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Apparently in an opinion poll run by the Independent, some 67% agreed with the Conservative view that the State is too large and needs to be reduced in size. The Indy’s view was that the size mattered less than the efficiency of the delivery from Government, a rather odd view and out of touch with the times.

Politicians due to the public generally having the attention span of a gnat or if you prefer Tony Blair, a derivative life form I understand, reduce all arguments to simple slogans of which, “The State is too big” is an example. The real argument is rather more complex and any politician trying to tackle the “size issue” will soon get themselves into hot water if they are not very careful.

The Society or State we are in…

The demise of Party Membership has been accompanied by the inexorable rise of the “sectional interest group”. The reality is that whilst in the various “political heartlands” people will still vote along class or tribal lines as they have always done, in the swing seats of England where General Elections are lost and won, the average voter has become more “apolitical”. On some issue, the same person may lean towards one party on one thing but another party on a different topic.

The public today is far more focused on their own personal needs and hardly at all on any concept of a “better society” as such, they want good schools, housing, healthcare and so on for them but really couldn’t care too much about people in the next city or town. We have a NIMBY culture and a life with sharp “elbows” is the norm.

The Real Question

The real issue is not whether the State is too big, it is “What should the State do, what should it provide and what level of taxation and legislation should flow from that ?” Although hardly a vote winner, answering these questions properly, leads us not just to ask whether or not the State should provide Nursery places so mothers can go to work, it actually and more importantly touches on the basic Constitutional relationship between the Citizen and the State.

Consider for a moment perhaps the most foolish policy insisted upon by the Labour Government, ID Cards, should they be allowed to impose such a thing upon the population in the first place ? Now I will not argue this case in detail nor shall I go into the arguments about Civil Liberties, my objection has always been on purely technical grounds ( http://baldysblog.co.uk/2009/04/28/id-cards-will-never-happen/ ) However, ID Cards do illustrate well both issues, a Civil Liberties one of the State imposing itself on the individual in an unwarranted way plus, the State wasting taxpayers money on projects that are not fit for purpose in the first place.

This is a far more complex argument that the public will not want to face unless forced to and in the current economic circumstances that apply to the UK, we or to be exact, an incoming Cameron Government, may well have the ideal conditions to do so.

It’s the Economy Stupid !

Despite the childish denials of this dying Labour Government, with the state of the public finances, there will have to be substantial cuts in public expenditure over the next 5 years or more and that will amount to likely, a 20 percent reduction but coupled with increased taxation. But whilst this is inevitable economically, at a political level Cameron must constantly monitor and ensure that all “cuts” are seen as reasonably equally shared with no one class or group gaining obvious advantage.

This will lead to some interesting “problems” for a Small State ideal as demonstrated by Osborne yesterday in his comments concerning Banker’s Bonuses. A relatively small number of people earning millions of Pounds in bonuses is really neither here nor there in the broader scheme of things, taxation should take at least 40 percent off them immediately whether the bonus is paid in cash or kind. However, in austere times, it just doesn’t look right.

Enforcing a downsizing of the Banks so that retail banking and investment banking are split is hardly a “True Blue” objective but, we need to be able to allow banks to go bust and that is a “business view”. A majority of the City activity is via “Deals” which produce wealth via commissions for some but do not create wealth or rather, increase the wealth of the UK so you may find a Conservative Government having to look at taxation as a tool rather than tedious legislation.

If you want to encourage longer term growth in the economy, there needs to be a switch away from deals based upon capital to businesses that produce income so, taxation might need to be favourably biased towards companies that pay out dividends to shareholders on their trading activities. Although the 40p top tax rate is far better than what preceded it, given some of the ridiculous salaries being paid to many top executives, a top and punitive tax rate that kicks in above say a x10 or a x20 multiple of average earnings may have to be introduced. If the average earnings are £25k then the top salary would be £250 or £500,000 and would rise and fall with the general economy.

Conclusion

No, I’m not advocating any of the above as “policies”, only as an illustration that even if you start off aiming for a Smaller State expressed as a limit on what the State does which must be a broadly good thing to aim for, it won’t be that simple. The practical logic says that cutting down the size of the State is obvious but and in the event, will have to be tempered by the political constraints of what is possible and what will attract the majority support from the public regardless of whether they voted for you or not. The watchwords are Openness, Consensus and Fairness in all things rather than political dogma and doggerel.

Although hindsight is 20/20 vision, looking back on 12 years of Labour, their biggest failing was across 3 Parliaments, they have always been tribal and divisive in their legislation and approach, it was only Blair until he over reached himself on Iraq who made them “acceptable”, the total disintegration since Brown’s Coronation has been all too obvious. The Conservatives whilst taking on a thankless task, should be grateful because without Brown, they wouldn’t have the political space to do the job on behalf of the Nation rather than Party. Their main problem will be to balance the practical with the politically acceptable, there never was a time more in need of “One Nation Conservatism”.