Skip to main content

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.

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

Popular posts from this blog

Concert and Blues

Tallinn is full tonight... Big concerts on at the Song field The Weeknd and Bonnie Tyler (!). The place is buzzing and some sixty thousand concert goers have booked every bed for thirty miles around Tallinn. It should be a busy high summer, but it isn´t. Tourism is down sharply overall. Only 70 cruise ships calling this season, versus over 300 before Ukraine. Since no one goes to St Pete, demand has fallen, and of course people think that Estonia is not safe. We are tired. The economy is still under big pressure, and the fall of tourism is a significant part of that. The credit rating for Estonia has been downgraded as the government struggles with spending. The summer has been a little gloomy, and soon the long and slow autumn will drift into the dark of the year. Yesterday I met with more refugees: the usual horrible stories, the usual tears. I try to make myself immune, but I can´t. These people are wounded in spirit, carrying their grief in a terrible cradling. I try to project hop

Media misdirection

In the small print of the UK budget we find that the Chancellor of the Exchequer (the British Finance Minister) has allocated a further 15 billion Pounds to the funding for the UK track and trace system. This means that the cost of the UK´s track and trace system is now 37 billion Pounds.  That is approximately €43 billion or US$51 billion, which is to say that it is amount of money greater than the national GDP of over 110 countries, or if you prefer, it is roughly the same number as the combined GDP of the 34 smallest economies of the planet.  As at December 2020, 70% of the contracts for the track and trace system were awarded by the Conservative government without a competitive tender being made . The program is overseen by Dido Harding , who is not only a Conservative Life Peer, but the wife of a Conservative MP, John Penrose, and a contemporary of David Cameron and Boris Johnson at Oxford. Many of these untendered contracts have been given to companies that seem to have no notewo

KamiKwasi brings an end to the illusion of Tory economic competence

After a long time, Politics seems to be getting interesting again, so I thought it might be time to restart my blog. With regard to this weeks mini budget, as with all budgets, there are two aspects: the economic and the political. The economic rationale for this package is questionable at best. The problems of the UK economy are structural. Productivity and investment are weak, infrastructure is under-invested and decaying. Small businesses are going to the wall and despite entrepreneurship being relatively strong in Britain, self-employment is increasingly unattractive. Red tape since Brexit has led to a significant fall in exports and the damage has been disproportionately on small businesses. Literally none of these problems are being addressed by this package. Even if the package were to stimulate some kind of short term consumption-led growth boom, this is unlikely to be sustainable, not least because what is being added on the fiscal side will be need to be offset, to a great de