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22 March 2004

Yes to public services, no to Whitehall pen-pushers

By Donald Hirsch

This was the Budget where the Chancellor ran out of things to say about taxation, and so decided to concentrate on making a virtue of public spending. With no major announcements to make on tax, he pre-announced much of the summer’s spending review, which will set departmental totals up to 2008. Most strikingly, he signalled a shift in priorities from a relatively narrow range of favoured areas to a lengthening list that is being promised real-terms growth.

Schools and hospitals were until recently the sacred preserves of new Labour spending rises. Now Gordon Brown makes a virtue of investing more in our transport system, in building affordable housing, in defence spending, in workforce training, in pre-school education . . . The list keeps growing.

Philosophically, this completes a remarkable transition from new Labour’s cautious first-term strategy of persuading the middle classes to back selected parts of the public sector, to a third-term version backing services across the board as long as this does not require more people working in Whitehall.

And how can the Chancellor afford these increases without swingeing tax rises? Not by spreading the jam more thinly: schools were again promised generous rises in the next round. Not by using some of the hidden tax wheezes that are kept up Brown’s sleeve: it is now assumed that tax allowances, for example, will rise with inflation over the next few years rather than be frozen, as assumed in last year’s Budget. Part of this upbeat Budget is possible because, for a change, the Chancellor’s past projections of current growth have not had to be revised downwards.

But the across-the-board spending increases would not be possible without assuming across-the-board economies in administration. This puts great pressure on the latest efficiency review to produce more fundamental changes in the way the civil service works than previous exercises. The popular image will be of weeding out surplus pen-pushers in Whitehall. More mundane but far more important will be getting clerks at local benefit offices to put files on computer in order to abolish their own jobs.

On such minutiae will lie the sustainability of Brown’s ever-ambitious spending strategy.

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