This week’s budget and spending review will be characterized by historic spending levels matching historic tax levels. It would be easy to demand that the government go âthis far and no furtherâ, except that the Conservatives have already gone too far, accelerating Britain’s transformation into a social democratic society.
The question is what next? How can the Conservatives now at least start reforming the NHS and other state institutions to justify the amount of taxes they are paying there? Spending on health and social care is expected to reach 40 percent of total daily departmental spending, up significantly from 28 percent in 2004. This will be popular early on, though few will like it when. national insurance will increase next year. – and the extra billions will probably not be enough. The NHS will continue to disappoint and the supply of social care will continue to be insufficient. There will be a new clamor for more money and higher taxes in a few years, and the never-ending cycle will continue, weakening the economy a little more each time, eroding incentives to work and invest.
It is extremely encouraging that Rishi Sunak, when asked last week to choose between JM Keynes and Milton Friedman, has gone for the latter – although it is also interesting to point out that Friedman said: “I am in favor. reducing taxes under any circumstances and for any excuse, for any reason, whenever possible. There is no way Friedman would have approved of government dependence on taxes and spending, but surely he would have recommended the introduction of as many market-based mechanisms as possible into the welfare state.
If even that is not deemed politically possible, the Tories must at least get a handle on the NHS and its abysmal productivity. They must wage war on waste and force the institution to change. How come we fell behind on the third jabs? Why not learn from the lessons of the previous vaccine deployment and create new entrepreneurial structures outside the main NHS to drive change in supply, innovation and efficiency?
The government’s big challenge is that the Labor Party can always promise to spend even more; in the meantime, the serious risk is that embracing Social Democracy for short-term electoral reward, in the eyes of many voters, will validate Labor’s arguments and make the vote less frightening for them. There is only one solution: the Tories must become reformers again.