The Budget will take us back to the 70s – and we know where that ended

Socialism has been tried in Britain before. And it turned us into the poor man of western Europe

It is upon us. The Day of Days. It has been like waiting for Christmas, only one with no Father Christmas, no food and no presents, just empty boxes and a frayed stocking hanging forlornly from the mantelpiece.
Has there ever been a Budget so long anticipated, so widely trailed, so laden with pessimism, so obviously built on sand and so certain to be a calamitous failure?
We know the Prime Minister and the Chancellor are terrified about how this is going to play out because they have spent so much time preparing the ground, blaming the Tories and making sure the voter knows who is responsible if it all goes horribly wrong. Not us, say Keir and Rachel.
The Prime Minister’s protestations, his ever more convoluted explanations of what it is he is trying to achieve and his reluctance to define a “working person” are a real giveaway. This is a pig in a poke Budget. We are invited to buy the empty promise of “change” without looking too closely in the bag.
They will tax us more (but not “working people”), borrow more (by massaging the figures) and spend more (on unreformed public services) and then declare the country transformed, as if none of this has been tried before under previous Labour governments.
In any case, Sir Keir was not given a personal mandate to change the country. He won less than 34 per cent of the vote on a 60 per cent turnout and is now more unpopular than any newly ensconced PM in history. He may have a huge parliamentary majority but that is not the same thing.
On the threshold of No 10 on July 5 he said: “Whether you voted Labour or not, in fact especially if you did not, I say to you, directly: my government will serve you.” Yet it now transpires that what he meant was I will serve you if you are a working person, preferably a trade union member in the public sector. His rhetoric, if it can be called that, is driving a gigantic wedge through the country that he vowed to bring together.
His statist, class-biased approach suggests Sir Keir is stuck in a 1970s time warp. He was asked during the election whether he would describe himself as a socialist and said unhesitatingly “yes”. He adheres to a creed that holds that the state is good and the private sector less so, rapacious even, however much he pays lip service to the importance of business and entrepreneurialism. He doesn’t mean it or understand it.
This has been a dividing line between Labour and the Conservatives, certainly since Margaret Thatcher’s time when she identified slaying the socialist dragon as her overriding ambition. “The problem with socialists,” she once said, “is that they eventually run out of other people’s money.”
In his speech in Birmingham on Monday, a not very amuse-bouche for the Budget, he made the following observation: “It is not possible to have lower taxes and better public services. We have believed in this fiction for too long.”
It was, he said, up to those who wanted a smaller government to explain to voters where services would be cut. This is a classic Aunt Sally argument, a tendentious assertion made to avoid addressing a position he has no intention of ever adopting, not on pragmatic but ideological grounds.
Socialism is a perfectly legitimate doctrine to expound. It just doesn’t work and every iteration we have had in the country shows that to have been the case. Of course, if you are named after the founder of the Labour Party and grew up steeped in a miasma of socialist baloney, it is understandable that you would cleave to a view of the state’s benign nature, whatever the evidence to the contrary.
But we should take Sir Keir’s point head-on: can his critics show that services would be better if the state were smaller? If the Conservatives had the courage of their convictions they could frame such an argument and, indeed, did so before the 2010 election.
It would require a complete transformation of the way services are delivered – health, social care, education, benefits and the rest – with more private and mutual provision. It would be a hard sell, much harder, indeed, than the alleged courage Rachel Reeves is about to demonstrate.
Cutting spending would be tough but it is possible to get more for less. What has been tested to destruction is that spending more on the public sector improves matters – just look at the NHS. Introducing a social insurance system in health would be tough but it can be done. Australia did it and its Medicare is a far better system than ours, as Wes Streeting acknowledged when he went there.
Labour is not changing anything. It is merely extending the reach of the state into all walks of our lives and claiming that this is what people want and that it will lead to growth. Taking yet more money from well-off people and borrowing more is not tough, whatever we are told in the Budget. That’s the easy bit.
Someone committed to real change would look 40 or 50 years ahead and ask how a country that sustains its public services by calling on a dwindling taxpayer base to keep contributing more can possibly keep going. Let us hope whoever wins the Conservative leadership contest on Saturday is prepared to carry out such thinking.
Sir Keir has challenged the Tories once more to make the case for smaller government. In truth there is no alternative. Ms Reeves plans to borrow more despite debt levels of 100 per cent of GDP. Within 40 years on the current trajectory it will be 280 per cent of GDP, mostly taken up by benefit payments. Who would buy such debt; how would we service it? Interest payments already outstrip most Whitehall departmental spending.
Moreover, the really scary figures can be found in the Whole of Government Accounts which includes liabilities and shows how unfunded public sector pensions alone, at around £2.7 trillion, are equivalent to the entire GDP of the country. A courageous chancellor would do something about the gross inequities and unsustainability of the public sector pension regime. But she won’t.
We really have become two nations: those who work for, or are beholden to the state, and the rest of us. This Budget is a defining moment, but at least we can see where the line has been drawn.