We need a change of approach to the banks, tax rates on savings and earning which optimise revenues, a different approach to managing and explaining public spending, and a more upbeat message from the government.
Today I wish to concentrate on what fascinates and preoccupies modern politicians the most – the message. The Coaliton government was right to get over the point that the UK’s debt is too large and growing too fast. They were right to stress the need for more rapid and purposeful attempts to cut the deficit, the rate of debt increase. They have brought long term government borrowing rates down, which is good news.
That is now achieved. The UK does not today stand on the brink of a Greek crisis, as markets are currently persuaded that the government will bring their finances back under control and the deficit will be financed without too much strain.
Today the challenge is to reassure savers, investors, companies and job creators that the economy will grow sufficiently to make new investment and job creation worthwhile. The task to is to show that the UK is truly open for business. That means welcoming expansion of banks and business consultancies as well as steel works and car plants. It means countering the idea that public spending is about to be slashed by 25% when the figures show otherwise.
This morning I heard some new forecast that 500,000 jobs will be lost in the private sector as well as 500,000 in the public sector as a result of the “cuts”. There was no counter to this, no explanation that in any healthy growing economy jobs are lost as well as gained, no-one asking how many new jobs would be created on the other side of the account. There was no-one saying that even this forecast did not imply 1 million people were about to be made redundant.
The government’s strategy depends crucially on growth. Their deficit reduction rests on the assumption that tax revenue will be £176 billion a year higher in 2014-15 than it was last year. For that to come true the government needs to send a positive message to enterprise that the public spending controls will be introduced and exercised sensibly, and that job creation and risk taking will be rewarded, not taxed away.
The public debate in recent weeks has been all about how to cut fair shares of a cake which is too small. We need to spend more time helping bake a bigger cake, and less time squabbling over the crumbs of the old one.