Ambulances are seen at the Accident and Emergency department of St. Thomas' Hospital in London. Photograph: Getty Images.
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Labour's plan to "declutter" public services is part of true fiscal responsibility

Chris Leslie's pledge to avoid the wasteful short-termism of the coalition is a good place to start. But far tougher choices lie ahead.

After being near-silent on the issue of public service reform since 2010, Labour has recently had much more to say on the subject, with speeches from Ed Miliband and Jon Cruddas promising radical devolution and a restructuring of services around users. In an age when there is less money around (NB: not "no money"), this approach is not just desirable but essential. As Cruddas, the party’s policy review co-ordinator, warned in his speech on "one nation statecraft" last June, "Labour will inherit a state that in many areas has reached the limit of its capacity to cut without transformational change to the system."  

Today, in his first major speech since becoming shadow chief secretary to the Treasury, Chris Leslie has taken up the theme by promising to "declutter" services in order to improve both user outcomes and to deliver savings. In his address to the Social Market Foundation, he argued that it is those on the centre-left, as the champions of a social democratic state, who have a duty to prove that they are fiscally responsible. The belief that the public sector is invariably wasteful gives the right the licence they need to permanently roll back services. He said: 

It is a long-standing project of some on the right of politics to erode trust and confidence in taxpayer-funded service provision, so that we revert instead to a society where individuals insure against their own health, education or welfare. Implying that effective budget management is anathema to the public realm is a well-trodden path on the journey of those wishing to shrink the state.

For those of us who believe that we achieve more as a society by acting together in cooperation, pooling our resources and delivering services from which we all benefit, it is important that we act now to rebut the notion that it can’t be done efficiently or effectively.

And more than this, we have a duty to prove that the foundation of successful public service provision is the sound stewardship of public finances.

This is why the centre-left should embrace the goal of balancing the books and controlling national debt; because sustainability and living within our means is at the heart of good governance, prudent decision-making and the reciprocal social contract between individual and state.

To those on the right, spending cuts are part of the long march towards the demise of what they interpret as state interference.

For those of us on the centre-left, sustainable management of public finances is proof that taxpayers can have trust in the public realm.

Through their deeds, he went on to argue, the Tories have shown their lack of commitment to a well-managed and fiscally sustainable public sector. He cited the abolition of the successful Future Jobs Fund and its replacement with the ineffective Work Programme (as he noted, the number of young people on nationally-funded employment and skills programmes has fallen by 10 per cent since 2009-10 even though the number of young people out of work for more than a year has doubled), the top-down reorganisation of the NHS, which cost £3bn and saw 3,200 staff handed redundancy payments before being re-hired, the botched launch of Universal Credit, which led the DWP to write off £40.1m of assets developed for the programme and put a further £91m at risk (and which currently costs a remarkable £190,000 per claimant), the establishment of free schools in areas with surplus places, while shortages grow elsewhere, and the recent scrapping of the Enquiry Service, designed to create a single telephone point of contact to deal with multi-benefit enquiries, at a cost of £34m. "Reform is worse than pointless if it does not improve the experience of the user and ends up costing money rather than saving money", he rightly declared. 

By contrast, rather than mimicking George Osborne's short-term salami slicing, Labour would seek to achieve "real public service reform" by recognising the duty of government "to devolve with the user in mind, and to de-clutter." To this end, he announced that as part of its zero-based spending review (one that requires every item of spending to be approved, rather than merely changes to a pre-determined baseline) Labour is looking at:

  •  Creating leaner, more efficient commissioning arrangements for health and social care
  • Using the criminal justice estate more effectively, for instance by co-locating County Courts and Magistrates Courts on the same site. At the moment only 32 Magistrates Courts are currently co-located with County Courts;
  • Greater collaboration between local emergency services, citing the example of County Durham fire and rescue service working with the police to share buildings;
  • Options for changing police structures, including locally-negotiated mergers, and whether to axe elected police and crime commissioners which are more expensive than the police authorities they replaced, following the report by Lord Stevens;
  • Greater collaboration between local councils to pool staff and resources, citing the example of North East Derbyshire and Bolsover councils which expect to save £1.5 million a year from sharing a chief executive and senior managers, as well as other shared staff and services including street cleaning, recycling and ground maintenance. 

