By Professor John Bryson, Professor of Enterprise and Economic Geography
Department of Strategy and International Business, University of Birmingham
The danger is that our politicians are suffering from Brexit myopia and this includes the inability to develop a longer-term vision for the UK. The only current vision revolves around an agenda set by others
In a speech given at Cheltenham on 26 April 2009, David Cameron, then leader of the Conservative Party in opposition, noted that “The age of irresponsibility is giving way to the age of austerity”. The rhetoric that has been driving the preliminary debate on the October 2018 budget is one that has emphasised the end of the age of austerity. This was signalled with the end of the public sector pay cap that was announced in the last Autumn Budget, 2017. In this statement, the Government confirmed the “end of the 1% pay policy”. For the budget on the 29 October 2018 there are three key issues to consider.
From austerity to irresponsibility
First, there is the shift in focus from the age of austerity and responsibility back to a new version of the age of irresponsibility. A responsible budget should be driven by a long-term sustainable vision for the people living and working in the UK. It must never be designed to shape or influence voter behaviour; such a budget would be irresponsible as it would be following a short-term agenda.
A major problem facing the UK is the accumulation of debt. Currently, the UK government spends £55.4 billion per year in interest payments. This is tax revenue that is spent to pay off irresponsible decision-making made by previous governments. This is only £55.4 billion of a total spend of over £800 billion, but it is £55.4 billion that does not directly benefit UK citizens. A responsible budget is one that is accountable to future citizens and tax payers and should not shift accountability from one generation to another.
A political responsibility
No political party has a long-term sustainable vision for this country. Many of the parties have short-term irresponsible plans that are more about trying to persuade the electorate to support a political party than to create a sustainable future for this country. The current state of UK politics is one where immediate issues shape policies, neglecting long-term problems. As an example, Brexit is a major distraction within government, more important than this is the development of a long-term vision for the UK that will produce better outcomes for those living in the UK today and in the future.
Politicians and the media are guilty of not seeing beyond the end of their noses, where there are radical changes in technology that are transforming economic activity. This means that the current relationship between the UK and the EU will change as economic activity and the global economy are transformed. Attempting to create a new UK/EU relationship based on the current economy will produce poor outcomes for the UK’s future population.
A responsible budget will focus on the ongoing transformation of the UK’s economy, which is being driven by innovations in online platforms, artificial intelligence, big data and quantum computing. The long-term future of the UK economy is based on the quality of its educational systems, its transportation and digital infrastructure, and its ability to develop a policy environment that is supportive of economic activity. These wider framework conditions are essential to support the long-term prosperity of all living in the UK.
The good of the people
A responsible budget is one that always encourages economic activity, but not necessarily economic growth. A distinction must be made between inclusive economic growth and inclusive prosperity. The current political debate favours the former and ignores the latter ambition. The history of all UK governments over the last fifty years has been one based on a conservative or risk-avoiding approach – this needs to change. The vision of a sustainable UK economy providing prosperity for everyone should be the ambition of all budgets. This would be seen, by many, to be an impossible ambition, but perfectly possible if based on a longer-term vision.
The danger is that our politicians are suffering from Brexit myopia and this includes the inability to develop a longer-term vision for the UK. The only current vision revolves around an agenda set by others – the European Commission. The future prosperity of the British people should not be determined in Brussels, but by the development of a proactive vision intended to produce better outcomes for all living in the UK.