So the experiment is over and the results are conclusive. Part one was
carried out under Gordon Brown who, as this column said at the time, tested to
destruction the theory that vast increases in government spending would cure all
the problems of the public services. The national disillusionment and
exasperation which followed on that ideological adventure should have led to an
immediate repudiation of it by all rational political leaders. But alas, there
was a period of suspended disbelief in which the Conservatives insisted that
sticking to Labour’s spending commitments was absolutely necessary if they were
to have a hope of being elected. Yes, that was what George Osborne used to say
back in the darkest days of modernisation.
Then came the economic crisis of 2008 and that was the end of that. By the time the Conservatives (only just) got into power there was no more question of sticking to anybody’s previous plans. Spending more and more as a solution to everything was over. It was now just a matter of deciding where and how fast you could cut. The political answer turned out to be: not very fast and not at all in some sacrosanct areas.
But even with those limitations, the second half of this on-the-hoof research has been a revelation. George Osborne accepted (at last) in his smug speech last week what many of us have been saying for a long, long time: it is perfectly possible to get better services for less money. Spending on local government has been reduced – and yet people profess themselves more satisfied with its services than they were. Home Office spending on policing has been cut – but crime has fallen by 10 per cent to its lowest level for 30 years.
The facts are now indisputable: the only way to get better performing services is by reforming them. And reducing the money that is thrown at them tends to spur that reform by making improvements in efficiency and productivity more urgent. Indeed, endless unquestioning increases in funding can actually obscure systemic problems and forestall the confrontations with self-interested lobby groups that genuine reform requires. If you haven’t got the cash to buy them off, you just have to have it out with the public sector unions and the Police Federation once and for all. And what happens when you face up to this terrifying reality? Does the earth open up beneath you and the sky fall in? No, everybody pretty much accepts that the game is up; local government works better and crime falls.
There has been a remarkably similar outcome in the United States where the failure by Congress to agree to the President’s budget caused the White House to act on its most terrible threat: the sequester of federal funds. And what happened, when this great abomination was unleashed upon the land? Not a lot. The most notable effect of sequestration so far has been that the Obama administration has put a stop to tours of the White House. There used to be an old pacifist witticism that went: what if they had a war and nobody came? The new version of this might be: what if the government stopped spending money and nobody noticed?
Then came the economic crisis of 2008 and that was the end of that. By the time the Conservatives (only just) got into power there was no more question of sticking to anybody’s previous plans. Spending more and more as a solution to everything was over. It was now just a matter of deciding where and how fast you could cut. The political answer turned out to be: not very fast and not at all in some sacrosanct areas.
But even with those limitations, the second half of this on-the-hoof research has been a revelation. George Osborne accepted (at last) in his smug speech last week what many of us have been saying for a long, long time: it is perfectly possible to get better services for less money. Spending on local government has been reduced – and yet people profess themselves more satisfied with its services than they were. Home Office spending on policing has been cut – but crime has fallen by 10 per cent to its lowest level for 30 years.
The facts are now indisputable: the only way to get better performing services is by reforming them. And reducing the money that is thrown at them tends to spur that reform by making improvements in efficiency and productivity more urgent. Indeed, endless unquestioning increases in funding can actually obscure systemic problems and forestall the confrontations with self-interested lobby groups that genuine reform requires. If you haven’t got the cash to buy them off, you just have to have it out with the public sector unions and the Police Federation once and for all. And what happens when you face up to this terrifying reality? Does the earth open up beneath you and the sky fall in? No, everybody pretty much accepts that the game is up; local government works better and crime falls.
There has been a remarkably similar outcome in the United States where the failure by Congress to agree to the President’s budget caused the White House to act on its most terrible threat: the sequester of federal funds. And what happened, when this great abomination was unleashed upon the land? Not a lot. The most notable effect of sequestration so far has been that the Obama administration has put a stop to tours of the White House. There used to be an old pacifist witticism that went: what if they had a war and nobody came? The new version of this might be: what if the government stopped spending money and nobody noticed?
