After Osborne's spin, it's time to bring parliament and the public into the spending process

Institutional reforms can reduce the extent to which short-term tactics trump long-term thinking.

As with most spending rounds in recent history, George Osborne’s announcements last week were as much about politics as economics. It was, as the BBC’s Iain Watson noted, a nakedly political exercise, intended to define the battlegrounds for the next general election. In addition to electorally popular protection for schools, pensions and the NHS, the Chancellor attempted to lay a series of traps for Ed Miliband and Ed Balls on social security. It shouldn’t be a surprise to any of us that spending rounds are conducted like this, but it should be a disappointment.

The British economy is still very far from healthy and the government that wins the election in 2015 will still face incredibly grave fiscal challenges. We cannot afford for sound economic policy to be subordinate to the desire for soundbites and election tactics. That’s why parliament and the public have to be brought back into the spending process.

Consider the 2010 Spending Review. It was probably the most important political event of the parliament but it was the result of a rushed and secretive process and was subject to the bare minimum of scrutiny, with the Treasury select committee carrying out a one month inquiry on its content. The Fabian Society Commission on Future Spending Choices today publishes its first report, Spending Wisely, and calls for a comprehensive package of reforms to strengthen the ability of parliament and the public to hold the chancellor to account for the spending decisions he makes.

We think the public should have access to much better information about public spending, so they know where their money goes. One option would be a Citizen’s Tax Statement, which we think would reassure many people that most government money is spent on priorities people share.

Next we recommend that future governments set out 'draft' plans for consultation in advance of major spending decisions. Pre-announcement leaks to friendly journalists and running commentaries on cabinet negotiations just aren’t good enough. If we want proper scrutiny of spending decisions it is vital that parliament, policy experts and the media are given the chance to comment on relative priorities, review the evidence and rationale informing decisions and highlight unforeseen consequences. In fact, ministers ought to welcome this change as it would give them the freedom to change their minds without being accused of a humiliating climb-down.

Alongside this draft  we also propose a new long-term spending statement, which would require the government to explain its thinking on the direction of public spending over 10 or 20 years. Subsequent year-by-year decisions would then need to relate to this multi-decade perspective, or minsters would need to explain why not.

The commission suggests that the Office for Budget Responsibility should become a servant of parliament, charged with giving MPs the firepower to hold the chancellor and ministers to account. The OBR emerged in 2010 from a Conservative election manifesto promise and has transformed how fiscal policy is debated. But it focuses on the announced policies of the government of the day, so is unable to aid parliamentarians in weighing up the merits of alternative approaches. For the sake of good governance, its remit could be expanded, so that it is more like the US Congressional Budget Office. Finally parliamentary scrutiny might be strengthened by the creation of a separate Budgetary Committee, easing the burden on the chronically overworked Treasury select committee.

But simply scrutinising the spending allocations is not enough. The commission also calls for a new institution to advise on how to get more out of public spending. We propose the creation of an independent Office of Public Performance to police the quality of public spending and to help build public trust and understanding. Its aim would be to ensure that when decisions are made, as much attention is focused on what they are intended to achieve, as what they cost.

Politicians won’t stop being politicians. But institutional reforms can reduce the extent to which short-term tactics trump sound, long-term thinking. The public need to have confidence that decisions are being taken for the right reasons and the only way for that to happen is to shine more light on the murky process of setting budgets. 

George Osborne leaves 11 Downing Street in London on 19 June 2013. Photograph: Getty Images.

Andrew Harrop is general secretary of the Fabian Society.

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What I learnt when my wife and I went to Brexit: the Musical

This week in the media, from laughing as the world order crumbles to what Tristram Hunt got wrong – and Leicester’s big fall.

As my wife and I watched Brexit: the Musical, performed in a tiny theatre above a pub in London’s Little Venice, I thought of the American novelist Lionel Shriver’s comment on Donald Trump’s inauguration: “A sense of humour is going to get us through better than indignation.” It is an entertaining, engaging and amusing show, which makes the point that none of the main actors in the Brexit drama – whether supporters of Leave or Remain – achieved quite what they had intended. The biggest laugh went to the actor playing Boris Johnson (James Sanderson), the wannabe Tory leader who blew his chance. The mere appearance of an overweight man of dishevelled appearance with a mop of blond hair is enough to have the audience rolling in the aisles.

