Tax and Fiscal Policy

On tax and spending, the voters are right: Our politicians are all the same

There are still 23 days to go, and the signs are bleak. Astonishingly, the rest of this election campaign could be even more trivial, insubstantial and tedious than we have witnessed to date.

This week, the political parties unveil their manifestos. This will have the effect of locking them all into a pattern of endless repetition of key policy pledges over the three weeks between now and polling day. Perhaps you feel it’s been sounding like this already.

On the upside, this means we will see an end to the drip, drip of ill-considered policy announcements being used to secure a headline in a sympathetic newspaper. The downside is that a content-free election campaign is set to become even more vacuous.

All of the major parties are operating within the same broad economic paradigm. Tax revenues, as a percentage of national income, are at about the highest overall level the government could hope to secure. State expenditure is outstripping this revenue by about £10m every hour. GDP growth – at about 2.5 per cent a year – is widely seen as an external God-given feature of economic life rather than as something which can be helped or hindered by government.

Given the widespread acceptance of this grim consensus, you might expect the debate to be based around how many angels you can get on the head of the pin. It’s been worse than that. The parties are starting to argue about which angel should stand exactly where.

So we hear from the Tories that capping energy prices is economically illiterate, but fixing rail prices is apparently prudent. Labour then out-trumps this by seeking to shuffle even more cash from road users to railway users. A Labour pledge to increase spending on the failing NHS by £2.5bn is met by a Conservative promise to display yet more largesse – they’ll throw £8bn at it.

The electorate can expect to be subjected to “death by slogan” over the coming weeks. A fairer society. A stronger Britain. A brighter future. The mainstream parties may as well be running under the banner of “We’ll basically try to just muddle through”.

They appear to accept that the deficit needs to come down and the state needs at least to pretend to live within its means. There’s a desperate desire to prove fiscal responsibility by showing exactly where each and every pound is coming from for any enhanced public sector spending splurges. At his manifesto launch yesterday, Ed Miliband was at pains to prove everything added up to the very last penny.

They are all against excessive public spending in general – but it’s devilishly difficult to pin them down on which expensive state programmes they would slash or abolish. The truth, of course, is that the state is spending and doing far too much. Our politicians are promising more goodies to key target voters and seeking to pay for this out of some amorphous – but apparently limitless – pot of billions paid for by multinational companies, bankers and tax avoiders. The fact that tapping into this largely fictitious fund will raise very little revenue, lead to higher prices, and inhibit economic growth is never addressed.

The sort of politician Britain needs is someone with the courage to say that the vast majority of people should be expected to stand on their own two feet over the course of their lifetimes. That the monolithic state is not an efficient provider of healthcare, pensions, insurance – or virtually any other important service that people desire. That the government should only seek to raise and spend around a third of national income – not nearly 50 per cent of it. That our tax rules should be simple and straightforward – not a politically generated mess of over 20,000 pages of loopholes and exemptions.

In the absence of such a figure, expect the average voter to repeat the refrain “they’re all the same”. That sentiment is much closer to the truth than the political establishment is willing to accept.

This article first appeared in City AM.

Director General, IEA

Mark Littlewood is Director General of the Institute of Economic Affairs and the IEA’s Ralph Harris Fellow. Mark has overseen significant growth in the IEA’s size, influence and media profile during his tenure, since 2009. Mark also sits on the Board of Big Brother Watch, a non-profit organisation fighting for the protection of privacy and civil liberties in the UK. Mark is recognised as a powerful, engaging and articulate spokesman for free markets. He is a much sought-after speaker at a range of events including university debates, industry conferences and public policy events. He also features as a regular guest on flagship political programmes such as BBC Question Time, Newsnight, Sky News and the Today Programme. He writes a regular column for The Times and features in many other print and broadcast media such as The Telegraph, City AM and Any Questions.

3 thoughts on “On tax and spending, the voters are right: Our politicians are all the same”

  1. Posted 14/04/2015 at 14:40 | Permalink

    In his penultimate paragraph Mark makes two key points: that most people should be expected to pay their way in full over their whole lifetimes and that the government is not an efficient provider of healthcare or pensions or (he might have added) schooling. Governments are not ‘monopolists’ in these important areas, as they are not selling anything: they are better described as ‘monoparechists’ (from the Greek words meaning ‘single providers’). Experience suggests that individuals, families and households are likely to be far more ‘responsible in their attitudes to spending and borrowing than governments have proved to be. It is sickening to see our leading politicians, who for all I know started their political careers as perfectly decent people, pandering to the lowest instincts of envy and greed. One of the things that can still be said in favour of democracy is that it gives the electorate a chance from time to time to ‘throw the rascals out’. The trouble is that even if that happens, we are all simply lumbered with another, almost identical, set of rascals.

  2. Posted 19/04/2015 at 17:59 | Permalink

    Mark Littlewood is right. It is infinitely depressing to watch Conservative socialists, and there are now no other kind, or none who will admit it which is the same thing (anyone heard from Daniel Hannan recently?) and Labour socialists squabbling over state largesse, deliberately conflating ‘deficit with ‘debt’ and trivialising everything else, not least defence. Meanwhile, an edict appears to have gone out from all leaders to all candidates to unfailingly connect the word “our” to the NHS.

    “The lessons of paternalism ought to be unlearned and the better lesson taught that while the people should patriotically and cheerfully support the government, its functions do not include the support of the people.’ (Grover Cleveland, 2nd. Inaugural Address, March 4 1893.)

    Today, Rand Paul may not get anywhere but at least the American libertarian is not completely disenfranchised. Paul’s ideas are out in the open. Here – well, thank God for the IEA. I for one am immensely grateful for all your efforts.

  3. Posted 20/04/2015 at 14:56 | Permalink

    Why are paragraphs not permitted?

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