Philip Stephens has an interesting piece in the Financial Times on whether the terms of political debate are changing in favour of lower taxes:
"The politics of the 1980s were defined by a view that tax cuts were good and public spending wasteful. The public realm was neglected in favour of individual aspiration. New Labour finally changed that argument. For the past decade, spending has been seen as virtuous, tax cuts selfish. Tony Blair’s genius was to cast economic competence and social justice as natural handmaidens.
The vital insight was that, even in the 1980s, voters instinctively favoured high spending on public health and education. But they did not believe Labour would spend their money wisely. Instead they would likely pay higher taxes without improvement in public services. Only by overturning such scepticism could Mr Blair win.
"The Conservatives’ problem since been a mirror image of Labour’s earlier travails. Voters have at once doubted their ability to deliver tax cuts and feared that the price would be neglect of vital services.
"The big political question now is whether there has been a shift in the terms of trade. Has the country begun to decide that much of the money poured into public services since 1997 has indeed been wasted? And is it coming round to the idea that Mr Cameron could reduce taxes without neglecting schools and hospitals?
"In truth, neither side knows the answer. Hence Mr Cameron’s cautious insistence that he will match Labour spending plans. Mr Brown’s response is to say that the Tory sums do not add up. He may be right. But debates about the arithmetic will not be enough if the government loses the argument that taxpayers’ money is being well spent."
It does indeed seem clear that the terms of debate are changing. The increase in capital gainst tax announced in the Pre-Budget Report last week has encountered well-founded opposition from those who will see an 80 per cent increase in the tax rate they pay for business assets held for over two years. But the sheer ferocity of the response from business groups and many others, including the BBC Dragon’s Den programme, is something we have not seen for a number of years.
On the day that Labour were elected in 1997, the then head of the CBI, Adair Turner, appeared on the BBC and said that the business community would be happy to pay higher taxes. How times have changed for the better!
Gershon efficiency agreements in preparation
It’s been a while since we blogged the government’s ludicrous Night at the Opera Gershon "efficiency" cuts (see many previous blogs eg here). But they popped up again last week both in Darling’s Pre-Budget Report, and a report from The Public Accounts Committee. And the two perspectives were somewhat different.
According to Darling’s version, everything’s absolutely tickety. The Gershon programme has already delivered "annual efficiency gains of over £20 billion… and is on track to deliver the goal of £21.5 billion by the end of March 2008". Moreover, there have been "gross reductions of over 79,000 civil service and administrative and support related military posts towards the target of 84,150, with over 13,000 of these reallocated to frontline roles" (para 3.28).
But according to the PAC, things are very far from tickety. Based on the most recent NAO probe (see this blog), only one-quarter of the reported cuts are "reliable". The rest are almost certainly a figment of the commissars’ fertile imagination.
So on that basis, of the claimed £20bn savings, real savings are about £5bn.
Always remembering of course, that even those "savings" have probably only been achieved at the cost of a deterioration in service quality. For example, the PAC found that "savings" at the Department for Work and Pensions had increased the average time taken to process Jobseeker’s Allowance claims from 11 days to 16 days. And the Department of Health, while reporting over £1 billion of efficiency gains from reducing the average length of time patients stay in hospital, had taken no account the fact that emergency readmissions had risen consistently.
One of the slipperiest concepts is the so-called non-cashable savings, which are meant to comprise reassigning people and resources from the dark back-reaches of the bureaucratic quagmire to work on "the front line". Here’s a nice chart Darling produced to demonstrate how successful they are at squeezing "administrative" functions.
The only problem being (apart from the obvious point that most of the "savings" are still to come) that the definition of what comprises the front line and what comprises admin is a tad hazy. For example, the PAC discovered that HMRC includes "managers, administrative support and IT staff that are employed in any of its business units" as being ‘front line’.
In other words, the fall in admin costs is complete bunk.
The whole Gershon nonsense remains an exercise in rearranging deckchairs. But what we taxpayers should be really angry about is that all over Whitehall there are people being paid by us to work on it.
It might be easy to think that once a real crisis like the poor housing that armed forces personnel are provided with breaks, with a furious reaction from the public and in the media, politicians will finally get on the job and ensure it is fixed. However, today the Liberal Democrats have unearthed that by the Government’s own figures they will take half a century to bring armed forces housing up to standard:
"In a written answer to Willie Rennie, the Liberal Democrat MP for Dunfermline and Fife West, Derek Twigg, the defence minister, said that the MoD had spent £16.4million of its housing budget upgrading existing stock to the highest level — called standard one.
Previously the MoD said it would cost £750million to bring all its houses up to standard, meaning it would take almost 46 years at last year’s spending rate."
This is another problem with political management. Measures don’t need to be effective, they just need to be enough for the minister to be able to pretend they have responded to the issue. Exactly the same thing happened with old council houses, before the Thatcher government allowed their occupants to buy them, councils didn’t properly maintain them.
If members of the armed forces have to wait 46 years for acceptable housing they won’t really be waiting for the funds they’ll be waiting for the slow wheels of a politically managed bureaucracy to turn.
Remember Alan Johnson telling us that the Maidstone & Tunbridge wells scandal was an "isolated incident". We thought this was unlikely at the time:
"Mr Johnson told BBC Radio 4′s Today programme this morning that the Kent outbreak was an isolated incident."
is either fudging the issue or outright lying. While the scale of the
outbreak in Maidstone & Tunbridge Wells is exceptional the scandal
of hospital infections is not confined to that NHS Trust."
Now it turns out that the hospital isn’t even exceptional. It is twenty-first on a list of the hospitals with the worst infection rates. Kettering General Hospital has nearly twice the infection rate. Hospital infections are a national scandal not an isolated tragedy.
With the ongoing weakening in standards and concerns that schools are teaching to the test the A-levels are becoming less and less useful for universities trying to assess students for entry to university. Oxford and Cambridge universities are responding by setting up their own tests. The Telegraph describes a range of new tests that are being introduced and new exams (such as the Advanced Extension Awards) that are being recommended in an attempt to provide some replacement for A-level grades as a standard that universities can use to tell students apart.
This looks like a private solution to the problem of exams responding to the needs of politicians, for yearly ‘good news’, instead of the needs of universities and business, which are interested in more rigorous tests. The government has set out plans to improve the situation by replacing the Qualification and Curriculum Authority (QCA) but it appears likely that any resulting improvement will be distinctly underwhelming as politicians will remain in charge. If the mainstream examination system isn’t reformed more and more universities will have to find their own solutions.