Lord make me chaste, but not yet

The central message of yesterday’s PBR was that we need to put the national finances in order, but not quite yet – in fact not for quite a long time. That does not mean there will not be severe cuts in public spending – there will be. It’s just that they will be severe rather than apocalyptic. With health, education and policing protected other areas will be hit all the harder. Local government especially will probably face between 15-20% cumulative cuts over the next four years.

Before the current crisis public spending was hovering around 42-43% of GDP, but within that a lot more went to public services because debt-servicing and transfer payments for benefits and pensions were fairly low.

We also had a small structural deficit – that is for some years government was taking in less than it was spending, and national debt was creeping to 40% of GDP – the ceiling proclaimed by Gordon Brown back in 1997. Now spending is due to rise to 48% of GDP and the cumulative deficit to a staggering £1.5 trillion by 2014-15. Even after the annual deficit is cut in half, at the top of the next economic cycle, it will still mean the government is spending about £60bn a year more than it gets in from taxes. The Tories of course want to do more, and more quickly, to reduce the deficit but it’s hard to see how much further they could push without causing both economic and political mayhem.

All the sound and fury, however, about how much, and how fast, to cut is focuses entirely around the issue of the annual deficit and the cumulative public debt. This obscures the fundamental question about how big, in the future, do we as a country want our public domain to be as a proportion of national wealth?

For the past four-five decades public spending and a proportion of GDP has hovered around 43% – it has sometimes risen to around 50% (under both Labour and Tories) and shrunk as low as 36% (under New Labour). But for the past few years there has been a political consensus that it should be about 42-43% of GDP – what we don’t yet know is where either main party think it ought to be in the future.

What to do about deficit and debt depends to a large extent on where you want to end up. New Labour are saying they think they can protect most of the major gains in public service provision made over the past decade, and in the long-term we can stay more or less where we are. The Tories are saying they would become chaste right now – cutting spending faster but also further and permanently shift the boundaries between the state and the markets.

Alasdair Darling’s political balancing act today was to say he’d cut in global terms to satisfy the money markets, but not spelling out the detail to avoid scaring the public too much. His solution is based on a huge gamble that the economy revives in 2011 and resumes its trend growth rate.

The Answer to Life, The Universe and Everything? It’s 43.

According to the supercomputer Deep Thought the answer to the question of life, the universe and everything was 42 (in Douglas Adam’s Hitchhikers Guide to the Galaxy).

It turns out however that this number may be subject to localised quantum relativity effects – specifically on an insignificant island off the north-west coast of Europe, a continent on a small blue planet in an unfashionable part of the galaxy. Here, the number is 43, rounded up – well actually 42.51, but it keeps wobbling around all the time and is subject to Heisenberg’s Uncertainty Principle. So usually, most of the time, its sort of around 43. Ish.

HELP!

No, not the Beetles hit, but the flavour of many of the meetings I’ve been attending in recent weeks and will be in the next few weeks.

First was a Guardian ‘roundtable’; this was followed by evidence I was asked to give to the Northern Ireland Assembly Finance Committee; another roundtable, this time organised by Public Finance magazine, last week; this week it is the Public Administration Select Committee in Westminster; and the following week it’s a Demos/PwC seminar.

Hidden Wealth of Nations

I thought I’d share this interesting message from David Halpern, Research Director, Institute for Government London:

NEW BOOK: HIDDEN WEALTH OF NATIONS

DAVID WRITES: As you may know, since leaving No10 and Cabinet Office, I’ve spent some time revisiting the last 25 years of data on value change, the social and economic challenges (and opportunities) we face, and thinking about the policy implications. The results are published in The Hidden Wealth of Nations, out in the beginning of December.

OneTotalLocalPlace

In the never-ending, and now more important than ever, effort to do more-with-less, a new initiative has come out of Whitehall: OneTotalLocalPlace.

There have been quite a number of initiatives that have been focussed on getting the best value for money our of local spending. These have included:

- Local Strategic Partnerships (LSPs) – these are meant to focus the efforts of all local service providers

- Local Area Agreements (LAAs) – these are like LSPs, but with money

- Comprehensive Area Assessments, or as they are now known, OnePlace – these are run by the Audit Commission and are supposed to measure results across a local area.

- Total Place – this is a new ambitious programme run by Treasury and DCLG to examine spending patterns across an area and see if the money can be better allocated, or cut, whilst producing the same or better results.

