This story, as with so many of Gove's travails, involves school buildings. Photo: Getty
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Michael Gove's mistake: Why you can't take politics out of public spending

All such decisions are inherently political. Politicians can come up with a formula based on an objective set of numbers – but which numbers they choose, and what they do with them, will always be a matter of judgement.

Last week, in a move that threatened to shake the very foundations of our world, Michael Gove admitted he'd made a mistake.

Okay, “admitted” isn’t quite the right word: the written ministerial statement, released at lunchtime on a Friday (when every self-respecting education hack is looking for a story), managed to blame both Labour and local authorities for the cock up. Nonetheless, the substance of the matter remains that the Department for Education (DfE) had promised something, found it couldn’t deliver, and now everything is going to cost more and arrive late. The affair tells us much about the difficulty of de-politicising the systems through which central government doles out cash.

The story, as with so many of Gove's travails, involves school buildings. One of the Tory party's main criticisms of Labour's mammoth construction programme was that it was wasteful – that its largesse was focused not on the schools with the most dilapidated buildings, but on the councils that shouted loudest about deprivation. The coalition’s smaller replacement programmes would put an end to this, by distributing cash solely on the basis of physical need; maintenance funding was meant to be handed out in the same way.

This is easier said than done, though, because no comprehensive survey of England’s schools existed (Labour scrapped the requirement on councils to conduct one back in 2005) – so since 2011, the government’s been conducting one. Most of the work’s been done by a trio of construction consultancies; to save money, though, where councils had continued to collect their own data, the government intended to use that. The whole thing was meant to be done by last July.

It wasn't. In his statement on Friday, Gove admitted that the council data had turned out to be both “inconsistent” and “inaccurate”. As a result, those consultancies were going to have to survey another 8,000 schools, and the whole thing won’t be done until next summer. Gove didn't tell us how much this would cost, but those firms aren't going to work for free; the first 11,000 surveys reportedly cost around £30m.

So, this is a cock up. But it is, on one level, the good sort of cock up: the kind you want your government to be making. It tried to use a shortcut, found it couldn't, and quietly backed down. Yes, it'll cost, but it would have cost anyway. At least they were trying to save money. No harm done.

On another level, though – nobody saw this coming? Are you kidding me? Of course the data is inconsistent, what kind of miracle would it take for 90 councils to produce comparable data, with no guidance whatsoever? And as for “accurate”, one of the things that triggered this whole exercise was a suspicion that councils were gaming the system, crying poverty to get themselves bumped up the waiting list. Did it really not occur to anyone that council surveys might be slightly on the biased side?

This isn't going to have much of an impact on the current school building programme: the DfE has already decided which schools were most deserving of its largesse, without the benefit of this grand survey (this, one might think, raises questions in itself). But it does mean another year of handing out maintenance funding based on pupil numbers, rather than actual need.

More than that, though, the affair highlights the difficulty of coming up with an “objective” basis for making public spending decisions. These surveys, construction consultants tell me, are always mildly subjective: a slight difference in judgement can, scaled up to an entire school, mean a big differences in cost.

What’s more, when it comes to school buildings, the whole notion of “need” is as much art as science. Research on the effect a building has on how much learning happens inside it has been limited and contradictory. If one school does well with a poor building, while another does badly with a better one, which is more deserving of scarce public funds? What if one school, in relatively good nick, could be improved with a small investment, while another, worse one would cost vastly more to patch up? Which should be prioritised? There’s no “correct” answer to these questions: all such decisions are inherently political.

This is a pattern you see time and again in government financial decisions, on everything from NHS spending to council funding to who should pay the most tax. Politicians can come up with a formula based on an objective set of numbers – but which numbers they choose, and what they do with them, will always be a matter of judgement.

In the scheme of things the cost of this latest mess is small, and it’s better to have this database then not to have it. But the notion that any system for allocating scarce schools capital funding could ever be “correct” was always a pipe dream. You can’t replace politics with science.

Jonn Elledge is the editor of the New Statesman's sister site CityMetric. He is on Twitter, far too much, as @JonnElledge.

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Full speech: John McDonnell's new, socialist economic policy to include a Living Wage Review

Floating a £10 an hour Living Wage and the possibility of Universal Basic Income, the Shadow Chancellor told the audience at Labour party conference they no longer have to "whisper" the word socialism. Read McDonnell's speech below.

Now the leadership election is over, I tell you, we have to become a government in waiting. An election could come at any time. Theresa May has said that she will not be calling an early election, but when could anyone trust a Tory leader?

We have to prepare ourselves not just for fighting an election but for moving into Government. To do that successfully we have to have the policies and the plans for their detailed implementation on the shelf, in place for when we enter government whenever that election comes.

