Are the Conservatives ideologically driven state-shrinkers?

Are David Cameron and George Osborne small government ideologues hell-bent on shrinking the state? Simon Wren-Lewis thinks so:

The goal is to reduce the size of the state, and because (with his encouragement) mediamacro believes reducing the deficit is the number one priority, he is using deficit reduction as a means to that end…. [W]e have a Chancellor that quite cynically puts the welfare of the majority of the UK’s citizens at major risk for ideological and political ends.

He says something similar here:

[T]he real long-term plan was an initial two years of sharp cuts to public spending and the deficit, to be followed by budgets involving tax cuts that would allow growth to resume but rather less deficit reduction. If this combination was enough to win the subsequent election, the recipe could be repeated all over again. Indeed, this is what George Osborne’s post-2015 plans look like. All done in the name of deficit reduction, when the real aim is to reduce the size of the state.

Danny Alexander thinks so too, as do many of the left. This discussion comes up at every budget and autumn statement. The cuts to welfare and public services advocated by the Conservatives are so extreme, they must be motivated by an ideologically driven plan to dismantle the state. Or so the story goes.

It can be fun to depict George Osborne as a cartoon villain. I’ve done it myself on the odd occasion. But I still find it hard to believe that he, David Cameron and the leadership of the Conservative Party have a Machiavellian plan to shrink the state.

Chris Dillow has written a few pieces about this (here, here and here) pointing out that, if the Conservatives were planning to significantly shrink the state, they have done remarkably little groundwork.

Public attitudes to state spending have shifted slightly in recent years but only from favouring more spending to keeping it the same. There has never been much appetite for a big reduction in public spending and there still isn’t.

Source: British Social Attitudes Survey

Allowing public services to collapse would therefore be electoral suicide, unless you could convince the voters that getting rid of them was a good thing. On this, says Chris, the Conservatives haven’t even made a start.

What would I do if I were a Chancellor wanting to shrink the state when there was little popular demand to do so?

What I’d do is create the demand – shift the Overton window. I’d get junior MPs to campaign to reduce government functions. I’d encourage sympathetic journalists – of which Osborne has many – to write about excessive or wasteful spending. I’d commission management consultants and civil servants to show how to improve the efficiency of each government department. And I’d find some economists to show that a smaller state tends to promote growth.

In short, there’d be a cacophony of voices calling for a smaller state. Economists such as Vito Tanzi would be as fashionable as Thomas Piketty. “The Chancellor has done well so far, but must go further” would be the cry.

But this is not happening. Sure, the usual suspects are making the usual noises, but no more so than normal. The “shrink the state” amp hasn’t been turned up to 11. The Britannia Unchained mob are quiet, and one Tory advocate of limited government has buggered off to Ukip. Yes, there’s some (silly) welfare-bashing, but there isn’t the ideological clamour for a smaller state.

For a brief moment, around the time of the last election, it looked as though we were going to get a serious debate about the size, role and shape of the state in the next decade. The Labour government’s Total Place pilots had shown that central government, the NHS and councils working together to redesign local services could potentially deliver big savings. There was excitement about the Big Society, social innovation and social enterprise. Lots of people were talking about alternative ways of delivering public services. The long process of designing the state for the 2020s seemed to be getting underway.

Thee was a lot of excitement about this. Many people from across the political spectrum realised that, over the long term, the state couldn’t go on in its current size and shape. A debate on this, even one led by the right, was at least a good start.

As Chris says, an ideological state-shrinker would surely have seized the moment. Here was an opportunity to change the conversation and shift people’s expectations about what the state could provide.

But then it all went quiet. Total Place became Whole Place and then Community Budgets. Each time, we heard a bit less about it. Sure there is still some good work going on but it lacks the transformational vision and rhetoric of 2010. The only evidence of the heady optimism of five years ago is in defunct and no longer updated websites. It’s like looking at the ruins of a once-great civilisation.

The Guardian’s Jane Dudman was one of the first to rumble the government’s total lack of strategy, only a couple of months after the Coalition had formed. The penny dropped for me a few weeks later after noting some early fiascos and talking to some senior public sector managers. By early 2011 I was convinced. This lot were winging it.

I haven’t seen anything since to change my mind. The public debt targets imply a big reduction in public services and/or welfare spending but the specific cuts identified so far are tiny. Some of the planned austerity was shunted into the next parliament so the train crash many of us expected hasn’t happened yet but if these cuts are implemented, it will.

Those who think the Conservatives are ideological state-shrinkers reply that this is the strategy. The Tories, they say, despise the public sector so they will just keep cutting and let the state collapse in a totally random and unplanned way. But if they were to do that they would never be elected again. If local authorities and NHS trusts fell apart, would a Cameron-led government really stand by and watch it happen?

Past behaviour suggests not. Sure, there’s a lot of rhetoric about improving NHS efficiency by allowing failing hospitals to go bust but every time one looks like it might, the government bails it out. As soon as there is a bit of political pressure, more money is usually found. It’s the same with welfare. The options for finding £12 billion in social security cuts are already limited. David Cameron limited them even more last week when he promised to ring-fence child benefit. The Conservatives might talk tough but put them in front of  group of angry parents or NHS patients and they cave in almost immediately.

So I don’t believe that a Conservative government would cut spending to the bone, allow public services to collapse and the working poor to be evicted from their homes. As soon as they faced angry voters at the next photo opportunity, government ministers would magic up some more money, just as they have done in the past.

But if that’s the case, what is the strategy for eliminating the deficit? My guess is that Dave and George are hoping for a sudden boost in productivity after they are elected. Under the OBR’s most optimistic projections, increased productivity and economic growth would lead to higher tax revenues and lower welfare costs, meaning that the deficit would disappear without the need for any spending cuts at all.

There is much talk on left-wing blogs of secret plans for slashing welfare and dismantling the NHS but I don’t buy any of it. I just can’t see David Cameron and George Osborne as the Dick Dastardly and Hooded Claw of state shrinkage. They are not evil men and they are certainly not stupid. They probably dislike the big state in that visceral drive past the council offices and say ‘God knows what they all do in there’ sort of way but nothing in their past behaviour suggests that they are ideologically driven small staters. They have, though, set themselves an enormous task and they don’t seem much idea of how to go about it. Right now, their focus is on getting elected, after which they will work something out and hope that something good turns up. It is a strategy that owes more to Micawber than to Machiavelli.