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Budget 2017 shows a reactive government throwing cash at crises

Firefighting is a brave and essential profession, but for a politician it is not a good look. Successive British governments have found themselves locked in a vicious cycle: some part of the public sector is squeezed for money, manages decline for a while, then cracks under pressure. The crisis is extinguished by a sudden spray of last-minute cash — an expensive way to solve any problem — while money and attention is drained from some other area. So the next crisis smoulders.

Philip Hammond, the chancellor, did not create this situation but neither has he shown much sign of breaking out of it. His very first policy announcement was a slug of money aimed squarely at the civil war in the Conservative party: £3bn to be spent on “Brexit preparations”, whatever they may be.

A similar amount was offered to the National Health Service in England over the next few years, in an act of largesse Mr Hammond emphasised was exceptional and “outside the spending review process”. This prompts an obvious question: what is wrong with the spending review process?

What’s wrong — according to a recent report from the Institute for Government — is that the government has been too reactive. It has squeezed public service funding, hoping nothing goes wrong, and doled out cash when it does. The most obvious culprit is Mr Hammond’s predecessor George Osborne, who presided over a sustained period of austerity.

One could reserve some blame for the Labour government which handed Mr Osborne an economy in disastrous shape — and for civil servants eager to make the numbers add up with optimistic forecasts that quality could be sustained during a funding drought. And let’s not even talk about the chancellor’s boss, a prime minister who triggered Article 50 and called a general election without ever seeming to think seriously about the hard choices involved in Brexit.

Meanwhile public services continue to be stretched. The next crisis looms in the prison system; after that, the police service and the UK’s visa and immigration system are likely candidates to show signs of serious strain. So far they have not done so, which may be why Mr Hammond said nothing abut them.

It is hard not to have some sympathy for the chancellor. He stands in the middle of a party in turmoil; he is on the periphery of a predictably difficult Brexit process; he has been handed a huge downgrade in growth and productivity forecasts from the independent Office for Budget Responsibility. None of this is his fault, and he deserves credit for ramping up spending on infrastructure and the housing market. It remains to be seen whether that money will be sufficient, or well spent, but the sums involved are not trivial.

Meanwhile Mr Hammond increasingly resembles a beaten-down dad in the middle of a raucous children’s party, trying to tidy up the mess on his hands and knees while the chaos continues around him. One five-year-old sits kicking on his back and another tries to spread Nutella in his ear. He has reached into his pockets and hurled out a few sweets, but his best efforts are unlikely to be enough.

For now, the cycle of emergency spending continues. There was a telling moment as the chancellor turned to discuss a real fire, the Grenfell Tower disaster. The House of Commons rightly fell silent. The tragedy should never have happened, said Mr Hammond. He then announced that he would be spending some money on the aftermath. Crisis, then cash. Same old story.

 

Written for and first published in the Financial Times on 22 November 2017.

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23rd of November, 2017Other Writing • Comments off