The talk is all about cuts. I am engaged in a big national debate about the state of public finances.
The local community will soon face cutbacks in central government funding for councils, a squeeze in the local NHS and tougher times for businesses and individuals who depend on government work.
The squeeze is coming because the government has picked up massive bills from the collapse of the banking system and from recession. Tax revenues have fallen like a stone while public spending has continued to rise. A big deficit was inevitable in recession. And the government must fight rising unemployment. But it will soon have to put the public finances in order.
The worst response is old fashioned ‘slash and burn’. We could lose funding for badly needed local schools. There would be cutbacks in financially vulnerable local hospitals like the West Middlesex. The promised improvements in local services would be stopped.
A better way is to decide priorities. There is simply no money for some big government plans: the massive databases, including ID cards, and computer projects, as in the NHS; the enormous defence contracts including new Trident submarines. There is need to curb unhealthy ‘fat cat’ culture in the public sector with massive salaries and subsidised pensions. The welfare benefits have mushroomed with the complicated tax credit scheme going right up the income scale.
Some people will say that the only way to get the books back into balance is to push up taxes. I suspect that the public will be angry at being asked to pay for the greed and folly of the banks and the government’s inability to control its own costs.
Indeed, taxes should be fairer not higher with a clampdown on tax loopholes and avoidance and steps to lift low earners and pensioners out of tax.