In an effort to join all this up, the Government has now announced OneTotalLocalPlace (or OTLP).

OTLP will be a powerful new organisation with substantial powers over local budgets, priorities and responsibility for determining and achieving outcomes. It will coordinate and allocate resources for maximum impact. Priorities will be fixed by a revolutionary new system, involving directly elected representatives of local communities. Some have suggested an alternative, simpler name: Local Government.

Gordon Brown’s Letters

I detest even having to blog about this – the Sun’s manipulation of a grieving mother of a dead British soldier today is disgusting.

But, let’s be very clear. Gordon Brown lost the sight in one eye when he was a kid, playing Rugby. The sight in his other eye is adequate, but not brilliant.

Theories of Performance – the book: coming soon.

My new book on ‘Theories of Performance’, which has come out of my ESRC Public Services Programme Fellowship – is more or less finished, bar some minor edits. I’ve added a new page (ToP Book – see tab above right) which has the contents, a description and some comments from colleagues who have read the draft, for those of you who might be interested.

What sort of crisis is public management in?

I’ve just been discussing with a colleague what sort of crisis we are in and what the effects for Public Management Reform are likely to be. Lots of people are discussing what the financial crisis means for public services and public management, without stepping back to think about what sort of crisis the public sector (internationally) faces?

The big issue for me is not the public sector financial crisis per se, but what caused it? Only by understanding that can we start to understand the possible reactions to it.

The Financial Crisis: How Economists Went Astray

from Professor Geoffrey M. Hodgson

Two Nobel Laureates and over 2000 Signatories Uphold that Economists have Mistaken Mathematical Beauty for Economic Truth

BNP Supports Polish Pilots?

Today’s controversy over the far-right British National Party using images from the British Armed Forces to promote themselves has one rather ironic element.

The BNP has featured the Spitfire on their literature as an symbol of the Battle of Britain – the air clash between the UK and Germany at the start of the war.

Balls takes his ball away

Gordon Brown put reinforcing parliamentary accountability at the heart of his premiership. One major change was to involve parliament in the appointment of senior public officials.

MPs Expenses – the missing mortgage money issue

So – MPs expenses are back, but this time with a slightly more complex plot.

Former civil servant Sir Thomas Legg has been accused of retrospective re-writing of the rules in calling on MPs to repay anything above certain set limits for things like cleaning their second homes.

PS – Eye Witness: Gordon’s seemed fine to me

I sat next to Gordon Brown at the Chequers seminar (Sat 10/10/09) as he he took copious notes – he was clearly having no problem writing, so I don’t know what all the fuss is over his eyesight?

Chequers, mate?

I almost didn’t get to Chequers (the Prime Ministers country residence) on Saturday for a seminar on “Equality, Fairness and Responsibility in the Post-Crisis Society” convened by the PM and chaired by Ed Miliband.

Recessions Come and Go

Don’t dismantle the public domain because of this latest one…. see my article in today’s Guardian.

See also my brief comment on George Osborne’s ‘cull’ of Whitehall in todays Financial Times.

Britain’s Emissions Exported says Chief Scientist – really?

A news story today apparently sent some in Whitehall into a bit of a tail spin – according to the BBC:

Professor David MacKay told the BBC that reductions in carbon dioxide emissions since 1990 are “an illusion”. ”Our energy footprint has decreased over the last few decades and that’s largely because we’ve exported our industry,” he said.

Is Ideology Back in British Politics?

The central message from Labour’s conference in Brighton is that “ideology is back” in British politics.

Emphasising differences on the economy, the financial crisis and public spending, Labour has sought to depict an ideological gulf between themselves and their Tory opponents. Labour is the party of public service – the Tories of markets.

The Paradoxical State We’re In

How can we be talking at the same time about shrinking public spending on core services while propping up the banks? FOR FULL TEXT SEE MY LATEST COLUMN FOR PUBLIC FINANCE.

Targets: more effective than we think?

A very well-balanced and interesting BBC programme and article by journalist Michael Blastland on the UK experience with performance targets, especially in the NHS. Well worth a read/listen.

The End is Nye: Religion and Soft Power

Professor Joseph S. Nye (Harvard) spoke this morning at the Maxwell School (Syracuse), where I am currently a guest. Nye is famous for coining the phrases ‘soft power’ and ‘smart power’ – both of which have slipped into the political lexicon.