Tweet I was not in the least surprised at the results of the recent opinion poll about whether people would prefer to plug the budget gap by raising taxes or by cutting public spending. But I'm not convinced that the survey has added much light to the debate. It seems to have proved, mostly, that the answer you get depends on the question you ask.
If the choice people were given had been between modest tax rises and closing half the country's hospitals, I'm reasonably certain that the headline could equally have read - 'people demand tax increases'. That alternative question is not a fair or realistic way of framing the question, of course; but my point is that neither was the question which was actually put to people.
'Cutting public spending' is always likely to prove popular; it's only when people are asked more specifically about what to cut that they have to give the question a bit more thought. Far too often, some politicians (of all parties, sadly) lead people to think that the answer is as simple as 'eliminating waste and bureaucracy'. There's a danger that that simply avoids facing up to the real question.
That's not to say that there isn't any 'waste and bureaucracy' in public expenditure. No organisation can be as big as the public sector without having some scope to improve its efficiency; but it is wrong and misleading to suggest either that such improvements can be achieved as a result of simply cutting their overall budgets by an arbitrary percentage, or that the level of savings likely to be achieved will be enough to plug the budget deficit without any cuts to services.
There are some big programmes which could and should be chopped, of course. There's a developing consensus that ID cards and the replacement of Trident are in that category. I'd add illegal wars to the list as well, although bringing involvement in those to an end will not be a simple task.
Even after taking such obvious steps, the gap between government income and current levels of expenditure remains a large one. And, for a variety of reasons including the need to spend on something else in some cases, and the costs already committed, the savings are not likely to be as large as the headline costs of the projects.
The cost of bailing out the financial sector has been a phenomenal cost which has led to a hugely increased level of government debt. (As an aside, I'm far from convinced that enough is being done to ensure that the same cannot happen again in the future. That's not directly relevant to the argument about how we get out of the current hole, but it's vital that government tackles that issue, and does so soon.)
Plugging that gap will be the major economic task facing the next government, and for all the attempts by Labour to try and paint themselves as being different from the Conservatives on this issue, it seems to me that whichever of the two leads the government after the election, there will, in reality, be a mix of both service cuts and tax rises. That will pose a particular challenge in Wales, for two main reasons.
Firstly, we are more heavily dependent on the public sector, and secondly, under the current devolution settlement (and even after the changed situation which will pertain after the referendum which is to be held in the next two and a half years) we have no tax-varying powers. Cuts in English public expenditure will lead to an automatic reduction in the block grant – and the Welsh government will find itself forced to cut budgets in some areas.
LIke most other people, I find discussion of Barnett incredibly boring – but the issue of fair funding for Wales has never been more important than it is right now. The current unfair funding system means, effectively, that those parts of the UK which are underfunded on a needs basis will suffer disproportionately from spending cuts – the exact opposite of what any needs-based approach would suggest should happen.
The One Wales government will be faced with some difficult choices in the near future - but we should surely start by trying to ensure that we have a fair allocation of funding in the first place, rather than by rolling over and accepting the situation.
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