Everybody in the Party, at every level and in every role, needs to appreciate the sense of urgency about this task, the mess we will inherit. So in this speech I want to address some of the key issues we will face and how we will face them.

First though, we need to appreciate the mess that the Tories are leaving behind for when we go into Government. Six years on from when they promised to eliminate the Government’s deficit in five years, they are nowhere near that goal. The national debt burden was supposed to be falling by last year, and it is still rising. In money terms, it now stands at £1.6 trillion. Our productivity has fallen far behind. Each hour worked in the US, Germany or France is one-third more productive than each hour worked here. Our economy is failing on productivity because the Tories are failing to deliver the investment it needs, and government investment is still planned to fall in every remaining year of this Parliament.

In the real world economy that our people live in wages are still lower than they were before the global financial crisis in 2008. There are now 800,000 people on zero hours contracts, unable to plan from one week to the next, and the number continues to rise. Nearly half a million in bogus self-employment, 86 per cent of austerity cuts fall on women,  nearly 4 million of our children are living in poverty.

As the fifth richest economy in the world, it shoudn't be like this.

So let's talk about the immediate issues facing us. On Brexit, we campaigned to remain but we have to respect the decision of the referendum. That doesn't mean we have to accept what the Tories serve up for our future relationship with Europe.

Since the Brexit vote, the Tories have come up with no plan whatsoever. They have no clue. Half of them want a hard Brexit, to walk away from 30 years of investment in our relationship with Europe.  Some are just paralysed by the scale of the mess they created. Working with our socialist and social democratic colleagues across Europe, our aim is to create a new Europe which builds upon the benefits of the EU but tackles the perceived disbenefits.

I set out Labour’s red lines on the Brexit negotiations a few days after the vote. Let's get it straight, we have to protect jobs here. So we will seek to preserve access to the Single Market for goods and services. Today, access to the Single Market requires freedom of movement of labour. But we will address the concerns that people have raised in the undercutting of wages and conditions, and the pressure on local public services.

We will not let the Tories to bargain away our workers’ rights. We will defend the rights of EU nationals that live and work here and UK citizens currently living and working in Europe. We were all appalled at the attacks that took place on the Polish community in our country following the Brexit vote. Let's be clear that, as a Party, we will always stand up against racism and xenophobia in any form.

In the negotiations we also want Britain to keep its stake in the European Investment Bank. At the centre of negotiations is Britain’s financial services industry.Our financial services have been placed under threat as a result of the vote to leave. Labour has said we will support access to European markets for financial services. But our financial services must understand that 2008 must never happen again. We will not tolerate a return to the casino economy that contributed to that crash.

We will support financial services where they deliver a clear benefit to the whole community - not just enriching a lucky few. We’ll work with the finance sector to develop this new deal with finance for the British people.

We will fight for the best possible Brexit deal for the British people.

There will be no more support for TTIP or any other trade deal that promotes deregulation and privatisation, here or across Europe. And we'll make sure any future government has the power to intervene in our economy in the interests of the whole country.

For Britain to prosper in that new Europe and on the world stage, our next major challenge is to call a halt to this government's austerity programme.

The Conservative Party built upon the disaster of the 2008 financial crisis by introducing an austerity programme that has made the impact of the economic crisis more prolonged, protected the corporations and the rich, and made the rest of society pay for the mistakes and greed of the speculators that caused the crash.

Last year this Conference determined that this party would oppose austerity and that's exactly what we've done. We have had some major successes. We've forced the reversal of tax credit cuts.We also fought and won to have the Personal Independence Payment cuts scrapped.

Sometimes we don’t thank people enough in our movement. So I want to thank Owen Smith for the work he’s done working with Jeremy to defeat the Tories on this.

These are tangible victories that are making a real difference to people’s lives. This is what we can achieve when we are united.

So when we go into government united, be clear, we will end this government's austerity programme that has damaged the lives of so many of our communities. The first step is opposing austerity; the second step is creating the alternative.

Exactly as our economic advisor, Nobel Prize winner, Joe Stiglitz, says: “we have to rewrite the rules of our economy”.

We will rewrite the rules to the benefit of working people on taxes, investment, and how our economic institutions work. So on tax, we know we can’t run the best public services in the world on a flagging economy with a tax system that does not tax fairly or effectively.

I’ll congratulate the Christians on the Left for their campaign promoting the hashtag “patriots pay their taxes”. It’s a great slogan. Patriots should pay their taxes. Labour are already setting the pace on tackling tax avoidance and tax evasion.

We launched our Tax Transparency and Enforcement Programme to force the Government into action. I’d like to thank Rebecca Long-Bailey for leading the Labour charge in Parliament to hold the tax dodgers to account.