The lesson we should take from Brexit and from Trump’s election is that politicians of all shades, including those who claim to be non-political insurgents, have zero control of events, whether we are talking about immigration, economic growth or the Middle East. We need to tweak Yeats’s lines: the best may lack all conviction but the worst are full not so much of passionate intensity – who knows what Trump or Johnson really believe? – as bumbling incompetence. The sun will still rise in the morning (as
Barack Obama observed when Trump’s win became evident), and multi­national capital will still rule the world. Meanwhile, we may as well enjoy the show.

 

Danger of Donald

Nevertheless, we shouldn’t deny the risks of having incompetents in charge. The biggest concerns Trump’s geopolitical strategy, or rather his lack of one. Great power relations since 1945 have been based on mutual understanding of what each country wants to achieve, of its red lines and national ambitions. The scariest moments come when one leader miscalculates how another will react. Of all figures in recent history, the Soviet leader Nikita Khrushchev, with his flamboyant manner and erratic temperament, was probably the most similar to Trump. In 1962, he thought President Kennedy, inexperienced and idealistic, would tolerate Soviet missiles in Cuba. He was wrong and the world only narrowly avoided nuclear war.

How would Trump respond to a Russian invasion of the Baltic states? Will he recognise Taiwan as an independent country? Will he scrap Obama’s deal with Iran and support a pre-emptive strike against its nuclear ambitions? Nobody knows, probably not even Trump. He seems to think that keeping your options open and your adversaries guessing leads to “great deals”. That may work in business, in which the worst that can happen is that one of your companies goes bankrupt – an outcome of which Americans take a relaxed view. In international relations, the stakes are higher.

 

Right job, wrong time

I rather like Tristram Hunt, who started contributing to the New Statesman during my editorship. He may be the son of a life peer and a protégé of Peter Mandelson, but he is an all-too-rare example of a politician with a hinterland, having written a biography of Engels and a study of the English Civil War and presented successful TV documentaries. In a parallel universe, he could have made an inspirational Labour leader,
a more thoughtful and trustworthy version of Tony Blair.

No doubt, having resigned his Stoke-on-Trent Central seat, he will make a success of his new job as director of the Victoria and Albert Museum. If nothing else, he will learn a little about the arts of management and leadership. But isn’t this the wrong way round? Wouldn’t it be better if people first ran museums or other cultural and public institutions and then carried such experience into parliament and government?

 

Pointless palace

When the Palace of Westminster was largely destroyed by fire in 1834, thousands gathered to enjoy the spectacle. Thomas Carlyle noted that the crowd “whew’d and whistled when the breeze came as if to encourage it” and that “a man sorry I did not anywhere see”.

Now, with MPs reportedly refusing to move out to allow vital renovation work from 2023, we can expect a repeat performance. Given the unpopularity of politicians, public enthusiasm may be even greater than it was two centuries ago. Yet what is going through MPs’ minds is anyone’s guess. Since Theresa May refuses them a vote on Brexit, prefers the Foreign Office’s Lancaster House as the location to deliver her most important speech to date and intends to amend or replace Brussels-originated laws with ministerial orders under “Henry VIII powers”, perhaps they have concluded that there’s no longer much point to the place.

 

As good as it gets

What a difference a year makes. In January 2016, supporters of Leicester City, my home-town team, were beginning to contemplate the unthinkable: that they could win football’s Premier League. Now, five places off the bottom, they contemplate the equally unthinkable idea of relegation.

With the exception of one player, N’Golo Kanté (now at Chelsea), the team is identical to last season’s. So how can this be? The sophisticated, mathematical answer is “regression to the mean”. In a league where money, wages and performance are usually linked rigidly, a team that does much better than you’d predict one season is likely to do much worse the next. I’d suggest something else, though. For those who won last season’s title against such overwhelming odds, life can never be as good again. Anything short of winning the Champions League (in which Leicester have so far flourished) would seem an anti­climax. In the same way, the England cricket team that won the Ashes in 2005 – after the Australians had dominated for 16 years – fell apart almost as soon as its Trafalgar Square parade was over. Beating other international teams wouldn’t have delivered the same adrenalin surge.

Peter Wilby was editor of the Independent on Sunday from 1995 to 1996 and of the New Statesman from 1998 to 2005. He writes the weekly First Thoughts column for the NS.

This article first appeared in the 19 January 2017 issue of the New Statesman, The Trump era