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.

Photo: Getty
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What Jeremy Corbyn gets right about the single market

Technically, you can be outside the EU but inside the single market. Philosophically, you're still in the EU. 

I’ve been trying to work out what bothers me about the response to Jeremy Corbyn’s interview on the Andrew Marr programme.

What bothers me about Corbyn’s interview is obvious: the use of the phrase “wholesale importation” to describe people coming from Eastern Europe to the United Kingdom makes them sound like boxes of sugar rather than people. Adding to that, by suggesting that this “importation” had “destroy[ed] conditions”, rather than laying the blame on Britain’s under-enforced and under-regulated labour market, his words were more appropriate to a politician who believes that immigrants are objects to be scapegoated, not people to be served. (Though perhaps that is appropriate for the leader of the Labour Party if recent history is any guide.)

But I’m bothered, too, by the reaction to another part of his interview, in which the Labour leader said that Britain must leave the single market as it leaves the European Union. The response to this, which is technically correct, has been to attack Corbyn as Liechtenstein, Switzerland, Norway and Iceland are members of the single market but not the European Union.

In my view, leaving the single market will make Britain poorer in the short and long term, will immediately render much of Labour’s 2017 manifesto moot and will, in the long run, be a far bigger victory for right-wing politics than any mere election. Corbyn’s view, that the benefits of freeing a British government from the rules of the single market will outweigh the costs, doesn’t seem very likely to me. So why do I feel so uneasy about the claim that you can be a member of the single market and not the European Union?

I think it’s because the difficult truth is that these countries are, de facto, in the European Union in any meaningful sense. By any estimation, the three pillars of Britain’s “Out” vote were, firstly, control over Britain’s borders, aka the end of the free movement of people, secondly, more money for the public realm aka £350m a week for the NHS, and thirdly control over Britain’s own laws. It’s hard to see how, if the United Kingdom continues to be subject to the free movement of people, continues to pay large sums towards the European Union, and continues to have its laws set elsewhere, we have “honoured the referendum result”.

None of which changes my view that leaving the single market would be a catastrophe for the United Kingdom. But retaining Britain’s single market membership starts with making the argument for single market membership, not hiding behind rhetorical tricks about whether or not single market membership was on the ballot last June, when it quite clearly was. 

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to domestic and global politics.