The publication of the Panama papers threw just some light on the scale of tax evasion and avoidance. Some of the largest firms in the City of London are up to their necks in it. HSBC alone accounted for more than 2,300 shell companies established to help the super-rich duck their taxes.

In government we will end the social scourge of tax avoidance. We will create a new Tax Enforcement Unit at HMRC, doubling the number of staff investigating wealthy tax avoiders. We will ban tax-dodging companies from winning public sector contracts. And we will ensure that all British Crown Dependencies and Overseas Territories introduce a full, public register of company owners and beneficiaries.

Our review of HMRC has also exposed the corporate capture of the tax system, and how staff cutbacks are undermining our ability to collect the taxes we need. I want to thank PCS, Professor Prem Sikka, John Christiansen and their team for the expertise they have provided us in drawing up this review.

The next stage of our work will be to develop the legislation and international agreements needed to close tax havens and end tax abuse. I’ll give you this assurance that when we go back into government, we’ll make sure HMRC has the staffing, the resources, and the legal powers to close down the tax avoidance industry that has grown up in this country.

But we have to do more than stop tax avoidance. The burden of taxation as a whole now falls too heavily on those least able to pay. So let me make it clear: in this coming period we will be developing the policies that will shift the tax burden more fairly, away from those who earn wages and salaries and onto those who hold wealth.

Turning to investment, as I've said before, Labour as a party of government needs to think not just how we spend money but how we earn it. I've announced a £250billion investment programme that will ensure no community is left behind. This is the scale of investment that independent experts say will start to bring Britain's infrastructure into the 21st century.

It means putting the investment in place that will transform our energy system, providing cheap, low-carbon electricity. It means ensuring every part of the country has access to superfast broadband, matching the best in the world. It means delivering the transport improvements, including HS3 in the north of England, that will unlock the potential of our whole country.

For too long major decisions about what and where to invest have been taken by Whitehall and the City. The result has been underinvestment and decline across the country. It’s time for our regions and localities to take back control. So we will create new institutions, not run by the old elite circles.

Our £250billion National Investment Bank will supply the long-term, patient finance needed to sustain a new, more productive economy. It will be backed up by a network of regional development banks, with a clear public mandate to supply finance to regional and local economies.

It’s a disgrace that our small businesses can’t get the finance they need to grow. Our financial system is letting them down badly. The new regional development banks will have a mandate to provide the patient, long-term investment they need.

But we’ll go further than this. We’ll shake up how our major corporations work and change how our economy is owned and managed. We’ll clamp down on the abuses of power at the very top. There’ll be no more Philip Greens under Labour and we will legislate to rewrite company law to prevent them.

We'll introduce legislation to ban companies taking on excessive debt to pay out dividends to shareholders. And we'll rewrite the Takeover Code to make sure every takeover proposal has a clear plan in place to pay workers and pensioners.

But we can do more to transform our economy for working people. Theresa May has spoken about worker representation on boards. It’s good to see her following our lead. We know that when workers own and manage their companies, those businesses last longer and are more productive.

If we want patient, long-term investment, and high-quality firms, what better way to do it than give employees themselves a clear stake in both? Co-operation and collaboration is how the emerging economy of the future functions.  We’ll look to at least double our co-operative sector so that it matches those in Germany and the US.

We’ll build on the good example of Labour Councils like Preston, here in the north-west, using public procurement to support co-operatives where they can. We’ll help create 200 local energy companies and 1,000 energy co-operatives, giving power back to local communities and breaking up the monopoly of the Big Six producers. And we’ll introduce a “Right to Own”, giving workers first refusal on a proposal for worker ownership when their company faces a change of ownership or closure.

So the next Labour government will promote a renaissance in co-operative and worker ownership. The new regional development banks will be tasked with supplying the capital a new generation of business owners will need to succeed.

We’ll support business hubs across the country. I visited Make Liverpool yesterday, where an abandoned warehouse is being turned into a shared workshop space for small businesses and the self-employed. The next Labour government will provide support to establish business hubs in every town and city.

We know the economy is changing, with more people self-employed than ever before. We need to think creatively about how to respond and so we’ll be taking a serious look at how to make the welfare system better support the self-employed.

And I am also interested in the potential of a Universal Basic Income - to learn from its potential from the experiments currently taking place across Europe.

But until working people have proper protections at work, the labour market will always work against them. To achieve fair wages, the next Labour government will look to implement the recommendations of the Institute of Employment Relations.

We’ll reintroduce sectoral collective bargaining across the economy, ending the race to the bottom on wages. And let me give you this commitment: in the first hundred days of our Labour government, we’ll repeal the Trade Union Act.