Now that we have learnt the truth about public spending – in what was as close as you can get to controlled laboratory conditions in the real world – there can be no excuse for not acting on it. Essential government agencies such as the police can be reformed. For the rest, the solution must be surgical. The only way that this or any government can have a hope of actually cutting the deficit (let alone the debt) as opposed to nibbling at its edges in a politically risk-averse but economically futile way, is for the state to get out of the service-providing business. In the Dark Age of the 1970s, the government manufactured cars and steel, sold milk (which you could not buy at a supermarket) from high street outlets owned by the Milk Marketing Board, and ran a travel agency. (Thomas Cook was the national equivalent of the Soviet Union’s Intourist.) How absurd does all this seem now? My younger colleagues can scarcely believe it – particularly the bit about the travel agency.
And how equally ridiculous might it seem in 20 years (or less, I hope) that the government once owned the hospitals, directly employed the doctors and nurses, and decided on the medical priorities and drug availability of virtually all the health-care provision in the country. Yes, it is time to think the unthinkable about the NHS which is, as even the BMA now recognises, unsustainable in its present form.
For any government that wants to get real, I predict that this is how it’s going to go. First, top-up fees for procedures that are outside the core health-care services will become officially acceptable. (In other words, it will be illegal to deny you the right to NHS care if you opt for elements of additional private treatment.)
At this point, the private health insurers will start devising “top-up only” policies which will be affordable and widely taken up. Top-ups (what Americans call “co-payments”) will provide an additional revenue stream for basic health care, which will still be free at the point of use. From there, it will be much more feasible to move to a more diversified health system (as other European countries have) with a mix of private and public providers, thus offering patients the kind of choice and independence which they regard as normal in other areas of their lives. The command-and-control model for health care is as outmoded as a government-owned travel agency and almost everyone involved knows it.
Politicians who are terrified by this (and by the NHS unions) should look again at what they have proved: in local government and in policing, the consumer and the producer interest have accepted the new dispensation with remarkably little unrest. And perhaps more remarkably, the electorate at large hasn’t raised a squeak. (Scarcely surprising this: better services for less money. What’s not to like?)
In fact, the past year has shown – as even Mr Osborne now seems to recognise – that popular opinion is way ahead of the governing class. Indeed, the parties are having to scramble to keep up with the realism of most voters – and not just on the matter of welfare reform.
Those “hard-working families” to whom every campaign speech is addressed now have very little sentimental baggage about the beneficence of Big Government. They are losing the fight to maintain their standard of living, and that makes them furious with services which waste their time and money and show contempt for their individual needs.
This is a moment for truth-telling. Mr Osborne has won a different, and much more important, argument from the one he boasts about: not the one with Labour about the need for austerity but the one with himself about whether life is better when government is smaller.
Related:
Guardian Robot Baffled By Generation Y's Embrace Of Thatcherism. Does Not Compute. Does Not Compute.
Why Britain's Fallen Out Of Love With The Welfare State (Or, More Likely, Everyone Else's Welfare State)
We'll Keep The Red Flag Flying Here
A Fair Warning To Those Promoting Open Borders, Amnesty, & Free Immigration
The Truth At Last! Peter Mandelson Admits Labour 'Sent Out Search Parties' To Bring Migrants Here After Losing The Votes Of The Working Class
Immigration & The Town That Stopped Mincing Words
Yes, Immigration Can Bring Huge Benefits, But On This Scale And At This Speed, It's Too Much To Cope With..
The Only Relevant Issue In The Immigration Debate: What Is Good For The Country And Her Citizens?
We'll Keep The Red Flag Flying Here
A Fair Warning To Those Promoting Open Borders, Amnesty, & Free Immigration
The Truth At Last! Peter Mandelson Admits Labour 'Sent Out Search Parties' To Bring Migrants Here After Losing The Votes Of The Working Class
Immigration & The Town That Stopped Mincing Words
Yes, Immigration Can Bring Huge Benefits, But On This Scale And At This Speed, It's Too Much To Cope With..
The Only Relevant Issue In The Immigration Debate: What Is Good For The Country And Her Citizens?
