Restore's fag packet economics

Today it’s Restore Britain's turn to release policy slop in the form of their new economics paper. Brandolini's law springs to mind. The amount of energy needed to refute bullshit is an order of magnitude bigger than that needed to produce it. What strikes me is how muddled it is. Certainly it's good that they've set out their general economic principles, but to then make fag packet calculations on budgets is just tiresome for those of us hoping for something more credible and serious.

To my mind, you're doing to wrong if you're going at the existing top line budget with a red pen, armed only with assumptions - especially if you're talking about making major cuts to welfare and pensions. It calls for detailed policy in both areas.

What you tend to find in pensions reform is that public sector pensions have accrued rights, and thus any changes necessitate long transitions, and do not generate and short to mid term savings. That matters because public sector pension schemes already went through a major overhaul in 2015 (career-average revaluation, higher pension ages) following the Hutton Review, and the botched transitional protections from that reform ended up costing billions to remedy. A £17bn mistake that will take generations to resolve.

I rather suspect Restore is working on some outdated and faulty assumptions here, and would have benefited from looking at pensions as a separate strand of fiscal policy. As to ending the triple lock, there's a reason the other parties haven't touched it with a barge pole. Even a freeze is a real terms cut. The state pension shrinks relative to average living standards at a time when home heating costs are only going to go up over the next decade even with the best available energy policy.

Elsewhere the document counts cuts to QUANGOs as savings it can hand back in tax cuts without doing the necessary work to establish how money is currently being spent - working on the presumption that all QUANGO spending is waste (slopulism). On that score, once you strip out health and defence spending, you'll be lucky to find more than £2bn in savings which you'll probably have to reinvest into entities where there are serious shortfalls.

I would venture that the largest and fastest-growing area of pressure on public spending is health and social care. Demand continues to rise due to demographic change and the increasing cost of new treatments. This, again, is where you need detailed policy and a long term plan rather than this vague red pen accountancy approach. You can say the same for broader welfare reform. You have to balance the equation. Cuts to benefits have to be met with corresponding supply side reforms.

You can impose fiscal discipline and freeze budgets but that's not going to generate the necessary fiscal headroom for major tax cuts. A lot will be contingent on what measures you take to increase labour market dynamism and boost investment in national infrastructure. That means policy on transport, energy, water, housing, and simplification of taxes.

I take the view that you can only really do this kind of budget work after you've taken an in depth look at every area of policy, not forgetting that we need to find billions to rebuild our armed forces. On the whole, Restore's numbers are wholly unconvincing. They're conjuring up savings that simply aren't there without structural reforms and in-depth analysis.

Just in energy they say "All forms of Net Zero expenditure, including subsidies, will end. We believe this will save government departments at the very least somewhere in the region of £15-20 billion per annum. It probably climbs well into the tens of billions". While there are savings to be had from dumping Net Zero, long-term contracts aren't easily cancelled.

A large share of renewable subsidy spending runs through Contracts for Difference and similar mechanisms that are legally binding for 15–20 years. "Ending" this spending isn't a switch you flip on Budget day. It likely means breach-of-contract costs, compensation claims, and reputational damage to UK infrastructure investment more broadly (which would raise borrowing costs for future projects, green or otherwise).

Some of what gets badged "net zero" is arguably needed regardless of climate policy. Grid upgrades address decades of underinvestment in ageing infrastructure. Some grid investment would likely be needed under any energy policy to keep the lights on.

They do state that further policy work is to follow, but then you have to ask why then they chose to release this hastily cobbled together screed, especially when attentions are absorbed by other matters. They'd have been better off saving it for an alternative budget when Labour release theirs.

If the game is simply to upstage Reform in demonstrating how little Reform has to say in terms of policy then it succeeds as a stunt, but as an exercise in building their own credibility it immediately falls flat. There is little, if anything, to take seriously in any of Restore Britain's policy output.