And what happens when trade unions are weakened? Over 200,000 workers in the UK are receiving less than the minimum wage set down in law. This is totally unacceptable.

Under Labour, we will properly resource HMRC and the Gangmasters and Labour Abuse Authority to make sure there are no more national scandals like Mike Ashley of Sports Direct. And our vision for a high-wage economy, with everyone receiving their fair dues, does not end there.

I have spoken before about building on the great achievements of previous Labour governments. One of the greatest achievements of the government elected in 1997 was the establishment of a national minimum wage, lifting millions out of poverty. The Tories opposed it, claiming it would cost millions of jobs, but - united in purpose - we won the argument.

Under the next Labour government, everyone will earn enough to live on. When we win the next election we will write a real Living Wage into law. We'll charge a new Living Wage Review Body with the task of setting it at the level needed for a decent life. Independent forecasts suggest that this will be over £10 per hour. This will be a fundamental part of our new bargain in the workplace.

But we know that small businesses need to be a part of the bargain. That’s why we will also be publishing proposals to help businesses implement the Living Wage, particularly small and medium-sized companies. We will be examining a number of ideas, including the expansion and reform of Employment Allowance, to make sure that this historic step forward in improving the living standards of the poorest paid does not impact on hours or employment.

Backed up by our commitment to investment, we will end the scourge of poverty pay. Decent pay is not just fundamentally right, it’s good for business, it’s good for employees, and it’s good for Britain. We need a new deal across our whole economy.Because whatever we do in Britain, the old rules of the global economy are being rewritten for us.

The winds of globalisation are blowing in a different direction.They are blowing against the belief in the free market and in favour of intervention. Look at the steel crisis. With the world market flooded by cheap steel, major governments moved to protect their domestic steel industries. Ours did not, until we pushed them to. They are so blinkered by their ideology that they can’t see how the world is changing.

Good business doesn’t need no government. Good business needs good government. And the best governments today, right across the world, recognise that they need to support their economies because the way the world works is changing.

For decades, manufacturing jobs disappeared as producers looked for the cheapest labour they could find. Today, one in six manufacturers in the UK are bringing jobs back to Britain. That’s because production today is about locating close to markets and drawing on highly-skilled labour and high-quality investment.

Digital technology means production can be smaller-scale, in smaller, faster firms dependent on co-operation and collaboration, not dog-eat-dog competition. The economies that are making best use of this shift are those with governments that understand it is taking place, and support their new industries and small businesses. We could be a part of that change here.

There is a huge potential in this country, and in every part of this country. We have an immense heritage of scientific research, and engineering expertise. Today, our science system is a world-leader. We have natural resources that could make us world-leaders in renewables. We have talent and ambition in every part of the country.

Yet at every single stage we have a government that fails to reach that potential. It has cut scientific research spending, it has slashed subsidies to renewables, threatening tens of thousands of jobs, and it plans to cut essential public investment in transport, energy, and housing across the whole country.

Be certain, the next Labour government will be an interventionist government. We will not stand by like this one has and see our key industries flounder and our future prosperity put at risk. Like Rebecca Long-Bailey has said, when we return to government we will implement a comprehensive industrial strategy.

After Brexit, we want to see a renaissance in British manufacturing and as we've committed ourselves, our government will create an entrepreneurial state that works with the wealth creators, the workers and the entrepreneurs to create the products and the markets that will secure our long term prosperity.

Let me just say this in conclusion, on a personal note. I'm so pleased that this conference is being held in Liverpool. I was born in the city, not far from here. My dad was a Liverpool docker and my mum was a cleaner who then served behind the counter at British Homes Stores for 30 years. I was part of the 1960's generation.  We lived in what sociological studies have described as some of the worst housing conditions that exist within this country. We just called it home.

As a result of Labour government policies, I remember the day we celebrated moving into our council house. My brother and I had our own bedrooms for the first time. We had a garden front and rear, both of us were born in NHS hospitals, and both of us had a great free education. There was an atmosphere of eternal optimism.

Our generation always thought that from here on there would always be a steady improvement in people's living standards. We expected the lives of each generation would improve upon the last. Successive Tory governments put an end to that.

Under Jeremy's leadership, I believe that we can restore that optimism, people's faith in the future. In the birthplace of John Lennon, it falls to us to inspire people to imagine.

Imagine the society that we can create. It's a society that's radically transformed, radically fairer, more equal and more democratic. Yes, based upon a prosperous economy but an economy that's economically and environmentally sustainable and where that prosperity is shared by all.

That's our vision to rebuild and transform Britain.

In this party you no longer have to whisper it, it's called Socialism.