Which public services will the Conservatives shrink further?

Liz Truss has just handed Liberal Democrat campaigners a powerful set of questions to put to Tory MPs. She insists that tax cuts are the answer to Britain’s economic problems – amounting to 1-2% of GDP, perhaps more once the full package of proposed cuts emerges. She’s pledged to raise defence spending by 1% of GDP – for which, sadly, there is a case when Russia intervention in Ukraine threatens European security. She’s promising to provide financial support for household and business energy bills, likely to amount to between 2% and 4% of GDP over the coming year, without offsetting the cost through a windfall tax on energy companies of the sort that most of our continental neighbours are levying. Other government programmes will have to be slashed to prevent public deficits spinning out of control.

So what cuts in other public services will Conservative MPs accept in order to prevent government debt spiralling and the pound sinking further on international markets? A squeeze on schools, or policing, or on the already-overstretched NHS? Holding down public service pay, while letting bankers’ bonuses soar? Slashing public investment in hospitals and transport infrastructure, and reducing local authority budgets further, thus saying goodbye to the promises of ‘Levelling Up’ that helped them to win the last general election? Or holding down benefits, leaving the poorest in our society even poorer? Ask every Conservative MP what further cuts they will support – or whether they will oppose this tax-cutting strategy.

Truss’s ideological commitment to tax-cutting is horribly outdated. As newspapers have commented, it’s the Reagan approach to economics from the 1980s, claiming (following the Chicago School economist Arthur Laffer) that cutting taxes triggers faster economic growth. There was little evidence for such an assertion then, and less in the difficult circumstances of 2022, facing a global recession and an energy crisis. Reaganomics led to a larger budget deficit, not to faster growth.

Truss has argued that tax cuts will ease supply constraints in the British economy. But some of the most severe constraints in our economy come from an under-educated and under-trained workforce, for which higher public investment in schools and skills are essential. Poor infrastructure – rail links, broadband, bus routes to connect workers with jobs – holds many parts of the UK back; the lessons of water privatization teach that private contractors do not make long-term investments in public infrastructure if the government leaves it to them.

Truss seems to have swallowed the libertarian ideology of the Republican right, filtered through the Institute of Economic Affairs (IEA), the Taxpayers Alliance and other right-wing think tanks. The Taxpayers Alliance was set up (by Matthew Elliott, later chief executive of the Vote Leave campaign) on the model of Americans for Tax Reform, whose founder, Grover Norquist, famously declared that “I’m not in favour of abolishing the government. I just want to shrink it down to the size where we can drown it in the bathtub.” Mark Littlewood, director of the IEA, was quoted when Truss won the election as saying that “ we want to totally reframe the debate about the proper role of the state.”

This is not a Conservative agenda – as our campaigners should sharply remind Conservative MPs and councillors. It’s a free market ideology, propounded by economists who believe that we are motivated solely by self-interest (and ‘rational expectations’), and that altruism, considerations of the public interest and the common good, social value and community, are irrelevant to public policy. The Conservative Party has been successfully colonised by this anti-state doctrine, with funds flowing from American billionaires to invite them to conferences and support their research. We should also remind Tories that the widening inequalities that unregulated free markets produce are incompatible with democracy; and that Chicago School economists chose free markets over democracy when they supported and advised General Pinochet’s regime in Chile.

The transition from one monarch to another has been marked by phrases like ‘constitutional government’, ‘public service’, ‘common good’, duty and decency: all concepts that are foreign to the libertarian right. We should pick up those phrases and throw them at Conservatives, as many of them waver at the approach of the new Prime Minister. These tax cuts are intended to shrink public services as much as to promote economic growth.

* William Wallace has fought five parliamentary elections in Manchester and West Yorkshire. He is a former president of the Yorkshire regional Liberal Democrats.

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4 Comments

  • Steve Trevethan 22nd Sep '22 - 11:26am

    It seems that Madam Truss is following Neoliberal Economic Theory.
    Which economic theory does our party follow?

  • Let’s face it Ms Truss it just another mouthpiece for a very dangerous right wing group that have taken control of the governance of our country and the sooner the electorate realise this the sooner our country will return to some sanity with politicians who represent a semblance of democracy and fairness for the majority.

  • Isn’t the answer that the current cliché in control of the Tories (as Steve and Barry have pointed out) are taking the led from their Republican high priests in the US. So shrink government with the exception of claims to increase defence spending all whilst letting government debt spiral out of control. If it was Lib Dems / Labour / SNP etc taking this approach to debt the Tories would be outraged. But it turns out the magic money tree does exist if you are Liz Truss after all.

  • Jenny Barnes 23rd Sep '22 - 6:47am

    All of them except the public order function of the police.

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