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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Metro mayors can help Labour return to government

Labour champions in the new city regions can help their party at the national level too.

2017 will mark the inaugural elections of directly-elected metro mayors across England. In all cases, these mayor and cabinet combined authorities are situated in Labour heartlands, and as such Labour should look confidently at winning the whole slate.

Beyond the good press winning again will generate, these offices provide an avenue for Labour to showcase good governance, and imperatively, provide vocal opposition to the constraints of local government by Tory cuts.

The introduction of the Mayor of London in 2000 has provided a blueprint for how the media can provide a platform for media-friendly leadership. It has also demonstrated the ease that the office allows for attribution of successes to that individual and party – or misappropriated in context of Boris Bikes and to a lesser extent the London Olympics.

While without the same extent of the powers of the sui generis mayor of the capital, the prospect of additional metro-mayors provide an opportunity for replicating these successes while providing experience for Labour big-hitters to develop themselves in government. This opportunity hasn’t gone unnoticed, and after Sadiq Khan’s victory in London has shown that the role can grow beyond the limitations – perceived or otherwise - of the Corbyn shadow cabinet while strengthening team Labour’s credibility by actually being in power.

Shadow Health Secretary and former leadership candidate Andy Burnham’s announcement last week for Greater Manchester was the first big hitter to make his intention known. The rising star of Luciana Berger, another member of Labour’s health team, is known to be considering a run in the Liverpool City Region. Could we also see them joined by the juggernaut of Liam Byrne in the West Midlands, or next-generation Catherine McKinnell in the North East?

If we can get a pantheon of champions elected across these city regions, to what extent can this have an influence on national elections? These new metro areas represent around 11.5 million people, rising to over 20 million if you include Sadiq’s Greater London. While no doubt that is an impressive audience that our Labour pantheon are able to demonstrate leadership to, there are limitations. 80 of the 94 existing Westminster seats who are covered under the jurisdiction of the new metro-mayors are already Labour seats. While imperative to solidify our current base for any potential further electoral decline, in order to maximise the impact that this team can have on Labour’s resurgence there needs to be visibility beyond residents.

The impact of business is one example where such influence can be extended. Andy Burnham for example has outlined his case to make Greater Manchester the creative capital of the UK. According to the ONS about 150,000 people commute into Greater Manchester, which is two constituency’s worth of people that can be directly influenced by the Mayor of Greater Manchester.

Despite these calculations and similar ones that can be made in other city-regions, the real opportunity with selecting the right Labour candidates is the media impact these champion mayors can make on the national debate. This projects the influence from the relatively-safe Labour regions across the country. This is particularly important to press the blame of any tightening of belts in local fiscal policy on the national Tory government’s cuts. We need individuals who have characteristics of cabinet-level experience, inspiring leadership, high profile campaigning experience and tough talking opposition credentials to support the national party leadership put the Tory’s on the narrative back foot.

That is not to say there are not fine local council leaders and technocrats who’s experience and governance experience at vital to Labour producing local successes. But the media don’t really care who number two is, and these individuals are best serving the national agenda for the party if they support A-listers who can shine a bright spotlight on our successes and Tory mismanagement.

If Jeremy Corbyn and the party are able to topple the Conservatives come next election, then all the better that we have a diverse team playing their part both on the front bench and in the pantheon of metro-mayors. If despite our best efforts Jeremy’s leadership falls short, then we will have experienced leaders in waiting who have been able to afford some distance from the front-bench, untainted and able to take the party’s plan B forward.