‘We can afford this’
James Butler
It is set to be a spending election, the first since the mid-1960s in which both major parties are promising significant borrow-and-spend programmes. Both parties have also proposed new sets of fiscal rules. Labour plans to adopt, in the words of the Resolution Foundation, an ‘innovative new approach which focuses on the country’s entire balance sheet (its assets and liabilities) rather than just narrowly on a sub-set of those liabilities (debt)’. Considering debt alone has led to perverse incentives: Northampton County Council, for example, recently sold its head office to a private company, from which it now rents the building. Recent IMF analysis puts the UK second-lowest in a group of 33 countries ranked by public sector net worth. Labour’s rules would also allow the government to engage in stimulus spending if there were a repeat of the 2008 financial crisis.
But fiscal rules rarely make headlines, and they don’t sway elections. The Tories’ spending plans are still vague, and their strategy on the economy so far has been to attack Labour: their headline figure of £1.2 trillion has been on the lips of every minister and backbencher interviewed on TV. This has meant some squirming when Conservatives have been confronted with the questionable arithmetic behind the attack, their own inflated claims, or their reluctance to say how much they would spend; but the sum looks vast, implausible and, they hope, unsettling to anyone who has internalised Osbornomics. The Tories have ducked direct confrontation – Sajid Javid has withdrawn from a proposed TV debate with John McDonnell – but thanks to billboard and Facebook ads, and a soundbite media culture, the expectation is that the figure will stick, and few voters will care about the credibility of the sums behind it.
With both parties competing over spending, the strategic calculus for the election alters: whether or not spending is a good thing matters less than where the money is spent, who it will benefit, and whether the parties can be trusted to keep their promises. Serious questions await the Conservatives on how sustainable their spending can be without raising taxes on the wealthy, or with the economic dislocation of a hard Brexit. It’s difficult, too, for them to resurrect 2010’s attack lines on the economy when austerity has vanished from the policy lexicon; Harold Macmillan warned his party in 1959 not to talk of Labour ‘spending sprees’ – for people who have lived through a straitened decade, spending may sound rather appealing. The last true disciple of Coalition-era doctrine turns out to be Vince Cable, grumbling about a ‘raid on Santa’s grotto’.
Labour’s ‘British Broadband’ policy looks likely be the focus of attacks over the coming week. The programme involves bringing parts of BT back into public ownership in order to roll out full-fibre internet connections across the UK, providing fast and free broadband for all. The policy involves a new unitary tax on multinationals – with such digital giants as Amazon squarely in its sights – and a proposed Charter of Digital Rights to protect against surveillance. Coverage of the proposal has been wall-to-wall, and opponents of the scheme have yet to hit on a strong attack line against it: there has been kvetching about investments in BT shares, quibbling over capital sums, and occasional frothing over confiscation of property. Boris Johnson dismissed it this afternoon as a ‘crazed communist scheme’.
The policy’s prominence ahead of the manifesto launch suggests that Labour strategists think it offers serious political advantages. Certainly, it touches on many of Labour’s key themes: universal access and provision, public ownership, ending regional inequality, and using technological investment to tackle climate change (not least through reduced need for commuting). The policy ought to help people trying to get their benefits from the DWP as much as start-up enterprises or small businesses. The internet is as central to everyday life across classes and communities as the road network: at the moment, people effectively pay the equivalent of a flat tax – on average £30 a month – to access it.
Another, wider hope rides on the policy: Labour hopes to make this a ‘measures, not men’ election, moving the debate beyond the personality of the leaders. Conventionally, policy doesn’t drive elections, but many Labour strategists think that the broad vision of the 2017 manifesto was an engine for the ‘Corbyn surge’. The scope of the broadband policy – acknowledging people’s fears about a growing culture of digital surveillance and data extraction, and their distaste at the tax avoidance of vastly profitable digital enterprises – points to an attempt to expand that vision for 2019.
It may be a deliberate echo of Harold Wilson’s enthusiasm for ‘the white heat of the technological revolution’. But it is also simpler than that. It may sometimes seem as if the UK’s major infrastructure projects have all been finished: they were completed by the ambitious titans of the Victorian age, or, at the latest, the reforming governments of the postwar period. On this view, no equivalent of the railway network, the sanitation system, the electricity grid or the NHS remains to be built. Labour’s broadband policy argues otherwise, and seeks to open a new frontier of ambition and optimism. For all the conjuring of communist bogeymen, the prophet here isn’t Marx but Keynes. In a BBC lecture in 1942, thinking of postwar reconstruction, Keynes ridiculed the assumption that life must be miserly or poor, and outlined a vision of public affluence in shared civic space. In a prophetic reproof to the latter half of the 20th century, he said:
Assuredly we can afford this and much more. Anything we can actually do we can afford. Once done, it is there. Nothing can take it from us. We are immeasurably richer than our predecessors. Is it not evident that some sophistry, some fallacy, governs our collective action if we are forced to be so much meaner than they in the embellishments of life?
Comments
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16 November 2019
at
11:41am
Graucho
says:
Every election the plaintive cry goes up "Where's the money coming from". Hopefully the ease with which a sackful of the stuff turned up to give the DUP a bung made some people start thinking. It would be of great assitance to national debates on expenditure if understanding the way the Fiat System works was added to the school syllabus. The real issue in any spending proposal is whether or not the nation has the physical resources to deliver all that has been promised and whether the results will yield tangible benefits making the time and effort worthwhile.
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19 November 2019
at
11:19am
semitone
says:
@
Graucho
The DUP bung was in poor taste but it's fiscally pretty irrelevant. Projected 2016-17 UK spending on Northern Ireland was £772bn. An extra billion is peanuts (spending in NI is already higher per capita than anywhere else in the UK).
