Howard Davies: The MT Diary

Bet on a bloodbath; Tweedlewho for chancellor?; Mandy's mechanicals; bracing Brum.

by Howard Davies
Last Updated: 09 Oct 2013

As if they didn't have enough problems - what with missing the recession and all - professional economists (plus a few amateurs like me in tow) have added to the gaiety of life with a public spat on fiscal policy. The worst thing about it was that it was conducted on the letters pages of the public press, so no-one even got paid. Proof positive, if any were needed, that economists don't live in the real world.

One lot said the incoming government would need to cut spending sharply over the next five years, beginning as soon as the recovery is under way. The other said that the new government should wait until it was sure the recovery is under way before beginning to cut spending sharply. This was presented, of course, as a major row, with bearded jokes about 'laying economists end to end and not reaching a conclusion' wheeled out as if freshly minted.

Incidentally, I have lost count of the number of times someone popped up on the wireless to say how vital it is 'not to cut spending too soon'. I was taught at school that a good test of whether a sentence has any meaning is to take out (or add) a 'not'. In this case, removing the negative produces 'it is vital to cut spending too soon'. Yet people still trot out these plonking platitudes, as if they have said something frightfully wise.

As the Institute of Fiscal Studies has helpfully pointed out, the difference between the two camps was quite modest, on a five-year view. There will be a spending bloodbath. The issue is just how deep it is.

The IFS, by the way, has had an excellent war. Its papers are insightful and beautifully written: yes, it is possible to write elegantly about the difference between the structural and cyclical deficits. But beware, its 'Green Budget' for 2010 is not for those of a sensitive disposition. Reading its description of the public spending cuts in the pipeline, I came out in a cold sweat.

The erratic polls have left us rather uncertain about which chancellor will receive the Treasury's 'Adults Only' brief come June. Will it be Tweedledum, or possibly Tweedledee? Only Balls might have the balls to face down the mandarinate - though some think his anti-cuts language is just for pre-election consumption.

I am no psephologist, and can offer only one unreliable clue to the outcome. In 1992, Labour planned to emasculate, and effectively abolish, the Audit Commission, a praiseworthy body to which I had devoted more than five years of my life. David Blunkett wanted to convert it into a kind of cheerleader for local councils called the Quality Commission. The staff were rather anxious, as the polls pointed to a win for Kinnock and his boyos. But it was not to be.

This time, George Osborne plans to abolish the Financial Services Authority, a praiseworthy (well, mostly) body to which I have devoted more than five years of my life. We'll see. If I were Cameron, I wouldn't plan a pre-election rally in Sheffield.

Peter Mandelson has not yet pledged to abolish the LSE (to which I have devoted...), but he is getting close. The Government's pro-Stem rhetoric is getting out of hand. (Stem, for those who do not spend their time deconstructing Mandelsoniana, stands for science, technology, engineering and maths). Those are the only graduates the Government wants to pay for these days, having given up in disgust on the City, the law, management and that lot - not to mention the useless arty crowd.

Some of my best friends are engineers (well, one or two) and I've nothing against them - unless they want to buy a house in my street, of course. But even I, who delivered speech after speech promoting manufacturing when at the CBI (a praiseworthy organisation, to which...), hesitate at the thought that we can reverse the long-term trend and radically increase the size of our manufacturing base.

I hope we need lots more engineers, I really do. But I wonder.

No foreign travelling for me this month, as I rehearse intensively for my role in a West End musical. Well, a WC2 musical, anyway: the LSE students are performing My Fair Lady, as a slightly off-centre tribute to one of the School's founders, George Bernard Shaw. They have found me a cameo role, as they do each year - it keeps me off the streets as spring springs.

So my only venture outside London this month was to Birmingham, city of sin. I am always struck, when I arrive at New Street, how much the pace of life slows down.

The choreography of the Midlands escalator is quite different. In London, the halt, the lame and the overweight cower to the right, while the rest of us march determinedly up and down the left-hand lane, as if our jobs depend on that 15-second time-gain (especially important if your commuter train was half an hour late). In Brum, there is no such nonsense. People stand proudly stock still, on the right, and do exactly the same in the overtaking lane, as if keen to make the most of their time in that architectural masterpiece, the Bull Ring.

I'm told New Street Station is soon to be redeveloped, or possibly nuked, but Edgbaston looked lovely in the spring sunshine. The university campus was carpeted with croci, and even the vast armies of engineering students took care not to trample them underfoot.

Howard Davies is the director of the London School of Economics

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