An unfamiliar witness to British politics would scarcely notice if a current politician pays homage to another by describing him as someone who “understood the importance of national democracy, who understood why you need to live in an independent country and what that meant, as well as being a free marketer and a small-government Conservative.” Yet when Conservative MEP Daniel Hannan made such a statement in an interview back on August 23rd with Reason TV, he touched the third rail of British politics that is Enoch Powell, the late Conservative MP commonly identified for his controversial and polarizing views on immigration, and by extension, race relations and a multicultural Britain. The Conservative Party disavowed Powell after his famous Birmingham speech in 1968 and continues to do so now for those members who profess Powellite views on immigration, such as then-potential Conservative Party candidate Neil Hatislow in 2007.

The Labour party and parts of the media were quick to attack Hannan. The Guardian printed quotes from Lord Mandelson, the business secretary, and Parmjit Dhanda, a Labour MP. The former equated Hannan’s views as that of official Conservative Party policy, while the latter baited Conservative leader David Cameron to sack Hannan much as he had done so with Hatislow. However, as Hannan specifically did not claim sympathy with Powell’s views on immigration, Cameron considered the event a non-issue and the story quickly lost steam.

It is therefore easy to assume that this episode is merely one of those faux-controversies that burst onto the scene for a few days, but is quickly discarded once all of its sensational journalistic ramifications have run their course. However, Hannan’s remarks are a reminder of how important Powell is to Tory philosophy of the past and present. He was a man whose views impacted and shaped Conservative thought on innumerable topics — including immigration, not limited to it — and a political-intellectual giant who possessed admirers across the political spectrum, from Margaret Thatcher on the right to Michael Foot on the left. Therefore, Powell is not the erudite anti-immigration bigot his detractors believe him to be, but an expansive political figure whose philosophy is still relevant to Britain today. This is particularly true for a significant present and future challenge facing the British state: the state of its public finances.

As a hardcore free-marketer, Powell spent his entire career inveighing against government intervention and participation in the economy, viewing such acts as obstructions to the flow of market forces. While he admitted that capitalist system was not perfect, it is “manageable and acceptable and broadly speaking regarded as workable, a mechanism which cannot safely or wisely be replaced by conscious formulation and by compulsion.” The free market is economically, morally, and politically preferable to any notion of paternalistic politicians making social welfare choices for the voting public, since doing so would be to stymie self-expression and create “a system which is centralized and authoritarian.” (See E.H.H. Green’s Ideologies of Conservatism) The government is not wiser than its people and cannot be allowed to dominate the economy.

Building upon this belief, Powell disputed the value of using public finances to keep the people busy and to strive for full employment in the economy. This is the core principle behind the Treasury Resignations of 1958, when Powell, then a Financial Secretary to the Treasury, resigned from Harold Macmillan’s government along with the Chancellor of the Exchequer and Economic Secretary over the Prime Minister’s refusal to cut £48 million to balance the 1959 budget. Powell and his Treasury colleagues argued heightened government spending and consequential budget deficit would drive inflation upwards. While Macmillan did not necessarily disagree with this notion, he trusted the Phillips Curve—the inverse relationship between inflation and employment in an economy—and prioritized full employment for its immediate political value. However, Powell took the view of, “It is not the duty of governments to make the maintenance of employment the be-all and end-all of policy regardless of what happens to the value of money.” Rather, the government’s primary economic responsibility is to guarantee a level playing field for economic actors, of which the most important element in that equation is the stable value of money.

While public debt, not inflation, is the largest threat to the present British economy, the Labour government’s spending on make-work schemes ring similar to Macmillan’s preference for full employment. Both exist for the simple purpose of keeping the people busy while incubating the far larger problems of runaway deficits and debt, or inflation.

Finally, Powell would argue that the purpose of government in social welfare matters is to aid those who need it the most. The trouble with British social security, as Powell said then and would likely say now, is that far too many of its programs are universalistic rather than only targeting those who need it most. In his view, social welfare in 1950s Britain (and by extension, present-day Britain) was a delayed reaction to and overcompensation for Victorian poverty. While a certain level of support must be maintained for those in need, Powell and his colleague Iain Macleod argued for a different approach to social welfare provision: “the question…which poses itself is not ‘Should a means test be applied to a social service?’ but ‘why should any social service be provided without a real test of need?’”

Powell’s views on the relationship between government, its finances, and its people are important to consider when one realizes the magnitude of Britain’s present and future fiscal problems. The situation is simple to describe: due to Labour governments’ unrestrained consumption spending since 1999, deficit and debt have grown to the point where the credibility and long-term potential of the British economy are compromised. Under Labour, public spending as a proportion of GDP has grown from 36.3% in 1999/2000 to 41.3% in 2005/2006, to 43% in 2008/2009, and according to the 2009 budget proposal, will rise to 47.5% in 2009/2010 and 48.1% in 2010. That is an increase of £119 billion in government spending from 2007/2008 (£582.7 billion) to the projected 2010/11 figures (£701.7 billion). Outside figures are even grimmer; the IMF believes the UK economy in 2010 will be 2.2% smaller than the Treasury’s projection, so the 48.1% figure is actually closer to 49.2%. This figure is astonishing, and Powell would argue such levels of government spending shuts out private enterprise and freedom of choice in the marketplace, and creates de facto nationalization of the whole economy.

