If only Gordon Brown had been as economical with the public finances as he was with the truth about public expenditure. His audacity in presenting spending cuts as increases this week was breathtaking. Labour cuts are “investment”, apparently, while Tory ones are attacks on “vital services”.
With the Treasury needing to borrow at least £175 billion this year, you would have thought the Prime Minister would be ashamed to have stood at the dispatch box on Wednesday reading out a list of the extra billions of our money he intends to spend. But spending has been Labour's virility test for so long that it is hard to break the habit. And when the Treasury insists on restraint because the world may stop lending to Britain, Mr Brown would rather not admit it.
If power corrupts, it has been said, Powerpoint, graphs and statistics corrupt absolutely. Mr Brown is a master of the presentation of statistics. He changed the definition of inflation when it was expedient to. He made a mockery of his own Golden Rule by shifting the time horizon. This week he flouted the convention in which public spending is described either in real terms, adjusted for inflation, or as a proportion of GDP. By leaving out inflation, and talking in cash terms, he could say that public spending would keep rising after 2011. But every government since 1947 has increased spending in cash terms. Even Labour's rather feeble new cost controls will leave many departments facing cuts of 7 per cent - as David Cameron made clear on Wednesday.
The point-scoring and deliberate obfuscation are totally at odds with the warm words about cleaning up politics. There has been a complete disconnect between arcane discussions about AV-plus electoral systems, and the studious ignoring of actual votes cast by millions for anti-immigration and anti-EU parties.
This week we are expected to delight in reforms to improve parliamentary rigour, while the brain implants of the new Cabinet transmit the order to smear the Tories as the party of cuts. Liam Byrne, the new Chief Secretary to the Treasury, even claimed yesterday that “the Conservatives plan to cut public spending this year” - undaunted by the fact that they are not in power.
Advertisement
The Tories have been honest about the hole in the public finances. But they have indulged in a tactical ploy of their own by promising to increase real spending on health, despite the NHS budget having more than doubled in ten years to £105 billion.
Yesterday, fears were expressed about the effect that NHS cuts might have on homeopathy: not shroud-waving but herbal blackmail. Imagine the conversation when the IMF comes in to bail us out. “Yes, we ring-fenced homeopathy. If you really want people to pay for it themselves, we'll need a structural adjustment programme to help them through the trauma”.
Anyone can spend money. But most taxpayers want politicians who are clever enough, and dedicated enough, to spend less of our money and to spend it wisely. We all know that the money has run out. We know that Britain is at the limits of borrowing, that taxes must be raised or spending reduced. We know that Labour's spending spree was poor value for money. Perhaps the biggest lesson of the new Labour experiment is that throwing money at public services is not always a panacea. If it makes them bigger rather than smarter, the new complexity and bureaucracy can undermine the benefits of hiring, for example, 41,000 more doctors and 85,000 more nurses. Money has not solved the NHS's morale problems: the Department of Health has stopped asking NHS staff if they would be happy to be treated in their own hospital, because the annual survey answers had become so shocking.
In a devastating report this week, the Office for National Statistics (ONS) said that NHS productivity fell by 4.3 per cent between 1998 and 2007, and that improvements could have been achieved with far less money. This chimes with individual experiences. Only last week I met a clinical director who had discovered that his hospital used 48 different steps to admit patients for surgery. He has cut that down to five, and only one form, but in the face of considerable bureaucratic opposition.
Across the whole public sector, the ONS found that productivity fell by 3per cent between 1998 and 2007, while public spending rose by more than 75 per cent. This fall comes despite using new measures of productivity, created at the behest of ministers who rightly wished to credit innovations such as statins drugs that have kept many people out of hospital. There was a slight improvement in 2006 and 2007, suggesting that efficiency may lag spending - but it was tiny. Productivity rose by 0.8 per cent in 2006 and 0.6 per cent in 2007.
Advertisement
Calculating value for money is fraught with difficulty. But the gap between 3 per cent and 75 per cent is just too big to be bridged by rhetoric or recalibration. The Blair Government largely squandered its opportunity. We will not see such riches again until my generation has paid off every last unfunded public sector pension liability, every last bit of PFI debt kept Enron-style off the books, and all the other components of the structural hole in the public finances. As the Institute for Fiscal Studies keeps explaining, that hole is “recovery-proof” - it will still be there even when the economy recovers. You cannot see the hole. You cannot touch it. You can sense it only through the planned increases in National Insurance and other taxes, and by the jitters in the markets when the Bank of England tries to raise money by selling gilts.
What those markets need now is reassurance that the Government will get a grip on public expenditure. Trading insults about “cuts” gives precisely the wrong impression. The terrible irony is that Mr Brown's planned cuts are far too small to put the public finances on a sound footing. Trying to conceal them is not macho, but madness.