Jul 272012

Yet again this week Ed Balls and Milliband have been criticising the Government for the atrocious GDP figures, which has shown the UK is back in recession for a 3rd consecutive quarter.

They are right to criticize.  That is what the opposition does, and Cameron and Osborne deserve it.  But not for the reasons that Balls claims.  Ed Balls and his thuggish friends and Union leaders would spend even more money to drag the UK out of recession.  The problem is one of too much debt, not too little.  Real GDP is bound to fall in this great deleveraging, and nothing can stop it.

This Tory government is a disaster.  They have talked a hard game but have steadfastly refused to make a break from Brown-era spending plans and Keynesian monetarism.  It is a disaster and is not working.

We now need to move rapidly to Plan B.  But not the plan B of Ed Balls and Red Ed.  No, we need to start cutting hard.  There is no money in the pot.  As well as cuts we need true supply-side liberalism and opening of labour laws.

For a start, cut the wages of all public sector workers by 30% and eliminate the final salary pension scheme immediately, to be replaced with a defined benefit scheme paid for by the employee, not the state.

Secondly, implement the Beecroft report on employment law in full.  Thirdly, release hundreds of hectares of farmland, especially in the South East to allow for a massive housebuilding programme.

While those measures are taking effect, work to massively simplify and liberalise the tax system.

If Cameron and Osborne truly want to save the country from a spiral into bankruptcy and default, then they need to stop tinkering and allow the recession to work its way through the system.  It won’t be pleasant, but the alternative is unimaginably worse.

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