Money doesn’t grow on trees

By Lizzie Porter

I’ll set one thing straight before I begin. I am in no way supportive of the 80 percent cuts to university research for the Arts, nor of the recommendations made by the Browne review. Whatever the University says about supposed bursaries and grants, such a heavily market-based system will mean Oxbridge favours bank accounts over brains. I’m not defending coalition spending decisions that are crude and unrealistic.

Where the population at large is concerned, I’ll ignore the coalition’s rhetorical guff about “fairness.” Since what is considered “fair” is a subjective notion, and what is just for one group will, almost by binary opposition, be unjust for another, it’s a political smokescreen.

And yet and yet. Government expenditure ballooned to roughly 45 percent of GDP last year, whilst national debt soared to over £100 billion. Out of every four pounds the state spent, one was borrowed. If this was on a personal level, we’d be reprimanded for over-zealous credit card spending. The interest on national debt stands at £43 billion a year. Coupled with the fact that there is little hard evidence to suggest the cuts will necessarily lead to a double-dip recession, this lessens the case for putting off the repayments. To return to the household bills analogy, we wouldn’t think it wise to toss the credit card bill aside and let the interest tot up. Similarly, letting the national debt inch slowly upwards will only make the payments more wince-worthy.

Of course there was hypocrisy in the coalition’s announcements: hey, this is politics. They’ve gone back on their promises for speedy appointments for all cancer patients, and schools will see a 60 percent cut in capital spending. The government has opted for votes over wisdom by maintaining pensioners’ winter fuel payments and free bus passes as universal perks. If they’re insisting on fairness, such benefits should be means tested, to be enjoyed by those whose need is greatest.

Where benefits are concerned, something had to give, as they make up the bulk of government spending. Call it salami-slicing or hacking off meaty chunks, but removing incentives for staying on incapacity benefits, and upping those to move on from social housing can only be good for both public and private sectors.

The media focus has been on grossly overpaid figures in the private sector, whilst the public sector chiefs who have until now retired on fatter-than-average pensions at 53 have got off lightly. Decentralising spending decisions might make local councils think twice about whether every town in the area needs really needs to have strategy book on how to spend money on road signs, or other pen-pushing tasks that state the sodding obvious.

Raising the state pension age to 66 by 2020 age also makes sense. This is a paltry difference. Cry about wanting to spend more time with the grand-children all you want. We cannot expect the blessing of longer life expectancies to transfer automatically into more leisure years. In any case, we should never have expected to subsist on the state pension: private pension schemes are a sine qua non.

There is one model that suggests our sense of “wealth” is determined by our peers. If we have greater or comparable amounts to them, we feel well-off. If our peers have deeper pockets, we feel poorer. The problem here is that our public finances’ sense of wealth was over-inflated, based on borrowed money and, ultimately, borrowed time. This isn’t a dramatised “then-and-now” analysis, but spending levels previously adopted were beyond our means. It was nice, but it was also too much.