Steve Richards: Just as in the Eighties, ideology is driving the spending cuts

Choices are being made on the basis of how politicians view the state - as an instrument that can be benevolent, or stifling
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The Independent Online

To what extent is the Coalition acting for ideological reasons? The question rages with a deceptive intensity. Revealingly, ministers insist that ideology plays no part in their calculations. With a look of anguished resolution they maintain that they have no choice but to cut spending, deeply and speedily. They would rather not. This is not what they came into politics for. Alas, there is no alternative.

This is nonsense. Messrs Cameron, Osborne and Clegg may or may not be taking the right course, but they had a choice. They could have followed the direction of economic policy in the US, which still recognises the importance of public spending when the global economy is fragile. France and Germany might have been their models, countries that are starting their more gradual descent from a higher base of sustained public investment.

Instead, the Coalition decided that Britain was as vulnerable as Greece, even though David Cameron has pointed out that this country is not in the euro and the economy here was growing after the hyperactive measures taken to prevent a recession deepening further, policies opposed by the Conservatives in opposition but supported at the time by the Liberal Democrats. Choices are being made on the basis of how politicians view the state – as an instrument that can be benevolent or one that is nearly always stifling.

At the weekend I interviewed Geoffrey Howe, the former Chancellor, who delivered the famous 1981 Budget, the last economic statement to make as many waves as the one last week from George Osborne. I asked him how Osborne's statement compared: "It more than compares," Lord Howe said. "My 1981 Budget was the third in a sequence. This is the first on this scale by this government... These are deeper cuts. We had been doing some cutting already so our approach was more gradual... This is much larger and more difficult..."

Lord Howe told me he fully supports the cuts, although he expressed doubts over whether some of the welfare reforms would be implemented. He is, and was, one of the most decent figures in British politics, but of course his voice was not the one that shaped the public narrative of the 1980s. Instead Margaret Thatcher defined the decade as a never-ending battle. There were enemies within. She only wanted to work with those she saw as "one of us". Cleverly, the Coalition now seeks distance from that decade by adopting a more conciliatory tone. We are all in this together. The aim is fairness. We are progressive.

But in policy terms and in the values that shape their policies they are very close to the 1980s, as Lord Howe recognises. At the CBI conference yesterday David Cameron highlighted his determination to achieve growth after the recent intense focus on cuts. But as Howe stressed in my BBC interview, the aim of his 1981 Budget was to achieve growth too. Nick Clegg insists that the package as a whole is progressive and with Thatcher-like fury dismisses the opposite verdict of the Institute for Fiscal Studies as "nonsense". Clegg's anger is partly understandable. He has put in a lot of energy to ensure the pupil premium for poorer children got decent funding (although there is no overall increase for schools) and that councils had a greater freedom to borrow (a technicality that gives him particular pride), among other measures. He argues that this is more balanced than the proposals that accompanied the cuts in the 1980s.

But in one sense he misreads that decade. Howe was not seeking to be "unfair". He and others sought to redress some of their harsher polices. Urban Development Corporations were formed to encourage innovation in inner cities. Michael Heseltine focused resources in poorer areas. Nicholas Ridley declared a "housing revolution" in which the state would stand back and private landlords would compete to build social housing. It never happened. There was no revolution. But the intention was well-meaning. Clegg and Osborne would have called it "progressive". At the same time, like the Coalition, the Thatcher administration sought welfare reform, large increases in train fares, de-regulated bus services, big cuts for the BBC and local government, increased spending on schools and hospitals, though not at a rate that addressed the rising demands on both. There are many echoes.

In both cases a government had taken an ideological decision to limit the activities of the state. They took subsequent actions to make the consequences a little "fairer" but the fundamental decision determined all that followed. There were arguments then against the decision, as there are now. In the 1990s Tony Blair attempted to de-politicise politics by arguing that what works is all that matters. What works is what matters, but the debate about how that comes about is based unavoidably on conflicting values. The Coalition's wariness of admitting it is an ideological administration rooted on the right and shaped by the 1980s shows how Blairite de-politicisation has made its mark.

But the values are deeply held. Cameron/Osborne/Clegg laid out their beliefs very clearly in advance of the election. In several speeches Clegg declared that the state was necessary to fund public services such as health and education, but after that government should "back off". Privately he told colleagues that the social democratic experiment had failed. He even told some of the social democrats in his party, who now realise he meant it. Cameron's position was clear from the start of his leadership when he said that there was such a thing as society, but it is not the same as the state.

What is interesting with this sequel to the 1980s is that the crusaders continue the anti-state revolution in a less promising context. Thatcher's tonal aggression matched the social unease of the times. The Coalition's tonal focus on fairness and their claims to be progressive do not chime quite so melodiously with their shrinking of the state. Thatcher made her moves more cautiously (over three Budgets, as Howe noted) and she had big overall majorities. The Coalition acts in a hung Parliament with some Liberal Democrats stirring.

Politics is defined once more by a battle over ideas and is not a choice between two different sets of managers. Unlike in the 1980s, the advocates of a shrinking state are not necessarily swimming with the ideological tide.;