Turn off your iPad, David Cameron, and start dealing with Britain's debt
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Turn off your iPad, David Cameron, and start dealing with Britain's debt
By Fraser Nelson
The Prime Minister David Cameron talks about fiscal sanity but is borrowing like a drunken Keynesian.
No one dispenses advice to the eurozone better than David Cameron. His speech yesterday was a fountain of good sense and hard truth. Quite rightly, he said there’s no point in any uncompetitive, debt-addicted country thinking it can just muddle along. Radical, structural reform is needed. He didn’t say which of the many basket-case European economies he had in mind, but one sticks out. It is increasing its debt faster than anywhere else in Europe. It languishes behind even Pakistan and Nicaragua on the global regulation league tables. Its growth prospects have almost evaporated.
How do you solve a problem like the United Kingdom? Two years in, and Mr Cameron seems no nearer to a solution. He is ambitious over welfare and schools, but on the economy he seems trapped inside a failed Brownite consensus. The Prime Minister does know what should be done, as we heard yesterday: radical reform, and accepting that you can’t (as he puts it) “borrow your way out of a debt crisis”. But his government is attempting to do precisely that, borrowing more over five years than Labour did over 13.
Fairly soon, Mr Cameron will be fully aware of these depressing metrics. He has ordered a special app on his iPad that will give him a “management dashboard”, with everything from dole figures to inflation. (One of his senior advisers says the PM spends “a crazy, scary amount of time playing Fruit Ninja on his iPad”, so the new software will offer some respite.) It will be a digital horror show. His government is “dealing with the debt” in the same way that George Best dealt with the drink: bingeing on it. Ours has increased more than any eurozone member’s. And still, as his iPad will soon tell him, the government envisages no economic improvement to speak of by 2015. Britain’s deficit won’t be abolished. It will still be there – indeed, it will be the largest in the Western world.
The Institute of Directors has done more than just provide a stage for the Prime Minister’s speech yesterday. Next week, with the Taxpayers’ Alliance, it will publish a compendium of radical solutions to get the economy moving, almost all of which he will likely consider beyond the pale. The report of its 2020 Tax Commission (of which I am a member) is intended to be the most comprehensive guide to supply-side economic reform published in Britain in a generation. It highlights the many options open to George Osborne to replace the losing formula of tax rises and slow-mo austerity.
Tinkering won’t be enough. It’s not much use trying to simplify taxes, for example, when the system itself is beyond redemption. Rules on inheritance tax alone would take the world’s fastest speaker 10 hours to read. The time has come to start abolishing taxes wholesale, as Nigel Lawson used to do with every Budget. The entire tax system needs to be replaced with something coherent. Trying to incubate “green technology” jobs may well keep ministers busy, but will make no noticeable difference to the economy. British government spending is about half of economic output. Study after study shows the optimal size of government is closer to a third. This should be the aim.
Source: The Telegraph UK, 17 May 2012
