Polly Toynbee is right – we need more honest debate on tax and spend

I don’t approve of Polly Toynbee. She’s so deep in the Guardian bunker that she rarely has anything useful to say. She writes polemic that will entertain the left, but not persuade anybody else . So I wasn’t expecting much from her article last week Economic dishonesty is the deadliest deficit of all. I was expecting her to repeat the Labour myth that the economic crisis was somebody else’s fault, and that austerity policies have strangled the British economy. But she was making a point of value. It was that the Conservatives and Labour have very different views of the future government finance – but they were both concealing their differences.  The Conservatives do not want to spell out the implications on services and benefits; Labour do not want to look irresponsible, or to be painted as the party of high taxes.

She wrote her article before the Autumn Statement delivered by the Tory Chancellor of the Exchequer, George Osborne. Ms Toynbee should be pleasantly surprised at how things turned out, though I doubt that she is. The British government’s future policies on taxation and public expenditure have taken centre stage, and important differences have emerged between the political parties.

It started with some rather excitable coverage on the BBC Radio Today programme, which pointed out that Tory party plans for future spending would take it back to being the lowest proportion of national income since the 1930s. The bare statistics were factual (inasmuch as future projections can be described as factual) – but a comparison with the 1930s is farcical. National income is incomparably bigger than then – so a similar ratio of spending to income will not produce destitution that is in any way comparable. For similar reasons, the economic crash of 2008-09 is no way comparable to that of the 1930s, in spite of some of the ratios to national income being similar. Mr Osborne rather publicly objected to the coverage, drawing attention to the whole issue. Up to that point Ms Toynbee’s forecast seemed to be coming true.

In turns out that though Labour and the Conservatives are aiming at the same date to eliminate the structural deficit in British spending (i.e. cyclically adjusted spending less taxes), beyond that the difference between Labour’s spending plans and the Conservatives’ is as high as £27bn per annum. Differences on this scale are significant.

The next act in this drama was an attack by Mr Osborne on his Liberal Democrat coalition partners that they had lost the plot on economic policy because their plans were closer to Labour’s than the Conservatives. Danny Alexander, the Lib Dem Treasury minister, made a robust response about the impossibility of Conservative spending plans. Ms Toynbee, in typical Guardian bunker style, had painted the Lib Dems as indistinguishable from the Tories, so she would have been less than pleased about this – but not too upset since she no doubt thinks that the Lib Dems are a political irrelevance these days.

It is to be hoped that these spats are the beginning of a serious political debate. Up until now we have experienced manufactured political rows over the immigration, the European Union and the NHS. Admittedly the Tory preparedness to take big risks with Britain’s membership of the EU is a serious political issue – but the row is more about tactics and competence than strategy. On the other issues the politicians have very little of practical value to say. But the gap between left and right on state spending (I refuse to call it “economic policy” as most commentators do) foreshadows very different visions for how the British state should work.

The right has an economically liberal view of the state, with both state services and benefits being pared back, leaving more space for private enterprise and consumer choice. The left does not seem to have such a clear vision – much of its energy is being devoted to keeping public services and benefits as they are and avoiding serious questions about the future. That is a pity, because shifts in both demographics and the distribution of economic power point to a larger role for the state.

The problem with the debate, though, is that none of the political parties is being clear about what they want to do. It is good that we are talking about broad numbers on the size of the state – but this needs to be brought down to specifics. The Conservatives need to be clearer about what they plan to cut, and how they want to reshape benefits. Labour and the Liberal Democrats need to do this too – because their plans also involve big cuts. But they also need to talk about taxes. The Tories are quite right that the only tax raising idea that they will talk about, the Mansion Tax, is small beer.

Britain, along with most of the developed world, needs to rethink tax, state benefits and public services. I do not believe that they can be shrunk in the way the right suggests. But neither are they sustainable in their current form, as the left seems to think. That, not immigration, exactly who delivers health services, or even membership of the EU, is one of the critical issues of our time.

The more politicians debate these issues, the better. But if they obfuscate, then Polly Toynbee’s angry rhetoric will for once be justified.

 

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