The $64,000 question, of course, is how much money all of this would actually save. Every government arrives in power promising "efficiency savings" but almost all fail to deliver the promised sums. The real fiscal challenge for Labour remains to explain how it would meet its pledges to achieve a current budget surplus and to reduce debt as a proportion of GDP by the end of the parliament (affirmed by Leslie today) beyond reducing waste and duplication. As the IFS has warned, £12bn of tax rises will be required if annual departmental spending cuts are to be maintained at their current pace. A mansion tax (which Labour would use to fund the reintroduction of the 10p tax rate) and the restoration of the 50p tax rate would not even come close to plugging the gap. One left-wing economist, speaking very much off-the-record, recently told me that the parties may need to discuss the openly possibility of raising the only taxes that reap reliably large revenues: the basic rate of income tax, National Insurance and VAT. But that is the kind of genuinely "tough choice" that all sides seem desperate to avoid before May 2015. 

Leslie's promise of "real public service reform" is a good place to start, but with Osborne forecast to leave a deficit of £96bn, a start is all it is. 

George Eaton is political editor of the New Statesman.

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I was wrong about Help to Buy - but I'm still glad it's gone

As a mortgage journalist in 2013, I was deeply sceptical of the guarantee scheme. 

If you just read the headlines about Help to Buy, you could be under the impression that Theresa May has just axed an important scheme for first-time buyers. If you're on the left, you might conclude that she is on a mission to make life worse for ordinary working people. If you just enjoy blue-on-blue action, it's a swipe at the Chancellor she sacked, George Osborne.

Except it's none of those things. Help to Buy mortgage guarantee scheme is a policy that actually worked pretty well - despite the concerns of financial journalists including me - and has served its purpose.

When Osborne first announced Help to Buy in 2013, it was controversial. Mortgage journalists, such as I was at the time, were still mopping up news from the financial crisis. We were still writing up reports about the toxic loan books that had brought the banks crashing down. The idea of the Government promising to bail out mortgage borrowers seemed the height of recklessness.

But the Government always intended Help to Buy mortgage guarantee to act as a stimulus, not a long-term solution. From the beginning, it had an end date - 31 December 2016. The idea was to encourage big banks to start lending again.

So far, the record of Help to Buy has been pretty good. A first-time buyer in 2013 with a 5 per cent deposit had 56 mortgage products to choose from - not much when you consider some of those products would have been ridiculously expensive or would come with many strings attached. By 2016, according to Moneyfacts, first-time buyers had 271 products to choose from, nearly a five-fold increase

Over the same period, financial regulators have introduced much tougher mortgage affordability rules. First-time buyers can be expected to be interrogated about their income, their little luxuries and how they would cope if interest rates rose (contrary to our expectations in 2013, the Bank of England base rate has actually fallen). 

A criticism that still rings true, however, is that the mortgage guarantee scheme only helps boost demand for properties, while doing nothing about the lack of housing supply. Unlike its sister scheme, the Help to Buy equity loan scheme, there is no incentive for property companies to build more homes. According to FullFact, there were just 112,000 homes being built in England and Wales in 2010. By 2015, that had increased, but only to a mere 149,000.

This lack of supply helps to prop up house prices - one of the factors making it so difficult to get on the housing ladder in the first place. In July, the average house price in England was £233,000. This means a first-time buyer with a 5 per cent deposit of £11,650 would still need to be earning nearly £50,000 to meet most mortgage affordability criteria. In other words, the Help to Buy mortgage guarantee is targeted squarely at the middle class.

The Government plans to maintain the Help to Buy equity loan scheme, which is restricted to new builds, and the Help to Buy ISA, which rewards savers at a time of low interest rates. As for Help to Buy mortgage guarantee, the scheme may be dead, but so long as high street banks are offering 95 per cent mortgages, its effects are still with us.