Labour's economic legacy

I am grateful to Tory journalist Fraser Nelson (http://www.telegraph.co.uk/news/newstopics/politics/7827761/This-Budget-is-George-Osbornes-moment-to-be-radical.html) for summarising yesterday's Budd report:

• "Sir Alan said yesterday that Alistair Darling was being too pessimistic: on almost every measure, the public finances look like being in better shape. Unemployment, he said, will be almost 200,000 lower than had been feared. Economic growth will not be quite as strong but the tax revenues – which are far more important – will come in much more strongly than Mr Darling gloomily forecast. Something is going badly right."
• "In many areas that were not included in Sir Alan's report, the British economy is doing remarkably well. Manufacturing is bouncing back – helped, of course, by the weak pound. The Bank of England is no longer buying British government debt, but demand remains strong – keeping bond yields low. Banks are lending, and money supply is increasing. Just as the economy sprang a volley of nasty surprises as we entered the crash, it's yielding pleasant surprises now."
• " The so-called structural deficit (the amount of overspend that will not be eliminated by an economic recovery) is a little bigger than had been estimated. But crucially, Mr Osborne's election goal – to abolish "the bulk" of the structural deficit by 2014 – would have been easily achieved had Mr Darling remained in place. No more taxes need to be raised, or budgets cut, to honour this Tory manifesto pledge."
• "British house prices, which have recovered faster than anywhere in the world and should grow by 10 per cent both this year and next."

So Mr Nelson concludes that as he doesn't need to make savage cuts to sort out the deficit, George Osborne should instead have to make "the moral case for cuts".

I would be interested to hear what the "moral case" is for lower spending on benefits, schools, hospitals, social services, transport, police, defence or indeed any other service provided by national or local government. I can see a "moral case" for better or wiser spending - eliminating waste and diverting the money released to frontline services. I can see a "moral case" for seeking to reduce the tax burden on the least well-off. But an approach whose starting point is that smaller government is intrinsically morally better is just the same old Thatcherite prejudice that Cameron claims to have abandoned and the Lib Dems are supposed to oppose.

The UK actually has an economic model which thanks to the previous dose of Thatcherism means that compared to most of the rest of Western Europe we already have low taxes, a small state, a weak welfare system, low redistribution, low industrial intervention, and high inequality. Labour managed in 13 years to ratchet that back a bit and start to re-humanise and re-social democratise British society so that it might work for all citizens, not just the rich few. Nelson and Tories who share his prejudices want to redeploy the economics and morality of the jungle where the market rules and the state does the bare minimum. After the Budd report they no longer have an economic excuse and are reliant on dogma to justify trashing all the services and structures that create a society worth living in.