Going for decline

Richard Norrie, 22 November 2022

Kwasi Kwarteng was lambasted for turning No10 from a ‘nightclub into a casino’ as he banked on a plan for growth via a series of mild tax cuts, leaving borrowing to fill any shortfalls in state spending. Yet, Andrew Marr described the Autumn Statement thus: ‘Sunak and Hunt hope that talking tough will lead the markets to give them enough scope to spare us the worst’, adding, ‘let’s recognise it for what it is: one heck of a gamble’.

The statement offers tax rises where, a matter of months before, we were promised tax cuts, including by both Sunak and Hunt in their failed leadership bids, first time round. Taxes will rise by £55 billion, largely through stealth raids on wages, while corporation tax will rise sharply. At the same time the benefits bill is expected to rise by £90 billion, with almost half predicted to come from ‘progressively larger’ bills related to sickness and disability benefits. According to Iain Duncan Smith, ‘most’ already on such support ‘have anxiety and/or depression’. Fuel duty will rise by 23 per cent next year while household disposable income is set to decline by seven per cent.

Whatever cuts to state spending promised have in truth failed to materialise. Instead, we have a promise of £30 billion in cuts, only this is a projection of lower spending than expected, gauged against predictions made by the hit-and-miss clairvoyants at the Office for Budget Responsibility. In real terms, spending will rise. Such ‘cuts’ will occur after the next general election.

All this leaves the suggestion the government is on the side of those who take their living rather than earn it. Nor is there the feeling it is straight with us, particularly given Hunt’s claim this is a ‘recession made in Russia’. The rise in inflation predates Putin’s invasion.

Of course, there are ways the government can both deliver cuts to public spending while strengthening the hand of its democratically elected executive. One old hand brought back recently is Francis Maude to consider Civil Service reform once more, being recruited to ‘suggest where ministers can cut departmental budgets’, according to the Daily Telegraph. There should be ample room for this among the large platoons or ‘quangos’.

Official figures show just 295 ‘arm’s length bodies’ accounted for £223.9 billion worth of spending, with half of that accounted for by NHS England. Obvious ones to cut would be recent innovations that have presided over colossal failures, such as the College of Policing and the British Business Bank, while the Office for Students’ bill of £1.34 billion could be trimmed as part of a wider assault on wasteful university spending. Do we really need four Children’s Commissioners, one for each nation, for example?

Opponents of the quango state will often call for a ‘bonfire of the quangos’, only past bonfires have been largely illusionary. A report by the National Audit Office found that much of the decline in the number of quangos between 2016 and 2019 was ‘in large part driven by the reclassification of bodies and does not reflect a true reduction in the number of bodies delivering across government’. Over that period, we lost 168 quangos, only this was accomplished by 143 being ‘reclassified outside boundary’.

This was an opportunity to gently kindle something, while Maude is on his second or third attempt at Civil Service reform. His latest review will in truth largely focus on decision making within the Civil Service. The government does not seem especially interested in taming the quango state. Instead, it seems to be banking on decline.

Dr Richard Norrie is director of the statistics and research programme at Civitas