Are spending cuts inevitable?

Are spending cuts inevitable?

How could the public debate be made more accessable?

The Sunday Times yesterday led with a story that Whitehall Mandarins are drafting plans for public sector spending cuts of up to 20%. This has not apparently been ordered by the government, and doesn’t form part of the Opposition liaison that takes place in the run-up to a General Election: this appears to be unbidden, out of a fear that such cuts will be required, even if they cannot be discussed at the present time for political reasons.

Leaving aside the rather startling (at least to me) notion of the Civil Service acting without being directed (I imagine HAL from 2001: A Space Odyssey with a plumier accent), this fits in to a battle we are told is raging at the heart of government. The crux of the reported feud between Lord Mandelson and the Northern Ireland Secretary Sean Woodward is less a personal fight to hold the ear of the PM, but more a reflection that Labour MPs are concerned that the latter’s advice to keep attacking “Tory Cuts” is not the right strategy to save seats with a smaller majority than the former Tory frontbencher enjoys in St Helen’s South.

There is a further debate as to whether the Government is right to suggest that it will delay its Comprehensive Spending Review. Lord Mandelson announced it would be postponed on TV, before the Treasury confirmed it had yet to make that decision. Whether the delay is now policy or not, there will be enormous pressure to hold the review as soon as possible, in light of the current economic situation.

So the Conservatives are calling for some reductions in spending (except for Health and International Development) to ameliorate historic levels of national debt, the Government are holding the Keynesian line of increasing spending to public services to ride out the recession, and the Civil Service are contemplating slashing the public sector bill. What should the average voter make of this?

Regardless of where you stand on these issues politically, we should all acknowledge that there is a huge problem with the debate itself. In this country, short of holding a PhD in economics, the political debate about the economy is largely impenetrable. I have the utmost respect for journalists like Fraser Nelson, who actually follow, interpret, and explain the different financial mechanisms that both parties use to twist the numbers and make their political points, but I wonder how many others (like myself) find the economy to be discussed in a way that makes it difficult to grasp intuitively.

The way the economy is generally reported doesn’t allow the average voter to form a view on what course of action should be taken, and to argue that with the facts that underpin that view. This is bad for democracy, and especially so if public sector spending cuts are going to be the principle battleground at the next General Election.

There are two measures that I would be keen to borrow from US politics in this regard. The first is the centricity in public debate of the National Debt and of the Defecit. Mainstream political debate in the US has these figures front and centre, especially the latter – the public is made aware of whether the Budget is in surplus or whether the Defecit has grown year-on-year. That information is rarely communicated simply in the UK. Finance, especially governmental finance, is complex – but I’d argue the way it is reported does not allow for many regular voters to participate, or fight a corner based on the numbers.

The other measure is a Spend Analytics portal – introduced by Governor Jay Nixon (D-Missouri) to allow every taxpayer to see where and how every tax dollar is spent. I used to specialise in the software and reporting tools that are implemented by corporations and private equity houses to monitor third-party spend, and in terms of value for money having access to good management information (let alone releasing it to the public) saves many times the relatively low cost of implementing and maintaining such a portal.

Huge savings are possible in Public Sector procurement, if good management information (made public) and a strong mandate from the Treasury to harmonise contracting were to be given priority status. The Office of Government Commerce (OGC) reports in to the Chief Secretary to the Treasury at present and that role needs to be given prominance if large savings are to be realised. If some reports are correct, David Cameron might adopt a US-style model of having a macro-economic Treasury Secretary (Chancellor of the Exchequer) and a Director of the OMB job managing departmental spending (Chief Sec to the Treasury).

Even for the exceptionally political observer, the finances of the country are still opaque and rarely part of the debates that rage in pubs and canteens and on blogs. For such a crucial battleground at the next election, politicians and journalists need to examine what they can do to allow the economy to be a discussion that can be conducted as readily as a debate on ID cards or foreign policy. It is simply too important to be left to the accountants and the spin doctors.

  • Mike Smithson is on holiday until July 22nd
  • Morus

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