Public spending is needed to green the economy and repair public services. But the chancellor plans £100bn in cuts
Sir Rod Stewart is a Tory who backed Boris Johnson in 2019. So it was a surprise to hear the 78-year-old singer, when asked about recent strikes by NHS workers over pay, telling Sky News this week that he was on the nurses’ side not the Conservatives’. “I personally have been a Tory for a long time, but I think this government should stand down now and give the Labour party a go at it. Because this is heartbreaking for the nurses. In all my years of living in this country, I’ve never seen it so bad.”
Polling suggests this is a widely held sentiment. The country is in a mess and everyone but ministers can see it. It is not “declinist” to say so. The government bears the bulk of the responsibility for failing to keep the trains running, the classrooms open or the emergency wards working. Public sector workers are fed up seeing their wages fall behind the cost of living. They have every right to feel aggrieved. Private sector industrial disputes are being sensibly settled – with pay awards outstripping those in the public sector. Yet the government doesn’t seem bothered about resolving industrial disputes.
The running down of the public sector was a policy choice. In the decade before Covid struck, and in the name of sound money, Conservative chancellors cut annual public spending, as a proportion of GDP, from 46% to 39%. Austerity left the country underprepared when the pandemic hit. The effects of this are still being felt. Weekly deaths have reached the highest level for two years, with doctors warning that “dangerous” waits for emergency treatment are killing hundreds of people.
Jeremy Hunt, the chancellor, didn’t want to talk about the past on Friday. A cabinet minister for a decade, he wanted to focus on the distant future, not present-day failures. Instead of explaining how ministers would work to avoid falls in real incomes and rising unemployment, Mr Hunt offered himself up as a “tech bro” ready to turn the “UK into the world’s next Silicon Valley”, with a plan “made possible by Brexit”. This is old wine in new bottles. The idea that the British economy is an entrepreneurial success story compared with sclerotic European ones has been a founding Brexiter myth that Mr Hunt’s speech married to a notion of a British genius for innovation.
Mr Hunt’s plan for growth won’t work because it relies on a “restraint on spending”. For evidence just look at the warning this week from Dame Kate Bingham, the former vaccines tsar, that the UK’s hopes of becoming a science superpower are being dashed by Treasury penny-pinching over research subsidies. Yet the UK public debt ratio is lower than in many G7 countries. The government won’t spend despite the US, the EU and China using the state to build up green technology leads. Labour’s Ed Miliband is right to argue that Britain needs a proper industrial policy and a determination to put workers’ rights at the heart of it.
In the next two years, £100bn is being cut from government spending – money that should be used to repair public services, and save lives and livelihoods. Britain needs a balanced economy – one that manages both unemployment and inflation – not a balanced budget. Mr Hunt, however, wants one of the key issues at the next election to be about how to close the deficit. The choice he wants Labour to face is either to slash spending like the Tories; or to raise taxes and risk Conservative attacks over redistribution; or to slow the pace of cuts, which can be framed as profligacy. But in tough times, Labour can dictate the terms of political debate – as the support from Sir Rod shows. The opposition should shape the argument to remain on the right side of it.