Economy — House of Lords, 2015-09-10
Topic: Macroeconomics
David Arthur Russell Howell (Conservative, Centre-right): My Lords, I welcome this debate promoted by the noble Lord, Lord Haskel, who made several points with which I agreed. I want to focus on the austerity aspect of the debate—we are looking at the concept of "beyond austerity"—and examine some of the myths that surround it Austerity may have become a loaded word in some quarters, but the truth is—and this is difficult to accept but essential—that there has to be a permanent downward pressure on public spending at all times. That is essential if we want a balanced economy. Those who want to end austerity and make speeches about it at the moment really want more spending. More spending means more borrowing, which means more taxes to meet the ever-bigger interest payments. That taxation inevitably comes from workers’ wages and salaries, however much you try to squeeze the rich. So ending austerity and calling for a clear anti-austerity agenda—as I believe the fashionable phrase is—are just weasel words for shifting the burden onto working people and the poor to pay for the ever-swelling state. I find it difficult to see why people cannot understand that very obvious point, but those who cannot see it should to my mind follow the advice on the Underground ticket gate, which tells you to "Seek Assistance". Poor Scotland under Mrs Sturgeon’s economic policy, which is declared to be against austerity, and poor British workers if ever Labour take charge To maintain the essential downward pressure on public expenditure, which is needed at all times and not just over the next little while, I welcome the Chancellor’s new fiscal responsibility charter. But will that be enough? I will give a little history. Back in 1970, my colleague Mark Schreiber, who is now my noble friend Lord Marlesford, who I see is in his place, believed that we should import into Whitehall three powerful new tools: PPBS, which is policy and programme budgeting systems; PAR, which is programme analysis and review; and a central capability, subsequently called the central policy review staff, to drive the questioning of every government activity. The art of questioning is of course to ask the right questions. This was the genesis of the original CPRS idea. We wanted a central capability with colossal and persistent questioning power to ask, and repeatedly ask, the right questions of every part and function of government—every division and every agency. "What are your objectives? Could you achieve them better? Do they need to be achieved in the public sector or could they be contracted out? Could they be achieved better by the private sector? Are they worthwhile and necessary at all?" To mount such questioning centrally of course requires massive intellectual power, and that is what we wanted to see centred in the CPRS. We wanted it to drill down into every public sector department, division, agency and state-owned industry systematically and penetratingly, insisting on constant rejustification for every organisation’s or group’s existence in the public sector, with privatisation or abolition as the alternatives if public sector operation and public expenditure could no longer be justified. We saw this as the only way to place a firm and disciplined hand on the whole public sector and on the constant tendency, which is always underestimated, of public activity and public bureaucracy to swell and grow at all levels, which it always otherwise does This is not an ideological impulse: it is a practical and managerial one. Government is mushroom-like. If left in the dark and out of the light of challenge and questioning, it always grows. That is inevitable. Pressures good and bad are pushing for expansion all the time. How often one hears the cry "There should be a law about it", or "We need a new agency"— in a trice we have a new set of regulations, more committees and more spending. That is why we wanted then and still need a really powerful and well-informed inside mechanism to assist Parliament and the national interest, as we did in 1970 There was support then from the very top, but Civil Service chiefs were very suspicious of too much power in No. 10. Finding the right people to ask really penetrating questions was extremely difficult. One person whom we approached said, "I’m not going around Whitehall asking awkward questions. Socrates did that, and look what happened to him". So in practice, the CPRS began the right way but it really lost its direction after the 1970s and ceased being a powerful questioning and challenging agency. Instead, it started generalising about the broad direction of government and of macroeconomic policy, so it was abolished. Today we need central spending tightly controlled at all times, and not just in the short period ahead. We could call it austerity. I am afraid that the word "prudence" has been discredited. But whatever others call it, I call it common sense.