Could Labour take the lead on public spending cuts?

[Albus]

http://www.guardian.co.uk/politics/blog/2009/apr/03/labour-public-spending-cuts

A poll from PoliticsHome arrives showing deliberative research that indicates the public are warming to the idea of public spending cuts. Unsurprisingly, the very smart professor of cuts over at the Spectator, Fraser Nelson, is quick to rattle through 10 reasons Cameron should go snipping.

There's a growing number of people in the Labour party that think similarly. They think Labour ought to be the party spelling out how it will reduce – safely – spending on the public sector (£43bn a year needed to balance the books) rather than let the Tories monopolise it. The political imperative is that not only are gilt markets registering fear in UK plc, but voters may be about to start to buy the Tory debt argument, if they aren't doing so at the moment (for those still in their homes, mortgage repayments are currently down etc).

These voices are also in favour of a further April fiscal stimulus. They firmly do not see themselves with the Mervyn King-Tory-French-German-Czech huddle. They want another £20bn (or more) and they want it in April – thinking this will stand more of a chance of being absorbed before an election than any "offer" made in the next pre-budget report due in the autumn. (Incidentally, some see other ways of bringing about a fiscal stimulus without the Treasury spending money, namely calling on the £38bn of local authority reserves.)

But this camp – I suppose you can call them "Blairites" – do not see any contradiction in demanding this stimulus, followed swiftly by a longer term pledge to bring down the level of spending by the state. They are not thinking of one-off chops (appealing as a surgical removal of £25bn on Trident or £4bn on two new aircraft may be to some) or money saved on "waste", the gift that keeps on giving.

Instead, they are calling for more frugal ways of doing fewer things. I predict speeches by senior figures of the left in June, after the local elections, making the argument for a ceiling to be put on public spending, which should, in the long term, come down to lower than what it is now (and they don't just mean after RBS and Lloyds are sold off).

The next question is to ask the Blairites to make like Edward Scissorhands and lop something off the government's current annual £600bn spend.

The answer is to target quangos, not just by slashing the pay of chief execs, but by "sweating" the whole lot. There are stories of the Carbon Trust duplicating the work of the Envirowise, which in turn is duplicating the work of the Energy Savings Trust, and so on (all this is denied by the organisations involved).

It's a lot of money – last year a New Local Government Network report showed quangos spent £123bn of public money a year, though the government disputes this, saying they only cost £32bn (note: quite close to that £43bn annual shortfall). Some caution: even if the spend is as high as £123bn, there's no way you could chop it all.

Quangos include Jobcentre Plus, for example, and that's not going anywhere.

But they could be kept on a tighter leash; they currently don't have to meet the 3% year-on-year savings that local government has to meet.

There's also evidence that government funds to quangos get caught in a bottleneck; an internal report on the government's procurement – essentially how well the centre buys its services – is not flattering.

For example, the funds going into the Housing and Communities Agency are not coming out the other end quickly enough. In this way, some say, quangos are compounding the recession.

But this is the interesting bit. I've written before that there are factions angling for a hook of up between the Blairites and Jon Cruddas. So I've asked a colleague of Cruddas's what he would make of the above.

He didn't like the focus on spending reduction – still concentrating on this crisis and the need for a further (non-forthcoming) fiscal stimulus – but he did like the shrinking of quangos, which he called "arm's length and unaccountable regulatory quangos". He agrees: "Get rid of them and replace them with democratic control over key sectors of the economy."

What about the Blairites? One suggests something similar: turning the running of primary care trusts over to local government officials rather than duplicating the layer of non-exec middle management.

And another Blairite says this: "Break them up and then push all their functions down to local level where it then becomes up to people in the local area to decide whether they want to pay for those functions or not."

The biggest problem is that Gordon Brown may not let this get any oxygen. The trope "Labour = investment, Tories = cuts" is among his favourites.

[T_i_B]

1. So the Blarites are trying to out-RW the Tories...

what else is new?

[B Whale]

2. Nationalise fully the banking

system and use the profits (when they eventually start making them again) to fund public services. Simple.

[Albus]

3. why just the banking system?

[non sociopath skin]

4. So what would you nationalise, BD?

(Speak softly. The spirit of Ayn Rand is listening.... :evilgrin: )

The Skin

[Albus]

5. The government and the civil service

it's about time they were forced to act for the common good!

[non sociopath skin]

7. And there's me thinking that they were already nationalised.

But there you go ... maybe the people who say they've been bought by the Bankers and Big Business have a point after all.

The Skin

[LeftishBrit]

6. All too likely they could

The Blairites are basically slightly less extreme Thatcherites. And Thatcher's approach to any problem was to take an axe and hit some public service forty whacks. Brown, though he has the Thatcherite ultra-managerialism and sympathy for Big Money, is not quite as much of an axeman as some of them, so we shall see.