Reflections on Spending

At the end of the week, after all the punch and judy stuff has died down, I thought it appropriate to give my views on the Comprehensive Spending Review (CSR). I intend to state the cuts I agree with before moving on to those that I do not support. First, however, some general points.

1. "You're a deficit-denying socialist" - No I'm not. I agree with the need to cut the deficit. I do not agree with the pace and scale of the cuts. Why? Because I don't believe the UK will be any worse if we cut the deficit in ten years rather than five. At least that way the private sector will be in a better position to re-employ some of the public sector workers who have lost their jobs. It was telling that despite vigorously urging the Government to pursue its cuts agenda, the 30 or so top businessmen who wrote to The Telegraph gave no promises to re-employ any of those made redundant.

2. "Labour created this problem so how can you oppose any cuts?" - I do not doubt that Labour spent a lot of money in Government. There were two principal reasons for this. Firstly, I don't know if you noticed but there was a huge GLOBAL (repeat: GLOBAL) financial crisis. The Tories have somehow managed to create this myth that the recession was a UK-only event. The financial crisis prompted a need to prop up our financial institutions. If the Government had done nothing - as advocated by the Tories - savers would have lost their money, more businesses would have been cut adrift, more people would have lost their homes, more workers would have lost their jobs, and a lot more damage would have been done to the British economy. If you don't believe me about this, ask economists in every G20 country who decided that bailing out banks and stimulating growth was the right thing to do. Secondly, in the period before 2007, Labour needed to spend money repairing and improving those public services that had been cruelly overlooked by 18 years of Conservative Government. This obviously cost money.

*Cool Stat* - did you know, before the financial crisis Britain had the second lowest debt in the G7?

OK so here are the cuts I agree with:

1. Ministry of Defence - the Coalition were right to make cuts to our air force and navy, while broadly protecting the army. In my view, foreign co-operation is absolutely essential in military matters these days. The idea of the UK going to war by itself is - as it should be - a thing of the past. See my last post on a European Defence Army for my thoughts about the future of defence.

2. Welfare - while the cut to child benefit was surprising given Cameron's previous views, it was the right thing to do. It's unfair to expect poorer people to subside the rich. While I can understand people questioning the mathematics (families on £44,000 will lose out while those on £80,000 will not), I do buy the Chancellor's argument that anything else will create administrative mayhem. It's not ideal but it's one way of saving £1 billion without hurting the very poorest. The steps to implement a universal credit, making welfare easier to understand, should also be embraced.

Having said this, here are the parts of the CSR I just cannot support:

1. Ministry of Justice - a £350 million cut to legal aid was announced with barely a whimper of protest in the House of Commons. While MPs may not be overly concerned with this cut, I am of the opinion that it is hugely unfair on the most vulnerable people in society. Disadvantaged people rely on legal aid as their only access to justice: the only way they can have their rights and entitlements protected. Without this, a two-tier system is likely to emerge where wealthy individuals have access to the top barristers and solicitors while the poor have to make do with the cheapest bidders in the new legal aid tendering system. It's not fair. It's not equal. The Government should think again.

2. Home Office - the Strategic Defence and Security Review (SDSR) earlier this week identified terrorism as the biggest threat to the security of the UK. Odd, then, that the Government decided to slash the counter-terrorism budget by 10%. David Cameron has frequently said it is the first duty of Government to protect the people. Given the huge success of the police in disrupting terror operations in the last five years, this cut to their budget represents a massive gamble with public safety. Shameful. More generally, Labour managed to cut crime by 40% by putting in place adequate funding structures. The Coalition will not be able to paper over the cracks by claiming they are cutting red tape.

3. Local Government - also a very surprising target for budget demolition given Cameron's love of the Big Society. My concern is the threat to social care departments by funding squeezes. This is one of the major reasons why the IFS branded the CSR unfair. The Coalition simply cannot claim they are protecting the interests of the poor when they are cutting the services available to disadvantaged individuals and families.

I hope that this critique will be seen as reasoned and balanced. Let me know what you think.

Oui Monsieur, Sargeant

As the eagerly awaited Comprehensive Spending Review (CSR) approaches, one of the hottest political questions is what will happen to the defence budget. Many people have written about the potentially devastating impact of expenditure cuts on the ability of the UK to conduct foreign operations. Others have challenged the Government to review Britain's role in the world and embrace a much more isolationist foreign policy. My proposal is different.

One solution to pressing financial constraints has been closer co-operation between Britain and France in defence policy. I would go further. In my view, the time is nigh for the establishment of a full-scale European Defence Army.

The existence of an economic, monetary and quasi-political union in Europe has removed any real conflict of interest between Member States. The inter-relationship between European countries was exposed in the Greek crisis earlier this year, which saw every other European state take responsibility for the economic bailout of that country. Indeed, the situation in Greece is what prompted this Government to take such drastic action with the budget which has given rise to questions of defence spending. The fact of political life in Europe now is very simple: Member States are inextricably bound to each other in every possible sense.

Cultural diversity within Europe is also of diminishing significance. Every European country must observe the European Convention on Human Rights (ECHR), which guarantees the same protection to people in Latvia as it does to those in Ireland as it does to those in Austria. Europeans share the same views concerning democracy, tolerance and freedom.

In my three-week whistle stop tour of Europe last year, I observed first-hand the similarity of each country in the Union. Nowhere did I really feel like I was in a 'foreign country'. Under the treaty establishing the EU, I have the absolute right to live and work in any other EU nation. While every state has its own peculiarities and history, the basic principles governing each are broadly similar across the entire continent.

In this context, it seems perverse to keep reserving defence policy to each individual Member State. Given that the EU has a collective interest in things like global terrorism, piracy and nuclear proliferation, why is it that individual Member States continue to pursue their own policy? Every challenge the UK faces in the modern age is a challenge faced by the EU. It is absolutely ludicrous to suggest that European countries would again go to war with each other. The economic and cultural values of Member States are now so intertwined that the idea of conflicting national interests is simply irrational.

Moreover, the emergence of countries like China, Brazil and Russia as geo-political powerhouses has increased the need for European economic co-operation. Europe would be so much stronger if we completed the process of political union and created a unified defence force with it. Only then would the UK be in a position to maintain its role as an international influence. The idea that the UK will be able to preserve its seat at the top table long into the future is just naive. We will be simply unable to complete with regional super powers if we go it alone. Anyone that cares about Britain's role in the world must accept that the future has to involve greater European integration.

So when you consider the debate over defence expenditure, bear in mind that there is another option. The only sensible future is a European future.