Thursday, 29 June 2017

The Tory / DUP Arrangement

I hold no brief for the Conservative Party. However if I were a Labour supporter right now I'd hesitate to accuse anyone too loudly of friendship with terrorists. Pots and kettles spring to mind.

As an economist I'm naturally concerned about the public finances. On the other hand in respect of the agreement between the government and the DUP we are talking about finding an extra £1b over an extended period as opposed to the Labour policy of finding £50b. Unsurprisingly I'm less exercised by the former.

The inescapable fact is still that the crash of 2008 ruined the public finances and since then we've only partially recovered. The National Debt is unmanageably high and we're adding to it every year rather than reducing it. The so-called austerity policy aims for nothing more dramatic than ceasing to increase National Debt by 2025, in other words we're already allowing ourselves another 8 years of living beyond our means for which we expect our children and our children's children to pick up the bill.

I accept of course that some debt-financed public investment will lead to growth, though usually public investment is less productive than private investment. A certain amount of public investment in NI would have been needed anyway in order to maintain a frictionless border after Brexit. At the moment I don't know whether that's included in the £1b or not.

I don't accept that large scale running up of debt to finance public consumption is a wise course. Like any public body the NHS for one has extended its remit well beyond treating and preventing sickness. When we can't pay nurses properly we have no business providing free fertility care for example. A reassessment of NHS priorities is overdue.

The same would seem to apply to local authorities which neglect basic housing yet seem able to finance all sorts of special interest groups.

We don't need more government, we need better.