In Praise of David Laws

David Laws


Yesterday I recently read some of the most refreshing words on economic policy to have been uttered by a British politician in recent months, and they came not from a Conservative but from a Liberal Democrat MP.

In an interview with the Sunday Telegraph, David Laws, briefly Chief Secretary to the Treasury but now a lowly backbencher, made the case for reduced tax rates, deeper (but more wisely targeted) cuts in public spending and reform of the public sector:

… Mr Laws said the share of the economy accounted for by the state was “out of kilter” with the amount of tax the public were willing to pay.

Only spending on health, education and pensions should not fall as a share of GDP, the MP said.

The former chief secretary to the Treasury’s views will alarm many Lib Dems who have opposed the Coalition’s spending cuts. However,

Mr Laws argues that cutting state spending would be in keeping with the founding fathers of the Liberal Party.

“Even after the existing fiscal consolidations, state spending will account for some 40 per cent of GDP, a figure that would have shocked not only Adam Smith, William Gladstone, and John Stuart Mill, but also John Maynard Keynes and David Lloyd George,” he says.

“The implication of the state spending 40 per cent of national income is that there is likely to be too much resource misallocation and too much waste and inefficiency.”

Too much resource misallocation and too much waste and inefficiency. Yes!

I have found it irritating beyond measure to see minister after government minister talk about the need to reduce the ridiculous proportion of national output accounted for by government spending as a sad necessity resulting from the economic recession rather than as something desirable as an end in itself. When critics accuse the Conservative-led coalition government of using the recession as a trojan horse to impose ideologically-inspired reductions in the size of the state, I actually wish that they had the impetus to do just that – but this accusation greatly overestimates the political savvy and core convictions of the current Conservative Party leadership and instead, government spending continues to increase in real terms, and no big-name Tories are speaking out in favour of a leaner public sector.

David Laws (together with other likeminded libertarian-leaning types such as Michael Gove MP) is one of the few politicians to actually come out and make the case that the British public sector has grown far too large and bloated, and that reducing its size is both necessary and worthy, not just because of the present economic difficulties but because it is the right thing to do.

But why do we only hear this call for a  from a backbench Liberal Democrat MP and not from a frontbencher in the Conservative party, who should hold these views just as dearly? Why isn’t David Cameron acting as head cheerleader for shrinking government and making the case that important services can still be provided – often to a higher standard – when the government does not have ownership of them? Where is George Osborne, and where are the urgently-needed supply-side reforms so glaringly missing from his last Budget?

In short, why did I campaign for and help the Conservative Party fight the last general election, when it has fallen to a Liberal Democrat to make the case for a small, lean state and for economic liberty?