A marvellous statement of the obvious came from the Institute for Fiscal Studies this week. The think tank says all the main parties are hiding the true extent of the spending cuts and tax rises that will be needed after the election if Britain is to avoid fiscal meltdown.
It is, of course, perfectly true. Nick Clegg was out and about this week talking about how the Tories and Labour are taking the nation for “fools” by pretending a few “efficiency savings” can fill one “of the biggest black holes in our public finances in generations”.
But even Clegg, having recognised this, hasn’t actually come clean on exactly what is needed to fill the hole: he is promising that he will cut enough from public spending to reduce the deficit by £10bn. But while that may be a slightly bigger drop than those offered by his rivals, it’s still a drop in the ocean in the context of our vast structural budget deficit.
However, I’m not sure what else any of us could possibly expect from politicians. Before they even think about trying to fix anything they have to get elected. And anyone who announces that they’re planning tens of billions worth of cuts isn’t going to be. First, because none of us like the idea of losing state services we’ve come to think of as our right; and second, because so many of us now work for the public sector and have no intention of voting for our own unemployment.
There are 6.1 million people on the state payroll and along with their families – and what Neil Collins writing on Breakingviews calls their “client base of welfare claimants” – they now make up a significant voting block. Who’d be stupid enough to upset them with even a hint of what is surely to come before they’ve had their moment at the polls? They’d be fools not to try and take us for fools.
But just because our would-be leaders aren’t articulating their slash-and-burn plans, don’t think they haven’t got them: despite occasional appearances, none of them are actually clueless. Even if they were hoping that if they shut their eyes the debt debacle would go away, events across the Channel would by now surely be forcing a little focus.
I’m not immediately worried about the UK’s credit rating. We control our own interest rates and our own currency and, as the FT’s Gillian Tett has pointed out, most of our debt is long dated – an average maturity of over 13 years compared to under six for Greece. So we have a good amount of grace before we run into refinancing trouble.
But the fact that the troubles in Greece have spread so fast to Portugal and other fiscally challenged European states does, says The Daily Reckoning’s Dan Denning, show what it is that needs restructuring: “expectations of the level of social welfare the nation state can be expected to deliver without bankrupting the economy”. I’m pretty sure all our politicians have taken note.