Article for Wokingham Times

When 250,000 people march in Central London to complain about cuts the government should listen, and should engage with their leaders in a sensible dialogue. There are many things I felt I wanted to say had I been invited to talk to them as Mr Miliband was able to do.

I would have started with a  reassurance. I do not represent Wokingham in Parliament to sack teachers or nurses or doctors. Nor did many other Conservative and Lib Dem MPs set out to sack such staff.  I am glad the Coalition has said it intends to increase  spending  for these core services that matter to many electors. With the extra money we have voted there is no need to sack any of these important workers if things are sensibly managed. Nor did I stand for Parliament to threaten constituents of mine who may work in the civil service or other public administration with compulsory redundancy. My figures show we could make all the adjustments we need to make to public budgets without compulsory redundancies.

The issue at the heart of the march was money. I would have pointed them to the figures. In last June’s budget the new government promised to increase current public spending by £92 billion a year over the life of this Parliament, compared to the last year of Labour. If public sector pay and costs do not rise too much that provides a realistic  basis for running good public services. If pay and prices do rise too quickly it is more difficult to live within the spending plans. The increases are smaller than over the previous ten years, and do require some parts of the public sector to do more for less, or to cut out less desirable activities.

If we compare that with the budget last week, we see that the government has been listening to the protesters before their march. The government has decided to increase spending by more. The new budget proposes an extra £34 billion of spending over the next four years – all of which will have to be borrowed. It is difficult to see how we could agree to a bigger increase than this. Maybe the protesters did not appreciate this large increase in the spending totals, as they were not generally reported.

The Opposition in Parliament says the government is cutting spending too quickly and borrowing too little. Before you rush to judgement it might be an idea to look at the numbers. The UK government has a debt of around £900 billion today. The Coalition government plans to increase this total debt by £485 billion over five years. Let me repeat that. The current plans assume an increase in state debt of more than 50% over five years. They assume this government will add to our national borrowings   more  than the total state debt in 1997. I find it difficult to think this is recklessly mean, or evidence of drastic spending cuts that cannot be managed.

There are two main  reasons why  there does need to be some limit on how much extra we borrow. The first is we or our children have to repay it with interest. The interest bill is already bigger than many government department budgets.  The second is, if a state tries to borrow too much there comes a point where the markets make that state pay through the nose for the borrowing. We do not want to end up like Ireland or Greece or Portugal, forced to make worse cuts, because there are  no longer affordable loans on offer.  

Last week I was unable to vote for UK military action in Libya. I wish our military  well there and hope there can be a rapid and happy outcome. I just felt it would be better if Arab states and the other near neighbours did whatever the UN thought appropriate, and not us. We have done so much, strained our forces so much, and need to economise on the money as well.

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2 Comments

  1. Posted March 30, 2011 at 10:31 am | Permalink

    The UK government has a debt of around £900 billion today.

    ===========

    No it does.

    It has a borrowing (gilts) of 1050 billion.

    So since you’ve excluded civil servants pensions, that’s a good sign. You’ve clearly no intention of paying that debt.

    Bad sign too, that the state pension is excluded. Not sure that people will be too happy about not getting a state pension.

    Then people have paid all that money for a state second pension. Clearly, if you think that’s not a debt, they are going to lose all that money. I doubt they will be happy.

    The PFI people might get rather annoyed. Default on those debts, and they will reposses the hospitals. How are you going to treat people without a hospital?

    If you want a more accurate number, 6,800 billion, of which 50 billion is the bank bailout.

    The truth is simple. Carry on spending as you suggest and its (insert anglo saxon epithet)

  2. Posted March 30, 2011 at 5:01 pm | Permalink

    The public sector is too vast! (not large or big, vast) It needs culling. Shame there is no party that can do it. (since it’d probably be political suicide) so ingrained is the sense that the state should provide all.

    Maybe a move to a two class country of “the state” and “the free” – with “the free” NOT paying for “the state”! See how long that would last!

  • About John Redwood


    John Redwood won a free place at Kent College, Canterbury, and graduated from Magdalen College Oxford. He is a Distinguished fellow of All Souls, Oxford. A businessman by background, he has set up an investment management business, was both executive and non executive chairman of a quoted industrial PLC, and chaired a manufacturing company with factories in Birmingham, Chicago, India and China. He is the MP for Wokingham, first elected in 1987.

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