POLITICS
Her Majesty's Government goes on a binge: just one of this week's crises
SIMON HEFFER
he list of reasons why public spending has gone out of control reads like a chapter from a book called How to Fail in Politics Without Really Dying. First, the Govern- ment followed an economic policy that put a million more people out of work in two years, closing down tens of thousands of businesses on the way. This increased demands for welfare while decreasing rev- enues from taxation. Then, in a successful effort to be re-elected, the Prime Minister presided over financial incontinence in the last spending round, boosting the deficit to £28 billion. Mr David Mellor, the then Chief Secretary, would tell ministers they could not have what they wanted. They then went to complain to Mr Major, who overruled his fellow Chelsea supporter, and pushed us more deeply into debt.
Not content with a raft of pre-election bribes, the Tories included in their mani- festo numerous promises of the living- beyond-one's-means variety. Notable among these were pledges that the value of child benefit 'will increase each year in line with prices', and to improve the quality of public services, using (though this was not implicitly stated — it did not need to be) public money. Grandiose plans were made for training schemes for the growing num- bers of unemployed: 'We intend to make training credits available to all 16-year-olds and 17-year-olds within the lifetime of the new Parliament.' There was a guarantee that 'we will, year by year, increase the level of real resources committed to the NHS'. The council tax would be cushioned upon its introduction next April so as to protect from 'punitive bills' the millions of Tory voters whom its creator, Mr President Hes- eltine, had set up as its main victims.
This week's fight has been over who gets what share of the £244.5 billion public spending cake (a sum already 4 per cent higher in real terms than last year, it must be remembered). The Secretaries of State for Social Security (Mr Lilley), Employ- ment (Mrs Shephard) and Environment (Mr Howard) have been prominent in opposing moves to stop them fulfilling the promises made by Mr Major before they assumed their offices last April. It is no sur- prise that they should have been complain- ing about funds going to the Secretary of State for Health (Mrs Bottomley), whose allocation was said to be sacrosanct.
These promises, and others such as the £6.3 billion pledged to road building between now and 1995, were made in the unshakeable expectation of recovery start- ing, in the Prime Minister's ill-starred phrase, on the Friday after the Tories had won the election on the Thursday. Like so much that was promised, this recovery has not occurred. Even if it had started in April, the Cabinet would not have avoided this week's problems. The bad judgment and poor tactical understanding that have led Mr Major into this crisis have also meant the public spending question has to be settled in the same week he was fighting to save his skin over Maastricht.
Some ministers have expressed confi- dence that capital projects, like roads, would be protected while current spending, like welfare benefits, would be cut. This led to MPs complaining that the poor were being forced to pay for the Government's mistakes. 'The time to cut the dole,' one Tory backbencher said to me, 'is not when 3 million people are claiming it, however attractive the potential savings might be.' In his Guildhall speech, Mr Lamont, the Chancellor, announced that in future there would be a distinction between capital spending (which, as in most businesses, will be treated as an investment rather than a cost) and current spending. But however the accounts record the expenditure, the money still has to be raised: hence recent reminders by some ministers that no Gov- ernment would be so foolish as to say it would never raise taxes. The Tory mani- festo promised that taxation would be reduced to 20 per cent when prudent, and that a low-tax economy was the goal. If Mr Major thinks he has a problem with Maas- tricht, he should imagine what the Tory Right will do if he tries to put up taxes to finance the legacy of ERM membership.
It is hard to see how this Government could lose more credibility: however, it would if Mr Lamont, in the Autumn State- ment next week, signals that the £244.5 bil- lion limit on spending has gone the same way as the inviolable rate of DM2.95 to the pound. Even if he does not, the pressures on that limit will remain severe. A widespread public sector pay freeze may be needed, but could well cause industrial con- frontation. Some more experienced minis- ters are blaming demands for more money on the inexperience of some of their col- leagues, who they feel are the willing or unwilling victims of their permanent secre- taries. The civil service is out of control' one senior minister told me. `If I were Major I'd have MI5 bug the alternative Cabinet meeting [the regular gathering of permanent secretaries] to hear what those buggers are up to. Whenever they get together it's to agree their common pur- pose of screwing as much public money for their departments as they can out of the Treasury.' This may be a parody, since the Permanent Secretary to the TreasurY attends these meetings and would hardly want to endorse such behaviour. However, such is the crisis of management and lack of leadership from the politicians that it is no surprise we have civil service govern- ment in some of the less well-guided departments. Job security and an index- linked pension are an unhelpful basis from which to calculate the sort of sacrifices, especially in the public sector, that are needed in these stringent times.
The options are all painful. The Govern- ment could U-turn again, either by ignonn8 the borrowing limit Mr Major so adamantly set, or by raising taxes. Or it could renege on more manifesto promises, a habit - already well ingrained. Mr Major can do what he likes, knowing that, in the present moral climate, no one is likely to feel so strongly about the violation of principle involved as to want to make a scene and resign. It may come down to a choice about which vested interests to take on. The non - unionised council tax payers of Carshalton Beeches and Rickmansworth are a softer target than the organised battalions of Cohse, Nupe and the TGWU, who might otherwise be asked to bear much of the brunt of public spending cuts. Yet there will have to be a vote in the Commons possibly as early as next month — sanctioning the raising of rev.- enue by the Council Tax. If Labour is shrewd in its opposition, it may find up to 50 Tory MPs whose constituents are se punished by the tax that they cannot possi- bly support its introduction in its present form. Defeat would look certain; a climb - down at that stage might not be easy. All argument about this formed part of the entertainment at this week's Cabinet meet- ings. If the Department of the Environ- ment does not win more funds to massage the council tax, the electoral death wish must well and truly have taken root.
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