Cuts

It is being said in the left wing press that it is too early to cut expenditure; economists are being wheeled out to say it would be a mistake and this is being used as the Labur led attack on Cameron/Osborne economics. I think there is some (intentional) confusion here: it is not easy to find an economist who thinks this level of government expenditure is sustainable for long or who believes a sudden surge in growth is going to come from somewhere to get us out of the problem.

It is of course true that if you start pressing down on the money supply while the economy has not yet emerged into safety you run risks of stalling the recovery. My opinion is ignore this: what little exsperience of expenditure cuts exists (and it is usually forgotten in Labour circles that under Mrs Thatcher it rose inexorably, year after year, no cuts at all) suggests that it takes longer than you think. Look at the options:

Pension age: nothing is going to happen with this until 2016.

ID cards: to the extent these expenditures are already in the figures, this would be an immediate cut.

Local government: we all think that local councils shouldn't have diversity advisers and minority culture co-ordinators, but without taking away local powers (and quite the reverse, localising more, appears to be the fashion) all government can do is cut the subsidies. Local councils are then quite capable of keeping the diversity advisers and closing schools. It would take years to educate them out of this.

Big projects: someone always asks what the alternative would be. Cut the Navy's new aircraft carriers and they'll ask how they can get their planes around. Cut Trident and we'll need some other force de frappe to maintain our seat at the top table. Cut the Eurofighter and there will be tales of woe from the RAF. Cut the east coast main line and we'll have to spend more on roads. And each one will want a public enquiry, taking years.

And so it goes on. Civil servants don't want to lose their departments and introduce delays of their own. My advice is to start trying to cut as from Day 1. Then over a five year term you might have started. Start by selling things; everything a government doesn't need to own but which can be run perfectly well or better by the private sector: hospitals, post offices etc. This brings in immediate cash, the other things are just tinkering.