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October 23, 2010

Why Cameron lacks credibility on growth

In his podcast today, David Cameron explained that he wanted the country to move on from discussing cuts to growth.

Here’s the examples he gave:

"We’re investing in our railways and roads and spreading broadband access across the country. We’re creating more adult apprenticeships so we have the skills for the future. We’re making sure the UK remains a world leader in research by protecting the science budget. And we’re investing in the new green industries, which will be worth billions of pounds and thousands of jobs in the future."

Let’s run through Cameron’s list.

Thanks to the CSR, spending on roads and railways is down significantly.

The new government cannot claim credit for broadband, something most voters have had access to for years.

Thanks to the CSR, spending on further education is down significantly. Yes, there will be more apprenticeships. But those aren’t the only way young people learn “skills for the future”. And all the other stuff is being squeezed hard.

True, the science budget has been protected up to a point, but it’s still suffering real terms cuts. And if you’re talking about growth, there’s more to it than that. There’s technology, commercial R&D and the generality of innovation (which as we’ll see later seems to be what Cameron is really talking about). And when you look at that bigger picture, the innovation agenda that Cameron wants to lay claim to, then spending is down significantly again.

The green stuff is new investment. Well done sir.

But the claims in Cameron’s list are cautious compared to what follows. Here’s his conclusion:

“Across a whole range of areas – from skills to our infrastructure, innovation to trade, and competition policy to bank lending - you’re going to see the most pro-business, pro-growth, pro-jobs agenda ever unleashed by a government.”

These claims are truly, hot-headedly extravagant. I’m sure Cameron would like to lead the most pro-growth government ever. But he’s not. In all the spending areas he cites - skills, infrasructure and innovation - the CSR has just delivered large cuts.

If these are areas of spending that are key to growth - which is what I think and now what Cameron is starting to say - then Cameron is leading a government that is demonstrably less pro-growth than the last lot.

Instead of spending on these areas of investment, the Coalition is spending its money on consumption in places like the NHS, overseas aid and social care for the elderly. There are reasons for maintaining spending in these areas, and not just the promises made by Cameron before the election. But when you combine spending like that with a sharp commitment to deficit reduction, the result - as we have seen in the CSR - is that there isn’t enough money left to increase investments in growth.

So, with the current spending plans, Cameron’s claim to lead a pro-growth government ring hollow. Worst of all, Gordon Brown was in Cameron's own terms demonstrably more pro-growth.

Don’t get me wrong. I’m delighted that Cameron is adopting some sensible rhetoric on growth. And I’m delighted to the point of bouquets of flowers that some of the fundamental principles of what an advanced state needs to do in the 21st century to stimulate growth in the long term have abeen adopted by the government. But what this podcast from Cameron demonstrates is just what early days it is for the Conservatives in this territory - and how far he has to go before he can credibly make the claims he wants to.

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Comments

You know what less pro-growth than the last lot means dontcha ... anti-investment. Boooooo Tories

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