The C-word is out in the open. The Prime Minister previously insisted the debate was between indiscriminate and savage Tory cuts, versus Labour’s investment in public services. The Prime Minister uses the term “investment” as we might talk about “investing” in a Mars Bar, which most people would call spending. Now Lord Mandelson has described Labour policy not as big spending, but as wise spending, to be contrasted with Tory “savage cuts”.

The Government is trying to pitch the debate as one between cuddly and sensible economies from Labour, versus Tories “salivating about wielding the axe”. The debate has changed, however, in that the public now expects cuts and even supports them. Moreover, they trust the Tories to better implement them.

They are correct. Several studies have identified savings to be made without cutting essential services. The James report identified £35bn, the Taxpayers’ Alliance and Institute of Directors report pointed to £50bn, and the European Central Bank has said that Britain could save £96bn if its public services could operate with the efficiency achieved in the US, Australia and Japan – and without reducing actual services.

The notion that the public services were simply under-resourced has been tested to destruction by Gordon Brown. The torrent of public money poured their way has not brought commensurate improvements. What it has done is to leave Britain poorly placed (not “best placed”) to deal with the global financial crisis, and with an overhang of debt that will stifle future development and growth.

National Debt is over £800bn and heading for £1tn, and far more than that if the cost of baling out the banks is factored in. A Britain saddled with the costs of paying the interest on that, never mind repaying the debt itself, would see its business and industry intolerably burdened, with its ability to generate the jobs and wealth of the future severely handicapped. It is like a ball and chain tied to the economy.

That debt burden can be diminished in two ways. One is to let the economy grow by tax incentives and deregulation. The other is to cut public spending. The first targets must be waste, profligacy and inefficiency. But after that we must ask which services currently provided by government could be better done outside it, and which should not be done at all.

The enemy of our future prosperity is not the savagery of any spending cuts, but the hesitancy of those not prepared to do what is necessary. It is no time to be squeamish.

Published on Telegraph.co.uk here.

Old Teaser

Dr Madsen Pirie on spending cuts and its link to our future prosperity.

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