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The 2020 Public Services Trust Blog

Tuesday, March 30, 2010

Lights, cameras, action…

By Ashish Prashar

Last night the chancellors squared up in a the first live TV debate in the UK and although it wasn’t always electrifying the programme was certainly a triumph. The three would be chancellors clashed over how quickly the deficit should be cut, tax and what to do with the banks but there was concensus – the candidates were “all agreed that the cuts would have to be tougher than those imposed by Baroness Thatcher in the 1980s.”

In a fiesty hour-long debate the chancellors started off by talking about their personal qualities but it really got going when Alistair Darling and Vincent Cable ganged up on George Osborne to heap derision on the Conservatives’ proposed tax cut. Then the Chancellor attacked Osborne saying he “did not have a single penny in the bank” to pay for his plan to reduce National Insurance contributions and that he was taking a terrible risk… and with Osborne on the ropes Cable weighed in.

Vince Cable went from strength to strength by simply telling the truth. He won the most applause by presenting himself as the man who saw the recession coming, adding “we are not beholden to either the super-rich or militant unions” and winning the biggest cheer of the night when he described people unhappy with 50p tax as “pin-striped Scargills”.

They all criticised the financial sector and the banks in particular came under heavy fire. There was also consensus on public sector pensions until Darling pointed out the Tories’ failure to support Labour on care for the elderly. Osborne then accused Darling of stealing the Tories policy on stamp-duty, Darling replied with “there’s nothing like cross-party consensus Geroge” getting his biggest laugh of the night.

Darling did boob on the death tax and Osborne’s position on child tax credits still remains confusing.

So what’s my verdict?  Well, Darling made no big mistakes. There were a couple of decent gags that got a few laughs from the audience and some flashes of passion, which may have surprised some. Osborne stood his ground and certainly looked calm. However, he made little of the National Insurance announcement and sometimes looked like he was being ganged up on. Cable threw and landed the most punches, and in my opinion secured his place as the people’s favourite by smashing MPs and bankers, and clobbering Osborne over his IHT cut.

This was always going to be a warm-up to the main event; the leaders’ debates. Although I don’t think they will have the same drama and impact as the US Presidential debates they will certainly be interesting.

One last quick note Krishnan Guru-Murthy was excellent and played it really well… Watch Ask the Chancellors!

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Tuesday, September 15, 2009

Vince is right, but we must take courage and be bold!

By Charlotte Alldritt

I’ve just got back from Reform’s launch ‘Tackling the fiscal crisis: A recovery plan for the UK’ by Vince Cable MP. In this well reasoned and balanced pamphlet, the Deputy Leader of the Liberal Democrats argues for a bold approach to cutting the public deficit by 8% within 5 years.

Vince Cable’s ideas are based on the premise that a public deficit of 13% is too high. Moreover, it is a structural deficit – the increase in public spending of 40% since 1997 has been built on the “unstable and impermanent” UK financial sector and housing market. While he accepts that tackling the stock level of debt (as a proportion of GDP) is not a matter of immediate urgency, Cable asserts that the deficit and debt levels need to be reduced as soon as it is timely to do so (i.e. when it will not jeopardise recovery).

Meeting a challenge of such scale must not be rushed, argues Cable. It must be done right. He offers five principles for change:
1.  Zero-based budgeting – nothing is sacrosanct; departments will have to defend every aspect of spending.
2.  Democratic accountability – Parliament should be able to scrutinise public spending plans before they are implemented, not just after via the National Audit Office.
3.  Localism – local government should be free from excessive central government bureaucratic oversight. They should be given revenue raising power, especially over business rates.
4.  Transparency – public spending by the civil service and quangos should be readily scrutinised.
5.  Public sector reform – focus should be on value for money and outcomes, not input targets or meaningless talk of ‘efficiency’.

Whilst all these principles are right and laudable in theory and Vince Cable offers some sensible policy suggestions as a result, they pose considerable problems in practice.

For example, zero-based budgeting has the potential to lead to siloed rather than strategic resource allocation, as each department tries to defend his own (possibly for reasons of salary incentives and empire building rather than the public interest). Decentralisation has proved notoriously been talked of, tried and failed, largely a result of the centralised UK political culture. And what of the implications of cutting back education or NHS spending? As one member of the audience asked this morning, will we be going back 10 years to long waiting lists and people lying untreated in hospital corridors? Or, as Vince Cable himself acknowledges, might the quality of public services fall under the guise of so-called productivity gains (e.g. via doubling of class sizes, or reducing the number of HE tutorials)?

