“Build, build, build!” is Chancellor Sunak’s message to the nation. What Rishi the Builder actually means is “spend, spend, spend!”.
These words are key to Mr Sunak’s suicide note. Not his own suicide, I hasten to add, to calm or, depending on your point of view, disappoint you. The infamous last words were delivered on behalf of our economy.
The only sensible parts of his announcement were the public sector wage freeze and a £5 billion cut in foreign aid. Typically, it was this latter plan that forced Foreign Office minister Baroness Sugg to tender her resignation.
In her place, I would have resigned had the Chancellor not cut foreign aid. But then I’d have looked at the rest of his programme and resigned anyway.
Dave Cameron’s law committing Britain to spending 0.7 per cent of GDP on foreign aid was ill-advised to the point of being idiotic. He should have read the work of the late development economist Lord Bauer, who defined foreign aid as a transfer of money from poor people in rich countries to rich people in poor countries.
I used to advocate cutting out the middleman and depositing money direct into the Swiss bank accounts of assorted tinpot dictators, thereby saving large sums otherwise spent on administering such a vast charity. Yet these days the problem is even worse.
For as a manifestation of our charitable nature, we’re pumping billions into some bigger economies than our own. Grateful recipients include China, which is about to celebrate Mao’s anniversary by landing a man on the moon.
Yet the £5 billion so commendably saved is but a drop in a leaky bucket. For the Chancellor has optimistically allocated £100 billion for the biggest public works programme this side of the one designed in the 1930s by Hjalmar Schacht for you-know-whom.
The plans are indeed optimistic because no large-scale government programme has ever come in on budget. Pigs don’t fly and governments overspend – both statements are equally unassailable.
The HS2 project, designed to shave an hour off the train ride from London to Manchester, is a useful illustration of this law of nature. Originally budgeted at just over £30 billion, its cost is now estimated at £106 billion, which rate of increase is par for the course where government projects are concerned.
Needless to say, our cowboy builder reaffirmed the commitment to that megalomaniac madness. It’s vital, he said, “to deliver essential north-south connectivity”. Like most of his other statements, this one requires a translation.
In the last general election, the Tories managed to carry the north of England, dazzling the voters with shining prospects of prosperity. It’s already clear that Covid, ably assisted by the government’s economic incompetence, has moved those promises into the realm of mythology.
Suddenly a redundancy note for Messrs Johnson, Sunak et al. looms large, growing every day as the 2024 election draws nearer. The HS2 project is a sop – call it a bribe if you wish – for those irate northerners to please, please, please keep this lot in Westminster.
In their understanding of political economy, today’s governments, emphatically including this one, overemphasise the adjective and ignore the noun. They want to pay for their jobs with our money, which is as morally deplorable as it is economically ruinous.
For HS2 is only another drop in the aforementioned leaky bucket. Rishi the Builder wants to build houses too. “’To build housing, we’re introducing a £7.1 billion National Home Building Fund, on top of our £12.2 billion Affordable Homes Programme,” he says. Do remember to multiply every projected sum by at least three to arrive at the actual future cost.
Our broadband, already adequate if far from perfect, will also benefit from Mr Sunak’s largesse. He’ll spend, spend, spend to speed it up, as well as providing 4G mobile coverage for 95 per cent of the country.
And we haven’t yet even talked about the madcap ‘Green Industrial Revolution’, which will burn untold billions in the bonfire of economic and scientific sanity, nor about the 16.5 billion hike in the defence budget (remember the multiplier of three to be applied) and so on, ad infinitum.
“Our plans deliver the highest sustained level of public investment in more than 40 years,” said Rishi the Builder, pretending this is something to boast about, not to lament. Yet another unsolicited effort in translation is called for.
For it was 40 years ago that Margaret Thatcher first tried, with quite some success, to introduce a note of sanity into the economy of “the sick man of Europe”, as Britain was rightly called at the time. Johnson’s government, in this case fronted by Rishi the Builder, is repudiating her legacy both implicitly and explicitly.
Hjalmar Schacht’s programme, which evidently inspires this ‘Conservative’ government, had one of only two possible long-term outcomes: an economic disaster caused by the war, or an economic disaster caused by the programme itself. In purely economic terms, the latter could have been even more ruinous because no Marshall Plan would have come to Germany’s rescue.
Our activist cowboy builder at Number 11 ought to know that the state can only ever affect the economy positively by not affecting it adversely. Another German, Ludwig Erhard, showed the right way to get out of an economic crisis in the 1950s.
Instead of launching a spend-and-tax spree, the finance minister of a devastated Germany tightened the money supply, cut down public spending and taxation, and told the people to stick it out for a few years. That delivered the economic Miracle on the Rhine (Wirtschaftswunder for short, and don’t you just love the German language).
By doing exactly the opposite, Rishi the Builder is unfailingly steering the economy towards the Debacle on the Thames. And you know what makes the situation really hopeless? The other lot are even worse.