Thursday, June 05, 2008

Dear Prudence...

The OECD - the club of relatively rich states has spoken unusually forthrightly about British government finances. In particular it highlight "unique risks' that the government now faces: unable to cut taxes in the face of the gathering downturn.

After the early years of Brown-Blairism, most of us got pretty sick of the endless mantra of "prudence", "prudence with a purpose", and "an end to boom-bust". We saw it for the flannel that it was, and understood that much of the so-called prudent margins for error were simply accounting tricks. Meanwhile, by dint of such "off balance sheet" tricks as the PFI and the PPP, the overall level of government obligations (as opposed to recorded government debt) has grown explosively. Debt is up, but guarantees and other obligations are now truly enormous- just the contracts related to defence are now rather larger than the annual defence budget. It is also difficult to see how contracts are being policed when we see such appalling screw-ups as the UK Chinook helicopter contract seem to be repeated on a regular basis.

Well after hubris, comes nemesis- and now Brown has precisely no room for manoeuvre. Yet what is particularly galling is just how much of this overall increase in the size of the state has been wasted. It is not just defence where we can see "gold standard cock ups". Agriculture, education, health care have all seen gigantic sums of money wasted in cancelled contracts, unnecessary procurement or poor contract execution.

The state is probably too unwieldy as it is, but the elephant trap that Brown fell into was to trust the system too much -and of course to believe his own rhetoric. After all Prudence was never as popular as she was proclaimed to be.

In the words of Lennon and McCartney:

"Dear Prudence, let me see you smile
Dear Prudence, like a little child
The clouds will be a daisy chain
So let me see you smile again
Dear Prudence, won't you let me see you smile?"

The answer, seems to be... No, not any more.

2 comments:

Newmania said...

The systemic problems of the enlarged state were mostly arrived at when the Liberal party were criticising from the left if at all.I `m sorry , I agree but you have to say the hard things as well as the asy things.

Anonymous said...

Just for you Cicero. From your Dear Leader:

"“the UK is enjoying the benefit of currency flexibility and the devaluation of the pound against the Euro is giving a stimulus to manufacturing.” Doesn’t sound like someone who wants to join the single currency, does it?

Ah you know what they say about Sinners eh. I think we Eurosceptics might have to summon a Te Deum for this.


Lepidus