The tooth fairy of the cutsThe Tories are making progress with their arguments over the economy. The message has trickled down even to primary school children. Yesterday, six year old Niamh Riley offered David Cameron her tooth fairy money after hearing about the country’s economic situation.

I heard about it and I wanted to write a letter. I wanted him to get the letter with the pound to make the country better and pay for jobs.

Is there a better way to sum up Tory economics than this? David Cameron, the personification of the vested interests of the rich, telling us the cuts must come first and taking money directly from children.

Actually, he rejected the pound, but that seems pretty inconsistent given this week’s assault on child benefit.

Jeff’s made the case here that their move is a good idea, despite the widely shared concerns about the fairness of the specific proposal. Don Paskini, one of Labour’s brightest bloggers, has argued that the winning tactics for Ed Miliband would be to tackle the specifics and accept the principle. Tactically, perhaps, but on the principle I disagree with both, however progressive it may appear to being taking money away from the well off.

I’ve got four reasons for this position, even assuming the specifics are sorted out. First, means testing is inherently expensive. The savings will be partially offset by the cost of paying civil servants to work out who shouldn’t get child benefit. Second, child benefit gives a massive swathe of society a buy-in to benefits. It’s an incredibly powerful message, that benefits aren’t simply for the “others”, the people they read about in the Mail with their massive taxpayer-funded houses.

Next, although some have used child benefit for fine dining or other decadence, many find their partner gambling or drinking away money that they need for childcare, and that’s not just driven by class or income level. Some parents with partners on bigger incomes are in exactly the same position, and child benefit gets a little way past that problem.

Finally, it doesn’t look like the result of any considered and comprehensive policy on the public finances. A responsible government would look at the debt, current spending and current revenues, and start to prioritise. What are the most vital or cost-effective parts of our public services? What are the most progressive ways to raise funds? What will the economic impact be of cutting staff numbers at a particular rate, or of raising additional funds in a certain way?

They should be identifying the most obvious waste – like vast defence boondoggles and the damaging Afghan war – and cutting them first. Child benefit for anyone simply isn’t anywhere near the cut-off on that list, , even those on the civil list (who perhaps for equity should also also have a £26k limit on their income). Next, they should be looking at the most progressive ways to raise more money without damaging the economy, starting with taxing banks and bankers’ bonuses, or looking at (bear with me) Land Value Tax. Again, increasing VAT shouldn’t have featured there. As the Lib Dems told us before the election, it’s one of the most regressive taxes going.

That information should then have been plugged into projections about the deficit to estimate the optimum approach for tackling it. One thing the Tories are right about is this: paying ever-increasing interest on the national debt isn’t a good long-term use of taxpayers’ money. At the end of a long bubble like Labour’s property/cheap oil boom the national finances ought to have been in credit, which would have made it easier to invest in the lean years as Keynes knew. Leaving those regrets aside, though, can the cost-cutting and revenue options there allow deficit reduction now? Probably not without incurring other social costs too high to bear. More likely in a year or two, probably, but it’s hard to say without all this information being provided.

We should have been shown a review of this sort, a Domesday book of the British public finances. It’s a big job, sure, but if that’s not what the Treasury is for, then what really is its purpose? Telling tall tales to children?

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