In Kipling’s poem he observed “the burnt fool’s bandaged finger goes wabbling back to the Fire”.
I wonder that anyone who has witnessed political events for the last fifteen years could fall for the fantasy economics of Nigel Farage’s Reform programme announced only a few days ago.
Of course, I find myself often addressing students or sixth formers who weren’t politically aware when important events occurred. Also, many of my constituents have busy lives, balancing demanding jobs with any number of family commitments. Who can blame them if they barely catch a few headlines on the early evening news, when more pressing concerns crowd their consciousness?
But these are the facts as I recall them.
In 2010 the Conservative-led coalition government inherited the worst recession since the 1930ies. Included in this inheritance was a record government overspend funded by unsustainable borrowing. Cutting expenditure was vital to restore financial credibility. Together with the Liberal Democrats, setting aside party differences in the national interest, the coalition set about reducing the deficit. This policy was condemned as ‘austerity’. It was painful, but it worked.
Had we not undertaken those deep cuts we could never have had the credibility in the financial markets to borrow the billions necessary to sustain the economy through the Covid pandemic. Or, to cushion the effects of the huge increase in energy prices when Russia invaded Ukraine.
Clearly, these were two examples of times when Governments have to borrow in the face of emergencies, but their ability to do so depends on the financial credibility established in ordinary times by matching expenditure to tax revenue and paying down debt.
Our national debt, at some 100% of our income, together with the increasing interest payments to service it, is largely the cost of having survived Covid and the energy crisis with the economy intact. But it is essential that the highest priority is attached to reducing the debt and eliminating the deficit in current finances.
In this context any offer of tax cuts has to be accompanied by a credible explanation of how they are to be paid for. The lesson of the disastrous Truss premiership was the promise of tax cuts, accompanied not by matched restraint in expenditure but, on the contrary, further borrowing and spending.
Despite this bitter experience and the lessons that it ought to have taught us, we find that Reform has moved sharply to the left in a bidding war with the Labour Party to outspend them on welfare by ending the two-child limit.
In addition, Reform has promised £80 billion of tax cuts, to be paid for by reducing waste, ‘wokery’, and scrapping Net Zero.
The savings will be paltry and It is not entirely clear how much might be spared by cancelling Net Zero, given that most of it is to be driven by private sector investment.
In any event the Net Zero policy is, I believe, vital for our future security and prosperity. The difficulty with it is not one of principle, but of the nature and speed of its implementation.
In the end it comes down to this. Given our recent experience, are we really going to be taken-in by a politician offering us eye-watering tax cuts without the most detailed and credible explanation of how they are to be afforded?