“When I was young, it grew on me by the minute
That we were outside Europe and should be in it
Now I am old and we are back outside it
I simply can’t abide it.”
This clerihew was sent to me out of the blue by Martin Bell, the celebrated former BBC foreign correspondent who became known as the Man in the White Suit during his 1997-2001 spell in parliament as the independent MP for Tatton.
It seems to me to capture the feelings of so many people I meet or who write to me. We are of course still part of the continent of Europe, and always will be, but the European Economic Community, or the European Union it became, would not fit so well in such a neat, Ogden Nash-style verse. We know what he means when he says we are now outside Europe.
The chancellor, Jeremy Hunt, knows too, as he dots the i’s and crosses the t’s on his much-trailed budget, to be unveiled – finally! – on Wednesday. Hunt was a Remainer and fully aware of the self-harm, and indeed absurdity, of Brexit. With the Office for Budget Responsibility estimating a hit to the economy of 4% of GDP, Goldman Sachs putting it at 5%, and the National Institute of Economic and Social Research calculating up to 6%, Hunt knows that anything up to £40bn (the Centre for European Reform estimate) may have been knocked off the “headroom” he has for budgetary concessions. The tax-cutting Brexiters have been hoist by their own petard.
A combination of speculation and inspired – or uninspired – leaks has produced a situation where Hunt is said to have limited scope for tax cuts. But the independent Institute for Fiscal Studies has warned that the kind of tax cuts the Tories want would have to be counterbalanced by reductions in public expenditure. And this at a time when the budgets of so many public services have been pared to the bone.
As the IFS says: “The economic case for tax cuts is weak. The public finances remain in a poor position.” The irony is that the foreseeable strains on much-needed public spending indicate that taxes will have to rise to enable the nation to cope with the many demands now being made on the public weal. The International Monetary Fund says the same. Yet neither main party admits this.
It is obvious that the government, with all this stuff about tax cuts to help working people, wishes to bribe the electorate by claiming to ease the hardship imposed by cost of living pressures, while effecting this at the cost of even more austerity in the public sector. In fact, the main beneficiaries of tax cuts would be middle- and upper-income earners, not “hard-pressed working people”.
This ailing government is presumably making the cynical political calculation that short-term tax relief is worth trying even at the cost of yet more austerity.
Older readers may recall that early on in the post-2010 era of austerity, I quoted my late friend David Cornwell, aka John le Carré, who told me: “It’s planned penury.” And so it turned out for so many people in this benighted country.
Rachel Reeves, the shadow chancellor, was recently quoted by my colleague Larry Elliott as saying: “The next government – Conservative or Labour – will inherit the worst set of economic circumstances since the second world war.”
The problems facing the country do evoke parallels with the immediate post-1945 situation. Moreover, they demand an Attlee-style grasp of the need for bold measures, starting with a vast investment programme founded not on the kind of fiscal rules that imply continued austerity, but on the assumption that sensible investment pays dividends if you take the long view, and are not hidebound by annual budgets and arbitrarily chosen fiscal rules.
The Attlee government knew about the need for regional policy, well described in the memoirs of Douglas Jay, a prominent member of Attlee’s cabinet. Regional policy is now known as “devolution”. Under the auspices of Harvard University and King’s College London, a new report examining the UK’s feeble growth performance argues in favour of a more equitable regional balance, with more power given to local leaders throughout the regions.
At a panel discussion on the report, Sir John Kingman, a former senior Treasury official, and now chairman of Legal & General, complained that international investors get a poor reception here. Brexit, I could not help thinking. He said – I suspect only half-jokingly – that Gordon Brown’s chancellorship had brought lots of money to the regions but no devolution, whereas George Osborne’s brought plenty of devolution but no money.
Yes, Osborne was the chief begetter of Le Carré’s “planned penury”, and if Labour win they will be saddled with the consequences, as Reeves knows only too well.
