ANALYSIS:Britain's Election 2010 was supposed to be the election about debt. With just days to go, voters still have no understanding of the cuts ahead, writes
MARK HENNESSY
IN the late 1960s, Elisabeth Kübler-Ross first spoke about the five stages of dying: denial, anger, bargaining, depression and, finally, acceptance. Her steps can be used just as effectively to describe the public’s reaction when an economy implodes around them, or struggles to stay standing.
In some ways, the Republic is a year ahead, or even more, of the UK. Tough, unwelcome decisions have been taken, pay cuts have been implemented and social welfare benefits have faced the knife, all leaving the public somewhere, perhaps, between anger and depression, depending on the circumstances of the individual.
In the UK, the public has yet to embark on the Kübler-Ross steps. Everywhere you went over the last few weeks, you heard the public opine on the shame of the national debt and demand that “something must be done”.
Even Gillian Duffy, Gordon Brown’s “bigoted woman”, started by asking, “Gordon, what are you going to do about the debt?”
However, the state of the exchequer's health largely disappeared off the agenda once the election campaign got into full flow; particularly once it was consumed by the Britain's Got Talent-style national conversation that began after Liberal Democrat leader Nick Clegg took a starring role in the TV leaders' debates.
Only now, following a warning from the Institute for Fiscal Studies (IFS) that the economic blueprints of all of the major parties are notable for their gaps, rather than for their clarity, is the issue coming back – although the public’s understanding of how this will affect each of them still borders on the infantile.
Politicians are at fault but so is the public. The first group did not believe it could tell the truth and get elected. The second has not wanted to hear the truth.
Even though they were then outlining £7 billion of cuts a year – just 1 per cent of the treasury’s annual spend – the Conservatives tried tough love last September with talk of “an age of austerity” but they rapidly softened the message when their polling figures started to drop off a cliff.
In 1976, when Labour’s Denis Healey was chancellor of the exchequer, the UK had to go cap-in-hand to the International Monetary Fund for help when its annual deficit ran at 6 per cent of national income.
This year, the figure will stand at 12 per cent, requiring £42 billion of interest payments – more than is spent on defence and nearly the size of the education budget.
Although UK gilts have been regarded in recent days as a safer haven given the turmoil affecting Greece and the euro, the UK is now more prone to outside pressures than before because more than one- third of its debt is held by foreign government and investors – a sharp change on the situation before 2003.
Yet discussion between politicians during the campaign has centred on what they would protect, rather than on what they would cut. Health spending is guaranteed by all, along with education, policing and the military.
Pointing out the obvious flaws in the documents of each party, the IFS said last Tuesday that the Conservatives plan £57 billion of cuts a year by 2016/17 but have detailed just £11.3 billion of that.
Labour, meanwhile, proposes cuts of £47 billion a year by then but has identified just £6.7 billion of them, while the Liberal Democrats believe that £51 billion a year should be cut but have only marked out £12 billion of that.
Every time politicians come on air it costs the exchequer because they have offered a total of £25 billion worth of new spending pledges during the campaign, with everything from a guarantee of a cancer diagnosis within a week to a stimulus fund to back the green industries of the future, including electric cars.
So far, they have all resorted to talking about cuts that will not have an impact for the best part of five years, or otherwise they are depending on “efficiency savings” to make up the numbers. While there is undoubtedly waste in the system it is far from prudent to depend on its removal to sort out all ills.
There are very few crystal clear examples of existing benefits that the public enjoys that will be curbed.
Possible routes are closed off with every interview. Two of the more sensible politicians around, Labour's Liam Byrne and the Conservatives' Philip Hammond, speaking on BBC's Newsnightlast week, both categorically ruled out means-testing child benefit, despite the fact that such a change would reap £5 billion of savings (or a portion of that, depending on where the threshold was put).
No British politician has publicly mused about copying any of the Irish Government’s deeply unpopular actions, other than in frequent conversations around the Houses of Parliament in Westminster where they express amazement that any government could cut public pay and pensions and not have riots on the streets.
In the UK, a 2.5 per cent levy on public sector pensions – less, note, than was imposed in Ireland – would bring £3.2 billion worth of savings, while a 5 per cent cut in the public pay bill would bring £5.5 billion, giving the next chancellor of the exchequer less to worry about going to sleep every night.
Certainly, the UK is not Ireland. Borrowing in the last 12 months, while awful, was less than expected; the UK economy has moved back into weak growth, while much of its debt has a 14-year lifespan before rates have to be renegotiated.
Equally, the financial sector – the source of so many taxes for Gordon Brown during his time in the treasury – is back in profit, or heading there.
However, the growth figures of chancellor of the exchequer Alistair Darling are regarded as utterly implausible by the City, and Darling, or his successor of whatever political hue, will have to hope and pray that the City, which has been wrong about much else over the last couple of years, is wrong once more.
Under Labour, public spending has grown by 54 per cent per cent since 1997. Some of the money has been badly spent, undoubtedly, but much of it has improved the lives of millions – even if it was based on porous foundations.
Former Liberal Democrat leader Lord Paddy Ashdown has warned that the cuts to come will “provoke the second biggest crisis in politics” – after the MPs’ expenses scandal – when the public does comprehend the scale of what is needed.
Regardless of who wins on May 6th, and whether cuts happen within weeks, or months, significant public spending reductions can only happen when the public either agrees, or when they are so shell-shocked that they will not vigorously object.
Neither situation exists currently in the UK. The job of chancellor of the exchequer this time is one only for a masochist.