Friday, July 04, 2014

Getting and spending – two sides of the same coin for Government

The whole idea that you can talk about spending and taxation separately is deeply flawed. Indeed the idea that you can decouple the public accounts from the economy as a whole makes little sense. The start point of everything has to be citizen welfare in its broadest sense. It has to be bottom up. What are the needs of the people and how best should the Economy satisfy them?

If we start from a “Grand Ideology” then we miss the point completely. This is equally true whether it is Free Market Conservatives or Public Ownership Socialists who are making the noise! The economy as a whole is a huge Public/Private partnership. There are some things which fall unequivocally on the Private side of the divide and some which can only be done by the State. In between is a huge raft of consumer needs where Government has to make judgment calls about how best to manage.

Public expenditure falls broadly into three categories.

(1) Necessary, but efficient, expenditure which only the State can make.

(2) Discretionary expenditure which the State chooses to make, but doesn’t have to.

(3) Necessary expenditure which is inefficient and where either economies need to be made or which could be better carried out by the private sector.

The easy hits are in the second category. So we get cuts to Arts Funding which is likely to destroy some regional theatres and make the future of many arts institutions in peril. This is crass and deeply to be regretted. A cut to the International Development Budget would be in the same category. To its credit the Government has not done this despite the strident voices from some on the Right urging it to do so.

It is in the third category that most of the action is! If some aspects of the Health Service would be more efficient and cost effective if contracted out to private enterprise then only the Socialist ideologue would object. But if the motivation is some “private sector first” Conservative ideology then it is a very bad idea indeed – not least if the private sector beneficiaries are Conservative Party donor companies! The subsidies paid by Government to keep some rail services afloat and the utter confusion across the “network” of operators, fares and service standards are scandalous. This was a privatisation that was botched and had made us a laughing stock. Nobody wants British Rail back – but a publicly accountable Rail network that is consumer not profit driven seems a necessity to me. It’s not a call for renationalisation exactly, but it is a call for a publicly accountable revolution!

So let’s get away from arguing about expenditure and cuts as if they were separate things – they are of course two sides of the same coin. And let’s start making decisions based not on ideology or political expediency but only on a clear understanding of consumer need. Start there and you might get somewhere.


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