There is still no money left, so we should praise - not demonise - Theresa May for fiscal discipline

This piece was originally posted by the Telegraph.

Yesterday, on The Andrew Marr Show, the presenter peppered Theresa May with questions about public spending. Don’t nurses deserve a pay rise? How can benefits continue to be cut? Why won’t she fund schools properly? Implicit in each was a request - almost a demand - for the Prime Minister to do the decent thing, and spend more money. Election campaigns are, traditionally, a competition between parties to promise voters more of their own cash. Yet the central fact of British politics is not that Brexit means Brexit. It is, as Liam Byrne, famously put it, that there is no money left.

We are still struggling, almost a decade later, to pay off the bill for Gordon Brown’s spending binge. And in the years to come, an ageing population promises further pressures on the public purse. But still her critics demand that Theresa May commits to spending billions here and billions there.

There is a certain cognitive dissonance here. Since 2010, the Conservatives have proved that it is perfectly possible to cut spending without savaging services: policing, which the Prime Minister oversaw for so many years, is a golden example. Yet existing levels of funding are still treated not as a benchmark, but the bare acceptable minimum.

Consider school funding. Marr couched his questions yesterday in terms of a national crisis: “In England primary schools are facing a £3 billion cut by 2020,” he began, continuing that education “is badly underfunded”. But is it really? Between 1998 and 2012, spending per pupil doubled in real terms - more than doubled, in the case of primary school pupils. What we are seeing now is a modest flattening of the upward curve - which is somehow presented as an apocalyptic assault on our children’s futures. It is the same with the triple lock on pensions. This policy guaranteed that they would rise by the highest of inflation, earnings, or 2.5 per cent. The result was bumper spending on the elderly, even as benefits for those of working age were hacked back.

In political terms, it was a masterstroke, securing the loyalty of the demographic cohort who dominate at the ballot box. But in financial terms, it was lunacy. Yes, there are poor pensioners. But there are also very rich ones. Indeed, the average pensioner now has a higher income than the average worker.

The fact that May is prepared to pay the political price for abandoning this measure is not just thoroughly admirable, it is a sign that she appreciates the fiscal plight the country is in. The same logic applies to her apparent decision to ditch George Osborne’s “tax lock” - a pledge he only made in the first place because he never imagined having to stick to it. As a Conservative, May said yesterday, she wants to cut taxes. But being unable to raise income tax, National Insurance or VAT - indeed, having a Budget collapse when she tries to do so for just one class of worker - puts her in a fiscal straitjacket, not least if further economic turmoil materialises.

Personally, I would prefer the deficit to be closed via spending cuts rather than tax rises. But like May, I accept that there is a bigger point. Every minute of every day, the British government is spending money it doesn’t have. Yet every attempt to bring discipline to the public finances is treated not as praiseworthy, but barbaric. That will only change when we stop asking politicians how they’re going to spend money, and start asking how they’re going to save it.