Coalition Cuts

Helmut delivered coalition cuts... but we haven't got Helmut... or Germany's other politicos

As we hurtle towards our Jedward style election, the prospect of a hung parliament and some kind of coalition government looms ever larger. And the key question is whether such a government could possibly deliver the cuts we must have?

Because what we all need to remember is that these cuts are unavoidable. Depending on whose figures you believe, HMG is living £70-140bn pa beyond its means. And the only real question is whether we make the cuts in a considered way - attempting to safeguard the more valuable bits of public spending - or whether we make them over a single weekend of panic with an IMF gun pointed at our head.

We think a hung parliament will make the latter much more likely. As Ken said yesterday:

“The bond markets won’t wait for all the discussions and horse trading. Sterling will wobble. If Britain doesn’t deliver a Government a working majority, markets don’t think that we can tackle the problem, then the IMF will have to do it for us.”

Which sounds spot on to us. We'd be straight into a re-run of 1974-76, when a wobbly Labour government failed to grip a huge fiscal deficit, until forced to do so by a melt-down financial crisis and an IMF visit. And in that case, the government had actually started out with a majority - albeit wafer-thin (3 seats).

But despite that grim experience, there are those who reckon a coalition would actually be better at making the cuts, because it would have broader legitimacy. After all, our strained first-past-the-post electoral system means that no modern government ever has majority support (the current one only got 35% of the votes). So wouldn't it be better to combine the support for two parties?

Frankly, nobody has any idea. While it is true that coalition governments overseas have from time-to-time managed to implement substantial cuts programmes (eg Germany in the 1990s), we have no modern experience of such governments. A coalition would be trying to invent the rules at the same time as tackling the biggest peacetime fiscal deficit ever. Which doesn't sound at all reassuring.

And there's another key point. Minority and coalition governments only ever seem to have been able to succeed after a prolonged period of failure and crisis. For example, a minority government in Ireland managed a successful consolidation in the late 80s, but only after nearly a decade of failure during which government debt interest payments soared to 30% of revenues (eg see here, and see here for excellent Policy Exchange overview of selected fiscal consolidations in the UK and around the world).

Of course, as we've blogged before, there is absolutely no guarantee that even a majority Tory government would actually make the cuts required. And it may be that nobody will do all that's required until we as a nation have suffered our Dunkirk moment.

But a coalition government - probably with the increasingly unconvincing St Vince as Chancellor - would be the least likely to grip anything. Sooner or later we'd face that IMF gun, and a slash and burn emergency package that would make no discrimination between what we do and do not need.

PS If you missed yesterday's Chancellor's debate, you should definitely catch up on the demolition of St Vincent da Flipflop. Guido has the key clip here.

PPS On those German cuts, they were necessitated by the bill for German reunification. Kohl had initially promised reunification could be achieved without the need for tax increases. When that turned out to be nonsense, he was forced to introduce a string of increases in social contributions (aka hidden taxes - cf NICs), sell off government assets, and even fudge the budget numbers (thank God that could never happen here). Only after taxpayers started getting seriously pissed was he forced into serious action on spending. And he was further pressed by the need to meet the strict fiscal criteria for joining the impending Euro - a kind of external IMF-style cosh (only later did it emerge that half the other joiners, like Greece, cheated their way in).

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www.gudanggrosiran.com Categories: 2010 Election, constitutional reform

And The Governance Was Without Form, And Void

Yesterday the Major had another of his increasingly frequent seizures. Comrade Brown claiming to be the champion of the middle class was just too much:

"How dare he! He's spent the last 13 years hunting us down like dogs! He's taxed us to buggery, destroyed our pensions, stuffed us with debt, banned our children from the top unis, dishonoured our womenfolk, seized our lands, burned down our golf clubs... and now he has the sheer brass neck to say he's our friend! Gaaaaaah!!!"

Of course, you and I understand that Brown was simply delivering another helping of meaningless pre-election drivel that will convince no one. But the poor Major takes these things to heart. He still clings to a quaint old-fashioned notion that Prime Ministers are meant to speak truth unto the nation - even when it's unpalatable.

And maybe Brown has dragged his office down to new depths of moral decrepitude, although following Bliar, that seems improbable. Much more worrying is his obvious and painful inability to fill the space. However you look at it, he simply isn't up to the job. His presence has created a dangerous dysfunctional void at the heart of government.

This morning we get an alarming new account of the void from a group of 60 senior civil servants from across Whitehall. They've contributed to a study by the Institute for Government, and here are some of their comments:

“What comes out of No 10 is lots of barmy ideas. It’s the worst possible kind of policy making, which is ‘here is a problem, let’s have a kneejerk reaction to it tomorrow on what we’re going to announce’ and quite frankly the less contact with No 10 the better.”

“All the worst bits of policy making come from the centre. It’s these people who think you change the world by publishing a strategy. And you don’t change a thing by publishing a strategy, it makes no difference whatsoever.”

“It’s no great secret that Gordon is not strategic...a cacophony of silence and confusion... The centre [No 10] is certainly dysfunctional and the Cabinet Office is fragmented.”

“It’s worse than under previous prime ministers. With Blair they did invite you to meetings, but not with Brown. They contracted into a little bunker. I had a very good working relationship with Downing Street under Blair but that changed when Brown came in and it contracted to a very small circle of people. You just got orders from Downing Street, not consultation, and that is still continuing today.”

Now OK, these people are civil servants and they have their own axes to grind - including greasing up to their prospective new masters. But what they say squares very closely with what we see out here: a stream of increasingly preposterous announcements about meat soon coming off ration and happiness for all, the grabbing of every available grandstanding opportunity, and a total failure to address any of the huge pachyderms rampaging round our wrecked national room.
 
So what to do?
 
Well, ditch hopeless Brown asap, of course. But apart from that?
 
The Civil Servants have a suggestion:

“The office of the British prime minister holds a concentration of formal power greater than that of almost any other country in the developed world.
 
In contrast, the fragmentation and lack of co-ordination at the centre of the civil service — the Treasury, No 10 and the Cabinet Office — leads to an administrative centre that is relatively weak. This curious situation has created a strategic gap at the heart of British government which inhibits the ability to set overall government priorities and translate them into action.”

Hmm. I think we can see what they want. A stronger centralised bureaucracy to balance the huge power of the PM.
 
To which we say, not on your nellie.
 
Yes, we can all agree that the British PM has far too much power - more than any of his counterparts in other major developed democracies. But no, we don't want to counterbalance that with a stronger unelected bureaucracy, thank you very much.
 
What we need - as we've said before - is first, a stronger legislature to counterbalance the power of the executive (we still favour a directly elected President, formally separated from our elected MPs - like the US), and second, radical decentralisation - most especially on the fiscal front.
 
Centralised power on the extraordinary scale we've got in the UK is always a threat to our liberties and our prosperity. But when the hot seat is filled by an inadequate like Brown, our entire system of government simply seizes up.
 
Now, WTF do we find a bold radical leader who is big enough to fill the space, but humble enough to know he has to give his power away?

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www.gudanggrosiran.com Categories: constitutional reform, Gordo, whitehall