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The 2020 Public Services Trust Blog

Monday, September 7, 2009

Now for a real debate on public services

By Ben Lucas

There are signs that the Government is now groping its way to a more credible position on the future of public spending on public services. For the last year Gordon Brown has tried to maintain the Labour investment versus Tory spending cuts dividing line. But whereas New Labour’s successful political positioning always went with the grain of public opinion, Brown’s line on public finances has failed to convince anyone, few in his own government believe it, let alone the general public.

In practice, the dividing line has been Labour denial versus Tory realism. It is hardly surprising, therefore, that the Conservatives have been winning the argument. The tragedy for Gordon Brown is that having won international plaudits for his handling of the banking crisis and its aftermath, this success has been overshadowed by his incredible approach to public service spending. There is a powerful economic argument to be made about maintaining public spending in the recession, and the evidence seems to suggest that this has helped mitigate its social impact, particularly on unemployment, but this also depends on there being a credible strategy for reducing debt once the economy returns to growth.

A combination of interviews and briefings over the past week indicate that the Government is changing its position. The strategy seems to be to accept that there will have to be a significant spending reduction, but only once the economy returns to growth and that this will be across all public services including health and overseas aid (both of which have been ringfenced by David Cameron). Within this spending reduction some key economic and social objectives will be identified such as skills, educations and poverty reduction, where spending will be prioritised. In the other areas of spending, the emphasis will be on a return to public service reform, productivity savings, efficiency, choice, competition and more co-production. This could be allied with state asset sales and a more creative and flexible use of community assets, such as libraries, schools, parks and colleges.

But the question for Brown is can he overcome his innate caution and turn this into an effective strategy based on offering a credible alternative to Conservative realism on public service spending?. To do this, it will not be enough to hint at this new approach and hope that an upturn in the economy at the beginning of 2010 will be enough to transform the political debate. The Government will need to make its position very clear in the next few weeks and will then need at least six months to get this across to voters. The best way of doing this would be to go ahead with the Comprehensive Spending Review, which was suspended earlier this year. It’s no good waiting until there is better economic news, because that will probably not be until after the election. So the Government should be bold and push ahead with a CSR this year..

Establishing a more credible position would not only be good for the Government, it would be good for politics. The Conservatives have had it very easy because of Brown’s insistence on denial. But a debate between realists could be a different matter. The Conservatives would have to think hard about the logic of ringfencing health spending, they would have to be clearer about their own numbers and their own tax and spend priorities, including inheritance tax. So far the Conservatives have not had to explain how they would combine the increased spending necessary to tackle “Broken Britain” with 10% cuts in all public services except health and overseas aid. It is in the public interest that both the Government and the Opposition parties should have a credible strategy on the public finances, so that there can be a proper debate about how to achieve sustainable growth, how to reduce the dependency ratio and how to respond to demographic change, behavioural challenges such as obesity, the growth in chronic health conditions and global warming – all within a very tight budget.

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  1. [...] Lucas, Director of the 2020 Public Service Commision, posts here on Labour’s shifting strategy on public spending. I agree with everything he [...]

    Pingback by Innovation from public service adversity : Matthew Taylor’s blog — September 7, 2009 @ 5:12 pm

  2. You are right to suggest that a step change in debate will be more difficult for the parties (who will have to actually come up with some real solutions), but good for politics. And lets hope this is a debate that engages with long-term sustainability and addresses societal challenges, as well as immediate debt-reduction strategy.

    The serious media seem up for it – from the FT today:

    “Above all, Labour and the Conservatives must emphasise public service reform. Today, the Tories look far more committed than Labour to the devolution and contracting out of health and education services. But the Conservatives have questions to answer. If they are committed to letting parents set up “free schools”, what additional demands will that make on public funds? If they devolve health services, will that not create a “postcode lottery” with better hospitals in some places than others? There are no easy answers. Still, thanks to Mr Darling, there is more prospect of an honest debate.”

    Comment by Henry Kippin — September 8, 2009 @ 9:16 am

  3. [...] Ben Lucas and the RSA’s Matthew Taylor called for a real debate on public services this week, and it looks [...]

    Pingback by Whats at Stake in the Policy Debate « The 2020 Public Services Trust Blog — September 11, 2009 @ 1:02 pm

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