SPECIATOR
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TEST FOR THE TORIES
Just over a year ago, Britain chose New Labour. At the time, like many a hasty mar- riage, neither of the two participants knew very much about each other. Now, at last, the honeymoon haze is clearing. This week's comprehensive spending review reveals, in outline, the result of the nation's choice.
The Chancellor has abandoned his flirta- tion with tax cuts. Instead, he wants to keep the proceeds of Britain's economic growth for the government to spend. Even if we accept the optimistic official growth figures, the percentage of national income taken in tax is due to rise steadily. If the economy slows down, as it always does, then the climb will be much steeper. With tax reduc- tion rejected, Labour's spending priorities are clearer. They will spend more on edu- cation and health, and less on defence. There is no sign, however, that this extra spending will be accompanied by increased efficiency. Despite the protestations of ministers, most of the new money will be sucked into wage increases. With this much cash in their departmental bank accounts, Frank Dobson and David Blunkett will be unable to deny the demands of doctors and teachers for more money.
The benefits budget will continue to increase, even on the rosy economic projec- tions used by the government. The tradition- al Treasury attempt to obscure the facts this time by failing to count the £5 billion Working Family Tax Credit as part of the social security spending total — does not conceal the failure behind the figures. Plans for a real reform of the welfare system have been abandoned, and Mr Blair is not even attempting to fulfil his electoral promise to `cut the bill for social and economic failure'. Frank Field might as well resign now.
The Prime Minister has presented this package, both personally and through those newspaper columnists with close links to the government, as his .Third Way made flesh. But, far from being a new departure, it reflects a very old socialist misunderstand- ing. All this money which Mr Brown is spending was generated by private sector economic growth. Britain's enterprise cul- ture — the legacy of a generation of Conser- vative government — has encouraged, nur- tured and permitted that growth. These tax revenues have been built on a foundation of low taxation. To encourage further growth, taxes should have been kept down and cut further. Labour has not even considered this because, now as ever, they do not accept or understand the connection between a mar- ket economy and economic success.
These spending plans will damage Britain, but one group could benefit: the Conservative party. Now at last they have the opportunity to distance themselves from an increasingly left-of-centre Labour, and mount a vigorous defence of Mrs Thatcher's economic legacy. The Liberal Democrats have been reduced to attacking the government for not spending enough; a politically ridiculous position.
Strangely, however, the Tories appear to be hesitating. They seem unable to decide whether to attack Labour for spending too much or too little. They did not find the political courage to oppose the increased spending on health .and education. This is a mistake. Neither department needs more money, but instead must learn to use its current allocation more efficiently. The Tories can never win a public sector bid- ding war with Labour. Instead they should argue, as Michael Portillo did recently, that state spending alone is never the answer. Only by increasing the involvement of the private sector in the provision of so-called public services will Britain ever have the health and education systems that it deserves.
It has been a poor week for monarchy. The last Russian tsar and his family are to be buried in Moscow, but neither President Yeltsin, nor any foreign governments, nor the Orthodox Church will be officially rep- resented at the funeral. Meanwhile, Prince Edward has told American television that he would like to drop his title, because it makes people think he has 'no brains'. As we draw to the end of a millennium domi- nated by royalty, which saw a succession of great realms and memorable rulers, has monarchy had its day?
We must hope not. It still has a job to do. Here in Britain, elected politicians are proving unable to hold the Union together. The Tories, by ignoring Scotland, created a demand for devolution. Labour, by giving in to that demand, generated a rising imperative for independence. Now neither party seems able or willing to stand in the way of the rise of the Scottish nationalists and the break-up of the United Kingdom. One institution of government, however, still holds the fissile nations of our island together: the monarchy. The Queen remains as committed to Scotland as to England. She takes her duties at Holyrood House and her pleasures at Balmoral as seriously as the similar role she plays at Buckingham Palace, Windsor and San- dringham. The Prince of Wales looks at home in a Royal Stuart kilt. When democ- racy holds out no hope, we can still look to our monarch to hold the nation together.
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