As a general rule, it is not typically a good sign when the Leader of the British Opposition – a man who is, if you look at the polls, a very good shot at being the next Prime Minister of the United Kingdom – has to do a round of TV interviews to state that he does indeed understand that the economy and the public finances would be a priority for an incoming Government, writes Andy Silvester.
That rather bizarre situation, however, is exactly what Ed Miliband has managed to find himself in after his recent speech, despite its rather remarkable length, failed to convince that he understood the challenges that the next incumbent of 10 Downing Street will face.
Those finances are bleak. Public debt, which currently sits at £1.3 trillion, is still rising. We conducted research earlier this year which suggested that on top of that sits a £1.7 trillion, unfunded pension liability, some £610 billion more than the Government thought. Britain pays more in debt interest than it spends on schools, meaning hard-pressed taxpayers’ money is being spent on credit card bills rather than essential public services.
Ed Miliband yesterday delivered a speech that – for reasons known only to him and the team around him – skipped an entire section of the speech pre-briefed to journalists in advance which focussed on the need to bring the deficit down and start paying back some of that crippling debt. There was no appreciation of the immorality of handing that debt over to the next generation. There was no talk of the tough choices that must be made by any Government, even though last week the independent Institute of Fiscal Studies announced that at the very least Britain needs to find another £37bn in savings to balance the books.
But even worse than that, the only “new” announcements were depressingly familiar. It was for more taxes and more spending.
A “Mansion Tax” levied on expensive properties – apart from being arbitrary and, frankly, vindictive – is unlikely to raise the money the Labour leader suggested. Not only that, but as we’ve seen over decades, this Tax would creep down the property ladder to capture less expensive homes, at the same time as Britain’s housing crisis ensures that house prices will keep going up at an obscenely high rate. In even starker terms, Britain already has the highest property tax in the developed world, at 4.2% of GDP. In short, bricks and mortar are already taxed too high.
The other taxes will have unintended consequences too. Windfall taxes on tobacco companies will have a damaging effect on pension fund returns, hitting retirees. Sin taxes are regressive, hitting the poorest hardest.
Labour’s plan to spend the money on more nurses and NHS personnel went down well with the base, but there are questions as to whether that’s what the Health Service needs. International comparisons suggest that the NHS is well-staffed, and indeed the National Audit Office in 2010 suggested that there was no evident causal link between hospital performance, productivity, and staff numbers. What is of more concern is that Britain has fewer MRI scanners per head than Slovenia or the Czech Republic. Electronics might not play as well in a headline as more nurses, but it’s probably more of a priority. The NHS too has to take a hard look at all of its spending; there remains far too much waste in the system that diverts taxpayers’ money away from frontline healthcare to administration and bureaucracy.
Ed Miliband will of course not be judged on this speech if he does indeed become Prime Minister, but on his actions. The current Chancellor promised to increase the Inheritance Tax threshold – he hasn’t, and the public hasn’t forgotten it. He, too, promised to eliminate the deficit in the current Parliament – again, that hasn’t happened. Even the most concrete of announcements can be abandoned in power by politicians, it seems. But it is concerning that eight months before the election, an 80-minute speech was loaded not with content but with concepts. Making society “fairer” is an admirable goal, but how? Reducing poverty is again a worthy objective, but how?
Ultimately, it was a speech that refused to acknowledge let alone address the challenges Britain faces. Politicians of all stripes – from red to blue to yellow to purple – need to make a more compelling argument if they are to convince the public they have the answers to the questions Britain must face up to.
Andy Silvester is Campaign Manager for the TaxPayers’ Alliance