So we pass the fourth anniversary of Brexit. The trade barriers mount, with the UK “reclaiming sovereignty from Brussels” in order to become poorer, and Chancellor Hunt prefers tax cuts to relief of the squeeze on public spending; this latter when local authorities all over the country are threatened with bankruptcy, having already pared vital services to the bone.
Even the International Monetary Fund points to the need for a letup on austerity – a far cry from the 1976 crisis, when James Callaghan’s Labour government was besieged by IMF requests for spending cuts.
There is something characteristically pernicious about this shameless government blaming local authorities for supposed profligacy. The true blame lies with the 40%-plus reduction in the central government grant to councils imposed by George Osborne under the 2010 coalition government, and which has continued. In their desperation, councils resort to all manner of ways of making money, which only serve to make them unpopular.
Now, I am familiar with the observation that people have a natural preference for tax cuts they can feel rather than public spending increases whose benefits to them are somewhat amorphous. Nevertheless, recent surveys suggest that public anger over the dilapidated state of the public services is so intense that the majority would prefer Hunt to desist from trying to appease the lunatic right, and take decisions that actually alleviate the pressures on the public weal.
However, the chancellor has toned down his promises on the tax cut front. In addition to the limitations on his freedom of manoeuvre likely to be placed by the Office for Budget Responsibility, he must have taken fright at a wild front page story in the Mail on Sunday recently. This was promising a “Lawson boom” tax-cutting bonanza, but Jeremy Hunt is old enough to remember how the Lawson boom of 1988 ended in one of the worst recessions since the second world war, and the pound’s ignominious ejection from the European exchange rate mechanism (ERM) on Black Wednesday, 16 September 1992.
The combination of the government’s cynical approach to the public spending crisis and its insouciant attitude towards the manifest economic and social harm wreaked by Brexit makes me long for the British public to voice the kind of “savage indignation” expressed about other matters by the Roman poet Juvenal.
As the bureaucracy associated with the latest stage of Brexit negotiations takes effect, making life harder for exporters and importers – and guaranteeing delays and higher prices – some Brexiters are beginning to run for cover.
I was surprised when my friend the Keynesian economist Roger Bootle opted for Brexit. His latest column in the Daily Telegraph was headlined “No, Brexit was not a terrible mistake”. But the article sounded defensive – almost apologetic. He concluded: “Admittedly, if the UK makes a mess of its independence while the EU gets its act together, then we will have paid a not inconsiderable price for our exit.” He says that “on the balance of the evidence that is unlikely. But only time will tell.”
Well, I think it is pretty obvious that time has already told. Our act of self-harm has not yet reached the stage which, according to Plutarch, led Caesar to abandon his conquest of Britain because “the islanders were so miserably poor that they had nothing worth left to plunder”. But a succession of recent governments has been working on it.
As for Labour, I find that a disconcerting number of natural Labour sympathisers are not so sympathetic to the leadership’s ultra-defensive tactics. This applies to everything from the open goal of Brexit to the thorny subject of bankers’ bonuses. Labour’s concentration on relatively peripheral issues calls to mind Proust’s passage in Swann’s Way about Charles Swann’s approach to life: “Thus he had grown into the habit of taking refuge in trivial considerations, which enabled him to disregard matters of fundamental importance.”
I am told it will all be very different when – or if – they win the election. Let us hope so! Meanwhile, they are even backtracking on such important initiatives as their £28bn green investment plan and taking fright at Neil Kinnock’s well-thought-out wealth tax proposal, calculated not to frighten the horses or even wealthy horse owners.
This is a different kettle of fish from the question of changes to inheritance tax, the possibility of which seems to be worrying the Tories. However, I have said it before and I shall say it again: the revenues lost to the hit from Brexit will severely constrain a Labour chancellor. We need the single market!
