Yorkshire Post article on the need to make wise cuts

This article was published in the Yorkshire Post

To cut or not to cut... that is the pressing question for Labour

16 September 2009

WHAT is it with the C word? Politicians have been dancing around the word "Cuts" as if pruning a budget was the great unmentionable.
At last Gordon Brown, following on from Alistair Darling and Peter Mandelson, has used the "C" word in his TUC speech yesterday.

Can this open the way to an adult discussion about how we are going to manage our public spending over the next political cycle? Because, as always, the public is far ahead of the political class.

Every family, every business and every voluntary outfit lives with cuts in the sense that money that was once available is no longer there. Cars are kept longer, holidays are cut to one a year, Marks & Spencer food is replaced by Lidl and Netto.

In my constituency, every business is cutting budgets and laying off staff. If the order book is down or banks dry up credit, what else can a business do?

The public sector is not exempt. Rotherham Council is sensibly holding down council tax increases by withdrawing some services. These cuts hurt but life goes on. When Margaret Thatcher cut the supply of those tiny bottles of milk served from metal crates to school-children, she was denounced from every political pulpit. But why, in the affluent 1970s, should the taxpayer have supplied free milk when parents were perfectly capable of feeding their children?

The Essex police have shown the way by filling up at Morrisons' service stations with a big discount, and cut the expensive provision of petrol in police stations. Why not go further and close down police station canteens and ask officers to eat in local caf├ęs and be in the community?

When I was a Foreign Office minister, I asked why we could not fly easyJet or Ryanair? Fellow ministers and mandarins looked at me as if I had said something very rude and unpleasant. But every government department can cut waste if they set their minds to it. Taking money from hard-working citizens via the tax system places a moral responsibility on ministers to spend that money wisely.

The Ministry of Defence is moaning that the Treasury now wants to see any project that costs more than £100m. Hooray for the Treasury! We need more tough questions and more transparency on public spending.

Cuts do happen. The Foreign Office has suffered under Labour and had to close down embassies as money has been switched to development aid – as well as to the intelligence agencies – to counter the 21st century threat of ideological jihadi terror.

Aidcraft has replaced statecraft as the principle of British foreign policy. But the development department does not know how to spend the money. It has paid billions to accounting firms, corporate consultants and outfits like the Adam Smith free-market institute to do overseas development work. Certainly the well-paid employees of these firms have had their incomes grow and develop thanks to the taxpayer.

A major cut would be to banish these billion-earning consultant firms from government and oblige ministers and senior civil servants to take their own decisions and manage their departments instead of paying consultants a fortune in taxpayers' money.

But it is too late. Already the big consultant firms have infiltrated the Conservative front bench, seconding their staff and donating hundreds of thousands to Tory shadow ministers. If there is a change of government, once again you and I, as taxpayers, will be boosting the profits of the corporate consultancy world.

In fact, the biggest mouths on the nipple of taxpayer cash are some of the richest in the land. The Queen and our aristocratic land-owners are the biggest beneficiaries of the Common Agricultural Policy payments.

When Peter Hain and I, as ministers, tried to argue that we should top-slice the massive CAP cheques to the richest of landowners and instead support smaller farmers, the NFU lobby swung into action to ensure that the taxpayer would keep making the rich landowners even richer.

In Yorkshire, there are thousands of firms which train, build and provide services to hospitals, schools and local government. The men and women who run these firms believe they are sturdy private sector entrepreneurs. But they depend on the taxpayer and have an interest in the shape and scope of any cuts.

There is a debate which now needs to take place. But it is no longer about cuts – or no cuts – but how we guide the economy over the next period. The choice is clear. A Keynesian boost to the economy which keeps businesses afloat and shields the vulnerable from the kind of simplistic public expenditure cuts we saw in the 1930s or under the monetarist experiments of the 1980s. The paradox of the Thatcher cuts is that public expenditure actually increased as the state had to pay out more in social benefits as a result of millions losing their jobs.

So the best way to cut the share the state takes is to grow the economy and that, today, means investing. So the argument turns on what the state can do to support value-adding activity and where the state has to turn off the taps.

Certainly, when I became a South Yorkshire MP 15 years ago, parts of the region looked like they belonged in eastern Europe, with rotting infrastructure, poverty pay, schools dating from the 19th century and people driving Ladas and Morris Marinas.

Do we want to return this region to that level of poverty? The nature of cuts and economic management will provide the answer.

Let the debate be joined and the pain shared, but if we want new roads, new rail links, good hospitals, and new green industry to grow in Yorkshire, then those who demand massive instant cuts in spending should be careful. They may get their wish granted.