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19 November 2019
at
5:12pm
rgst
says:
@
semitone
Total UK government spending was £772bn .
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19 November 2019
at
11:01pm
semitone
says:
@
rgst
I beg your pardon (oh for an edit function) for the cut-and-paste error: Projected 2016-17 UK spending was £772bn. An extra billion on Northern Ireland is peanuts …
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20 November 2019
at
2:24pm
Reader
says:
@
semitone
"Such good grace and charm" ... ???
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19 November 2019
at
4:56pm
Simon
says:
There is not a tax on Internet usage, there is a charge, unless you want to call every charge a tax, thereby redefining the meaning of the word. If this policy were to be put into effect, which is very doubtful even with a labour majority, expect the following: a deterioration in service levels, a failure to innovate, a ban on websites not approved by the government and finally a social credit system akin to that of China. Of course, we should also acknowledge that it will involve, ceteris paribus, a transfer from light users/non-users to heavy users and the sorts of shortages experienced in other free services, such as the NHS. Welcome to your Marxist future!
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19 November 2019
at
5:35pm
Steve Chapman
says:
@
Simon
Agreed, the charge people pay for internet access is not a tax. It is a charge, like the charge for a prescription, and has the same effect of limiting access to those who can afford it.
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20 November 2019
at
2:27pm
Reader
says:
@
Simon
Ah, the old "thin end of the wedge" argument. As it happens I agree with you as far as the internet is concerned. But a thoroughly privatized service is not always a change for the better. I have known large companies that have all the vices of government-managed corporations, without any recourse to ministerial control. To my mind it's size that is the factor. Small is beautiful, and small is (almost by definition) private enterprise.
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19 November 2019
at
5:43pm
Michael Flanagan
says:
There IS a compelling argument against the British Broadband Corporation.
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19 November 2019
at
5:54pm
Frances
says:
Even setting aside the problem of actually organising/building the infrastructure, giving free access to broadband would undermine other companies providing this service - Virgin, Talk-Talk et al, throwing people out of work and damaging pension/investment funds invested in them (as well as funds invested in BT). Most people pay quite modest amounts for internet access. Surely better for the government to subsidise BT and Virgin to put broadband into areas where it is so far uneconomic, and perhaps charge those companies a small proportion of what users then pay for the service.
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20 November 2019
at
9:09am
John Tarpey
says:
My query is why we should provide state supported opportunities for the Russians (and others) to interfere in our elections and subsidise the theft of our private lives by the big actors in the surveillance economy?
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20 November 2019
at
2:39pm
Graucho
says:
Going back to my original thought "The real issue in any spending proposal is whether or not the nation has the physical resources to deliver all that has been promised and whether the results will yield tangible benefits making the time and effort worthwhile. ". My only question on the broadband proposal is whether the outcome will be to enable the financially strapped to search for better jobs, start up companies, improve their skills through on line training, create profitable web sites etc. or will the newly available band width be used up playing video games ?
Read moreI agree however with your point about physical resources and capacity for spending. This is why I have enjoyed the Guardian's novel response to Labour's spending announcements, considering how they could spend so much money in such a short time (e.g. what projects are "shovel-ready"?) rather than hand-wringing about the deficit.
The total spending of Northern Ireland was only £37bn in 2017 so an extra billion goes a long way in NI.
Get your facts straight.
The extra billion wasn't sourced from a future fund of projected N. Ireland spending; it was paid for from consolidated revenue and added to the national deficit as a whole. So I think it is more useful to think of the extra expenditure as a proportion of total spending. But whatever. I certainly am not defending the deal, or Brexit, or the DUP, or the Tories or ...
In any case, thank you for the correction it is always good to be have one's errors pointed out with such good grace and charm.
Oh, you! You got me!
My old irony blindness kicking in again.
And thank you by the way, Semitone, for not responding to rgst with a similar level of rudeness. Good to see someone else trying to push back against the unpleasant modern habit of descending into insult via discourtesy. At least on this website, one would hope for higher standards and a stubborn resistance to being taken over by trolls.
Many of us believe that the growing inequality of power, income, wealth, health, opportunity, life expectancy, housing (and on and on ...) in this country is not how things should be. It is not the natural way of things. But it is a situation that benefits those who are not excluded or marginalised and encourages the mindset that change is unnatural / too difficult / too expensive / Marxist, and anyway "they" will just rip "us" off (and probably store coal in the bath).
If we take the fast track to access for all, there is no reason to expect "a deterioration in service levels, a failure to innovate, a ban on websites not approved by the government and finally a social credit system akin to that of China". The promised charter on digital rights is precisely what is needed to bring order and civilised standards to the digital world. The alternative is hand-outs year on year to the private companies that have presided over poor service levels and failure to innovate.
It's not that we can't afford it (Britain has to pay for a decent broadband network, and it's a secondary question whether that's with public or private money) or even that we can't afford for it to be free at the point of use: the modern tech sector is stuffed with business models where the plain-vanilla version of a product's free, but upgrades aren't.
The problem, though, that's plagued Britain since the mid-19th century is how the State manages the need for continuous ongoing investment. Whether it's sewage or railways, Britain's history has been high-quality initial infrastructure, which public funds can't constantly upgrade.
That's been a nuisance with sewage, but merely makes life unpleasant for Britons until we have the sense top privatise. With the implication that the Broadband Corporation would have a monopoly of "last 100 yard" access, inventing one would be guaranteeing the slow decline of electronic competitiveness for the half-century it'd take us to reprivatise.
Corbyn, correctly, has reminded us all that there are some arguments for greater state involvement, and that much of the case for near-universal private ownership is hokum. But what works for roads won't work for a monopoly hi-tech provider.