Planning the revolution – Labour and the Spending Review

In four weeks time the Chancellor will announce the results of the 2015 spending Review. There won’t be many winners but some will have lost more than others. Political commentators and discussion forums will pass judgement and public sector managers will, yet again, pick through the debris, making do and mending from what ever they can salvage.

Before we get overtaken by the detail we should reflect on the bigger picture. What ever the chancellor says on June 26^th it will be an answer to the wrong question. Protecting this and cutting that for one year only isn’t just rearranging the proverbial deckchairs,  its putting up the parasols and setting out the nibbles.

Current spending trajectories particularly in health and social care will soon be unaffordable if they aren’t already. More broadly our patterns of consumption are environmentally and economically unsustainable. Deficit reduction and simple common sense cry out for the prioritization of sustainable solutions above short term crisis management. Now more than ever we need to be reaching for the goals of the governments own fiscal framework – “sustainable public finances… promoting intergenerational fairness”. A one year spending review, driving short term thinking and in year savings will inevitably generate a parade of false economies. This will be the very antithesis of a sustainable approach and exactly not what the Treasury itself was calling for in its spending review framework, published in 2010. Future spending reviews it said must ‘Look beyond near-term pressures to support reforms that better position the UK for meeting long-term demographic, economic, environmental and social challenges, any of which could imperil long-term fiscal stability if left unaddressed.’

This  goal is unachievable without changing a spending review process which sets the parameters for planning and budgeting in government and beyond. It normally takes a three year outlook, better than the one year 2015 folly but still not enough when, as the Review Framework insists, we need policies that add up in the longer term.

We know, for instance, how many 12 and 13 year olds are likely to leave school without basic skills in four or five years time and we know the price of unemployment. We know also the cost of reading recovery programmes and the percentage that succeed. A society that applied a longer term perspective to its public finances would be investing more in literacy work with school age children. In reality spending on reading recovery has always been limited and is falling fast incurring an imminent liability, reducing the nation’s capacity for economic growth, and so contributing to increasing, not decreasing, the national debt. It helps to balance the books in a single year but  is exactly how not to ‘ensure sustainable public finances.’

Labour should commit  to introducing ten year spending plans published in each Spending Review. Each should include firm plans for the first few years, as now, and the implications of every spending decision, over the next ten years. The plans would of course be subject to regular review and updating, as circumstances and governments change but the projections would enable current priorities to be established on the basis of longer term value.

There are precedents. One year spending plans were extended to three in the 1990s, and decisions have often been made with implications beyond elections. However, there is a radical difference between introducing new policies that may have long-term implications and routinely justifying expenditure over ten years.

Of course other factors, particularly the electoral cycle, also contribute to a short term bias in public policy but it is in the processes of government, as much as it is in elections, that choices are framed and, and, almost by default, options constrained and decisions made. Without ten year planning little else will ever change. Spending reviews will come and go but public policy will continue on the unsustainable trajectories that are barely meeting current needs and accumulating impossible liabilities for the future.

No one will mount the barricades for ten year spending plans or list the promise on a pledge card but this simple change – it wouldn’t require legislation – would unleash a measured revolution with profound and lasting benefits.