How big should the state be? The political consensus appears to be that it should be very big indeed. Last week the BBC’s assistant political editor referred to the idea of a smaller state as “utterly terrifying”.
Chancellor George Osborne went on Radio 4 immediately to dismiss this as “hyperbole”. But, as Janet Daley points out in her column in The Sunday Telegraph, he also effectively “denied that he had any intention of significantly decreasing the functions of government”.
Why? Because, like most politicians, he believes the general population can’t cope with the idea of a smaller state: the idea is not only “frightening, but incomprehensible – a dismantling of all the known laws of the universe”.
This is a shame. That’s partly because he is wrong in thinking that everyone in the UK agrees with state-supported assistant political editors. A large part of the population is well aware that the finances of the state are unsustainable and that the state must, as a result, shrink.
They would also vote in a government that was prepared to admit this. But it is also because Osborne has to cut the size of the state (at least relative to GDP) substantially: as the Institute for Fiscal Studies think tank points out, without a “fundamental reimagining of the state”, his sums don’t add up at all.
So we have to think the apparently unthinkable. We have to confront the many vested interests in our public sector – the ring-fences around our sacred cow services and the automatic spending reflex to special pleading.
How? I’ve written here before about how countries such as Canada have in the past done full reviews of every single part of the state’s spending, with every programme having to justify itself or be axed. These have been very successful indeed.
We need the same. Allister Heath, writing in The Daily Telegraph, suggests establishing a cross party and “not especially ideological” Commission into Public Spending to do the same in the UK.
It could look at abolishing or merging entire departments; means testing all benefits; privatising motorways; getting rid of all the regulations that make both prices and compensatory welfare payments high; dumping layers of pointless management and doubling up of services; introducing user fees for services; and cutting the endless subsidies that make business so confusing.
This won’t be easy and it is possible (if very unlikely) that the Commission would come up with no good ideas or cuts at all. But if we don’t start to get a grip on the size of our state, we will never get the UK back on a stable financial footing. That’s the really utterly terrifying thing.
Finally, I wanted to let you know that we have a new comments section on our website, moneyweek.com. It should be much easier to use than our old one and I would love you to try it out. Thank you!