Magazine article Public Finance

Divide and Rule?

Magazine article Public Finance

Divide and Rule?

Article excerpt

THE GOVERNMENT AND Opposition broadly agree about the unprecedented scale of the public expenditure reductions now taking effect. Of course, they disagree about the need to reduce the deficit at such a pace and, indeed, about Labour's culpability for the scale of government borrowing. Chancellor George Osborne deliberately signalled the severity of his programme from the moment the Coalition took office a year ago.

Oddly, both the government and Opposition have also been happy to proclaim the awfulness of the cuts. From the government's point of view, expectations have been talked down. For Labour, the damage to be caused by spending reductions must be talked up.

Now that we are a month into the 2011/12 financial year, the impact of last year's general election result is starting to be seen. The newspapers have been full of stories about the rationing of drugs, closing libraries and reductions in police numbers. Council budgets have 1 fallen by an average of 5%-6% as a result of cuts in government grant and the consequent impact on spending power. There are similar reductions for police and fire authorities, while the NHS and schools face a freeze in their resources.

The Trades Union Congress rally in late March brought hundreds of thousands of people on to the streets of London. The march was good-natured, even if a few anarchists created havoc on the edge of it. But the event took place after councils, the police, NHS and education budgets had all been set for 2011/12. There was never a chance that the chancellor's mind could be changed.

Presumably the trades unions and the Labour Party now hope to convince Osborne to mend his ways in time for the next budget round early in 2012. If such a U-turn is to be brought about, it might have been expected that the TUC would have laid out its strategy to change his mind. Actually, the new financial year has thus far proved curiously quiet. Strikes and industrial action have been remarkable for their absence.

One reason why it is probably hard to sustain a continuous and effective campaign is the way the government has spread spending constraint relatively thinly across services and, in particular, by forcing councils to impose the deepest reductions.

Devolving blame is an old trick for governments. Labour councils, many of which faced the maximum cut in their grants, were forced to dip their fingers in large quantities of blood. Ministers then attacked them for deliberately exaggerating the need to reduce spending. The surprise is not so much that the government used the tactics, but the relatively meek reaction to them.

Local government had little time to prepare for the 2011 budget round. The government did not publish the grant settlement until December 13, leaving barely ten weeks to make final plans. Of course, October's Comprehensive Spending Review had made clear the direction of travel. But no individual council could have predicted its precise grant total.

As a consequence of this minimal timescale, each local authority has gone about budget-making on an individual basis.

Despite noble efforts to merge departments and share officers, there was simply not sufficient time to manage a rational and planned approach to joint provision, improved procurement and reduced overheads.

Thus, the post-April public sector is one in which some authorities have decided to close libraries, others have cut fun ding to the arts, many have increased charges, a number have protected streetcleaning while elsewhere entitlements to adult social services have been reduced.

But there is no settled pattern. Thus, while author Zadie Smith may have taken to the airwaves to protest about library closures, the arts lobby has been battling to save funding for local theatres and museums. Others have campaigned about roads or housing or adult care. The diversity of voices concerned with single issues has allowed the government - with some justification - to reply by saying "well what would you cut instead? …

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