that £11bn?  Or £18bn?

Let’s be honest, there will be no sudden end to Westminster mudslinging and yah-boo politics.   Did anyone seriously expect that to be a by-product of a hung parliament?  (Actually some people did, and that’s why I’ve been arguing with them about it on these pages and elsewhere.)  I know I had no illusions.

But I really, really didn’t expect to find myself feeling that the most statesmanlike of LibDems, Vince Cable, had lied on television in the very first days of the Coalition government.

I rather think my heron was inauspicious, and that none of this augurs well.

 

STOP PRESS

for a surprisingly similar (and much better written) article, see http://www.anthonypainter.co.uk/2010/05/25/the-haunting-of-vince-cable/ 

Once you’ve read Mr Painter, you’ll never read me again.  Even I won’t read me again.  Shame, I was just getting warmed up.

* Mr Painter’s answer to “what I’m missing” is, essentially, that Vince Cable believes the cuts might send us into a downward spiral.  He is haunted by this fear.  Interesting.   For my part, it is hard to get worked up by the relative small beer of £6bn.  On the other hand, the language of cuts – “designed to send shockwaves” – and of course the signposting of massive austerity measures down the line could have the effect of terrifying the private sector – would you invest in an economy which is having all the demand sucked out of it?  how are you going to sell anything to people with no money in their pockets? – and triggering the double-dip.  That is a real and sobering risk, and it is the principal reason I signed up to help the Labour Party during the election.   If this goes belly-up, the hopes of a generation will be lost.  And it will haunt us all, not just Vince Cable.

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