Whilst going further to inject sense and honesty into the debate than has been offered by the other two main parties, the overwhelming critique I have of this paper is its limited reference to the growing demand for health care, social services and education (see my blog yesterday). If we take these into account and – as Vince Cable argues – we have to tackle the national debt and deficit sooner rather than later by cutting public spending, our situation looks even graver still.

Courage will be needed to tackle this head-on, and it must start with a fundamental change in the relationships between the citizen, communities, local and central government. We need to be bold to avoid this otherwise impending black hole for public services.

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Friday, April 24, 2009

In place of denial

By Ben Lucas

The Budget has removed the last excuse for continuing with the era of mutually assured denial (MAD) between the main political parties. There can now be no denying the scale of the challenge which Britain faces. The Budget set out the top lines about the scale of borrowing and public debt levels, which by any measure are pretty frightening.

Public services will go through the toughest period of retrenchment for at least a generation. Cutting the rate of public sector spending growth to just 0.7% from 2011 will be hard enough. The IFS have since revealed that when cuts in capital spending and the costs of borrowing and increased unemployment benefit are taken into account, this becomes not just a freeze but an actual reduction in expenditure.

This much both the Opposition and the Government accept. What neither will talk about openly is what are the real choices which will have to be made about public services in the future? As Nye Bevan said, “Politics is the language of priorities”, yet with the exception of Vince Cable, who has started to talk in these terms, none of Britain’s major politicians are yet setting out their stall about what their priorities will be for public spending after the next election.

Neither the Government nor the Opposition wants to surrender any ground to the other, they are like two crabs locked in battle standing at the edge of a cliff. Yet what might seem a safety first policy is fraught with danger. The next election will not be 1979 all over again. Whichever party loses this election is not likely to gift the Government with a clear run, whilst they get on with the more important business of tearing themselves apart, as Labour did in the early 1980s. Moreover, the causes of the current crisis cannot be all pinned on the Government and its wider hinterland – the bankers not the unions are the pantomime villains this time. So the danger for the Conservatives, should they win, is that if they haven’t prepared the way for and built a constituency for radical change in public services, then as soon as they try to signal a clearer direction they could quickly find themselves on a collision course with both public service workers and the public.

What both the Government and Opposition need to do now is move beyond the safety net of efficiency reviews and rhetoric about investment and debt levels to starting to spell out what a progressive approach to public service retrenchment would look like. This will involve setting out priorities and identifying where the pain will have to be felt.

A progressive approach to this ought to combine fairness with responsibility. The priority should be on spending which achieves the objectives of reducing inequality, and promoting social cohesion, security and sustainability. This will need to be balanced with people needing to take greater individual and social responsibility both for their own behaviour and for the contribution which they make to achieving social outcomes through taxation, co-payment and their own time. There is a growing sense that the public are ready for a very different type of debate about how we can emerge from this crash with a more sustainable society. All of this suggests that the important thing is not just to signal where one off cuts can be made but what the elements of a new deal between the citizen and the state might be. This is about the role of the state of markets and of society.

In terms of new directions, by far the most interesting development in the Budget was Sir Michael Bichard’s proposals in his Chapter of the Efficiency Review on Local Incentives and Empowerment. The era of the big, central British state trying to run ever more public services from Whitehall is surely now over and Bichard’s paper starts to set out an alternative direction. This is based on pooling local public services and effectively re-creating accountable local strategic government, which can make joined up resource and spending decisions at a level where they can really understand the impact these will have on people’s lives.

12 pilots are to be established to look at how public service can be better co-ordinated and more accountably run at a local level. At the same time, the Budget itself announced Manchester and Leeds will get the go-ahead to develop themselves as City Regions, along the lines of London. The Conservatives are committed to these City Regions having directly elected Mayors, which is still the missing piece of the local accountability jog saw. Below the radar a new model for decentralised public service administration and strategic local government is starting to emerge which will be more efficient, deliver better outcomes and finally offer the basis of an answer to the English question which devolution has posed since 1997.

But this is only one element of what will need to be an entirely new public service landscape. If politicians want to rebuild trust then they should start with being honest about what the real choices are which society will have to face over the next decade.

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