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Johnstone's View 26th September 2008

Honesty is a quality which is more common in politicians than many members of the voting public give us credit for. Yes, there are some who have an annoying habit of telling the people what they want to hear, but mostly, the argument can be made that we are telling, at least, part of the truth or perhaps, a version of it which we do actually believe ourselves.

This can however, be a bit hard to swallow when a politician suddenly changes tack and begins to support an idea which is diametrically opposed to the principals with which they have been associated over the previous 10 years! So, it would seem, is the case with the conversion which has taken place among the Liberal Democrats. For eight years, they were partners in the Scottish Government, not to mention control of Aberdeenshire Council, and in all that time they pushed up taxes and called for ever increasing levels of expenditure. Now, in a blink of an eye, their new leader Tavish Scott, supported in the pages of ‘The Leader’ by his local cheer leader Mike Rumbles, sees them trying to reposition themselves as the party of tax cuts.

I suspect that this proposal is being put forward with tong firmly in cheek. The eight hundred million pounds which this would cut out of the annual Scottish budget is only the start of the mathematical problems which this would create for the political party which has, for as long as I can remember, staked its political future on their ability to spend public money quicker that the banks can print it! Last Thursday afternoon in the Scottish Parliament I heard Jim Tolson demand ‘at least £50 million’ for housing, Jeremy Purvis demanding ‘additional support for small and medium sized companies, uncosted, Ian Smith, the reinstatement of the Edinburgh Airport Rail Link, £500 million and Jeremy Purvis again, proposing a wide-ranging extension of the modern apprenticeship scheme, again uncosted.

The ‘back of an envelope’ and ‘think of a number’ approach to government finances would appear to be alive and well and pursuing a new career at the very heart of Liberal Democrat economic theory. You only need to look back at the events surrounding HBOS last week to see that the real world has no time for political lead swingers. These people need to get a grip, and fast!

The truth is, the country is in an economic mess, but how did we get into this position? Well it was simple, and in the early days at least, a quite innocent mistake by the Chancellor, now Prime Minister, Gordon Brown. Keen to develop public services, he set ambitious spending plans which, as is often the case, all took a little bit longer to realise and all cost a little bit more by the time they were delivered. These plans were all to be financed by increasing revenue streams underpinned by strong economic growth and low inflation. Trouble is that economic performance always fell just a little bit short of the Chancellors ambitions projections.

Consequently, a gap appeared. Increasing taxation papered over this crack for a while but even this could not last for long. Increasing the rate of taxation as a percentage of Gross Domestic Product has the effect of depressing economic growth – the very thing that the government could not afford to let happen. The only other source of money was borrowing, so that is where they went next – and how.

So the Liberal Democrats want to cut taxes. This can only be financed in one of two ways – massive increases in public borrowing or swinging cuts in public services. As a result of the unique way in which the devolved system of government operates, the Scottish government does not have the power to borrow. That means public service cuts are the only option left. Oh, they are talking about ‘efficiency savings’, but £800,000,000 is a lot of money and this could only be achieved in one way – the wholesale downsizing of the public sector with tens of thousands of redundancies. What price your job then?

Labour had the luxury of taking over the government of this country in 1997 at a time when, we now know for certain, all the economic trends were going in the right direction. Now their luck has run out and they have been found wanting in one key area. They have shown themselves to be unable to cope with an economic reversal other than to say, “Steady as she goes and throw more money on the fire!”

It is a curse to live in interesting times. It takes courage to aspire to government at this moment. Those of us who take this responsibility seriously, could well do without his kind of misleading distraction.