Even more disturbing is the fact that of the proposed £119 billion increase in public spending between 2007/2008 and 2010/2011, only 38% can be attributed to automatic costs of the recession, such as expanded social security and unemployment benefits. The banking bailouts of the past year, which will cost the British taxpayer more than £130 billion, are not included in the spending increase figures. Almost two-thirds (62%) of the spending increase falls under discretionary government spending, and upon further inspection, much of it is devoted to short-term consumption—“make-work” schemes designed to keep the public busy—rather than long-term capital and infrastructural investment for the British economy.

This splurge in public spending has not come without a cost; the government estimates its budget deficit is at about 12% of GDP a year, while others calculate it at 14%. The structural deficit—that is, the deficit not owed to recession-related spending—hovers around 10% according to the Treasury and IMF. Standard & Poor’s has downgraded UK credit to “negative,” putting Britain at risk to lose its AAA credit rating. Total government debt is around 40% of the GDP, but will quickly rise up to 100% within a few years if the deficits are not checked. The implication of this is manifold for the UK’s economic recovery: not only will it cost Britain more to borrow due to higher interest rates, but also much more of the annual budget will be devoted to unproductive debt service rather than productive economic activity. Labour’s answer under Gordon Brown to the question of, “How should British governments choose to spend money?” is the same one that drove Powell out of Macmillan’s government: the government has a responsibility to keep its people “occupied,” regardless of the risks to the nation’s fiscal and economic health.

As such high levels of debt are unsustainable for the British economy, the British government has two choices. It can either raise taxes to pay for its spending and debt servicing, or it can cut its spending. The former option is the less attractive one; a recent OECD study of its member countries’ economies from 1980-2000 concludes that 30% of the money raised from taxes leaves the economy (e.g. £100 billion in new taxes costs the GDP £30 billion). Furthermore, public spending itself is bad for the economy; studies from the European Central Bank and economics professor Dr. Pak Hung Mo of Hong Kong Baptist University show a 1% of GDP increase in public spending reduces overall GDP growth anywhere from 0.12% to 0.216%. Also, public spending does not provide good value when overall productivity of public service have decreased by 3.4% in recent years and when even 84% of those working in the public sector believe that “lots” or “a fair amount” of the money has gone towards bureaucracy. Finally, public feeling is on the side of cutting public spending. According to the British Social Attitudes survey, while 63% of the voting public in 2002 supported higher tax and spending, only 42% of the public wanted such a policy in 2007, with 54% wanted the same or less tax and spending. Given the large increases of government spending in the past year and near future, there will likely be even less public support for tax-and-spend fiscal policies.

What then, should Britain cut? The Financial Times argues, no matter the next government’s identity, it “will be remembered as a cutter,” as “No reforms can save the British state from its coming resculpting.” However, the decisions the next government makes will explain “which functions of government they regard as sacred and which, if forced, they would sacrifice.” While the permutations of possible cuts are nearly infinite, the independent Taxpayers’ Alliance recently published a paper where they proposed a number of cuts designed to bring down government spending by £50 billion. The largest group of cuts they suggested fell under the label, “Cutting middle-class welfare: Stop paying benefits to people who don’t need them,” and total £12 billion. They aim to roll back the universalist aspects of the British social welfare state, which devotes far too money to those who do not need it. Powell would applaud such an approach and add that rigorous methods for testing need must complement any aid program.

The ideas of Enoch Powell are still important to consider if British politicians want approaches to resolve their country’s problems. If Powell were still alive today, he would decry the level of British public spending and the state of Britain’s finances. He would advocate a retreat in government spending—in particular programs that keep the populace busy but do little to benefit Britain’s long-term economic health, or social programs that dispense aid without regard for client need—and choose his targets with relish. Referring back to the recent British Social Attitudes survey, the British public appears ready for such actions, and British politicians would do well to remember Powell’s assessment of their professional responsibility:

A politician crystallizes what most people mean, even if they don’t know it. Politicians are word-givers. When they have spoken, individuals recognize their own thoughts. Politicians don’t mold societies or determine destinies.

If the British politician agrees with this job description and chooses to act on the increasing public demand for fiscal retrenchment, Powell would leave him or her with two important pieces of advice drawn from his speech on the welfare state in 1961. First, “In politics is it is more blessed not to take than give;” politicians must consider the impact and consequences new services thoroughly before introducing them, as institutional inertia and political pressure tend to retain them regardless of their effectiveness. Failing that of course, as Britain has done, the real solution to the country’s public spending problems are not:

…disconnected, spasmodic pluses and minuses but by presenting a broad and large conception of the manner in which resources ought to be redeployed to meet modern realities and this will not be done without soberly assessing but boldly facing the in-built obstacles to that redeployment.

The next British government will do well to keep these words in mind.

Will Chou is a graduate student in history at Ohio State University.