the Blog rss Title underline

The 2020 Public Services Trust Blog

Tuesday, November 25, 2008

The return of zero-sum

By Ben Lucas

Yesterday’s PBR, prompted by the global economic crisis, saw the return of zero-sum to mainstream political economy in the UK. For more than a decade New Labour has defied the idea that public policy necessarily has to involve choices which create winners and losers. This has been best exemplified by its use of the conjunction “and” as in “social justice and economy efficiency”, or “tough on crime and tough on the causes of crime”. The Cameron Conservatives also went along with this consensus, hence a policy based on “sharing the proceeds of economic growth” which allowed both tax cuts and high public service spending.

But what is now clear is that we are entering an era of hard, and probably increasingly clear choices, which will create winners and losers. The Government, in order to reassure financial markets, was explicit yesterday that while there will be short term winners from the economic stimulus package there will be long term losers, particularly high earners. Moreover, whilst in the short term some £3bn of capital projects will be brought forward to boost the economy, in the medium term public spending will be the loser as an even tighter straight jacket is put on public service spending from 2011 onwards.

But where the main political parties are still not facing up to the new reality is what this will mean for public services in the medium to long term. The general message is that the ‘party’s over’ for public services. But the demand pressures on public services will grow and grow. In the very short term this will be seen with much higher benefit bills, welfare spending was 35% of all public spending at the height of the recession in the 1980s, it was 25% of all public spending in the 1990s recession, but at present only stands at 15% of public spending. This is bound to rise as a result of unemployment.

But the long term pressures will be even more stark. The demographic timebomb is far more potentially explosive than the future tax plans unveiled in the PBR. We will have to find a way of paying for an increasingly elderly society, which will see a 50% increase in the number of people over the age of 85 by 2020. At the same time society will have to confront a number of behavioural challenges, such as obesity and re-offending, which current public services are ill equipped to deal with. On top of which will be the cost of mitigating climate change and managing risk, including systemic market failure.

To suggest that the only response to these new pressures is some variation on a cost-reduction exercise is to fail to grasp the extent of the challenge which public services will face in the future. Here too we are probably going to have to make some hard choices, about what is really important for society and what is less important. About what the state should be responsible for and what it shouldn’t, about how services should be paid for, how they should be delivered and how rights, responsibilities and risks should be allocated between the individual, society and the state. These are the big issues which the PBR failed to touch on. They will be the focus of our shortly to be launched Commission on 2020 Public Services.

divider « Newer Posts

To subscribe to email updates of this blog, enter your email address below:

Delivered by FeedBurner

  • Recent posts
  • Archive