Getting off the (Ring) Fence

Getting off the (Ring) Fence

Prime Minister David Cameron recently announced that education spending per pupil will be protected over the course of the next Parliament. In turn, Labour have promised that the NHS budget will be safeguarded from any cuts and added to with the revenues of the much-discussed Mansion Tax. In the run up to a General Election, greater clarity of the parties’ spending plan is to be welcomed, however, announcing the ring-fencing of departmental budgets seems to be a poor way of planning for an uncertain future.

The most obvious difficulty is that it decreases government flexibility and limits politicians to, often somewhat arbitrary, sound bites. It is unlikely that either David Cameron or Ed Miliband will become Prime Minister without achieving at least at least a supply and confidence agreement with another party and, as Nick Clegg has discovered, bold promises made in the run up to an election can come back to haunt those who made them. Perhaps more obviously, it is impossible to predict what the economy will look like in six, twelve or eighteen months’ time and how changing circumstances will affect how much a government can spend and where.

Second, ring-fencing effectively pits government departments against one another with little consideration as to their interdependence. While Ed Miliband has promised to safeguard spending in the NHS, no analysis of how the party would treat social services has yet been undertaken, despite shadow Health Secretary Andy Burnham espousing the necessity of a more “holistic” approach to health and welfare. Too often government departments become silos, internal bureaucracies wrought with rivalry and ring-fencing risks exacerbating this siege mentality.

Finally, protected government budgets undermine the need to search for efficiencies and can prompt departments to enter a state of cruise control. There is a tendency in modern government to assume that reform equates to increased spending, rather than improved performance or cost effectiveness. In a period of uncertainty it seems imprudent to remove any impetus for improvement and enhanced cost-effectiveness.

It is tempting for politicians to offer protection to popular areas like health care and education, but the potential cost of doing so seems to outweigh any tangible benefits. Trust in politicians, even to maintain such promises remains low. It is, for example, telling that during the 2010 General Election just 40 percent believed that the NHS was safe from cuts, despite promises from all sides that it would be. Such scepticism will no doubt be multiplied by coalition negotiations, which may need to take place between uneasy bedfellows.

The Conservative Party are in a particularly unenviable position. Defence Secretary Michael Fallon and a number Tory MPs have been pressing for a commitment to devoting 2 percent of GDP to defence. Having already promised to protect overseas aid, the NHS and now education, it is unclear where cuts would be made, despite the Institute for Fiscal Studies proposing that departmental budgets need to fall by around 29 percent over the next 5 years. Already divided on Europe, the Tories could well be undone by budgetary horse trading.

What then is the alternative? The first option is simply for more honesty from politicians of all parties and an admission that in an uncertain and unstable world little can be promised at this stage. However, despite public cynicism, replacing promises with preferences or ideals has obvious risks and dangers.
Second, and perhaps more achievable, would be an exercise in goal setting across departments. Rather than simply suggesting that the NHS will be protected at all costs, parties should outline what this really means. Labour’s focus on whole person care seems to be a step towards this and a promise to, for example, sustain and improve funds available for the treatment of dementia seems far less arbitrary than merely placing a floor on health care spending. The question needs to be: be how can we achieve the best outcomes, rather than how much can we spend?

Finally, and perhaps most radically, the time may have come for a thorough analysis of how Whitehall functions and whether semi-autonomous departments act in the best interests of the country. It would take a bold leader to take on and reform the civil service, yet this labyrinthine body is notoriously difficult to navigate and manage. Simplifying and streamlining how it operates and how government funds are circulated could well be a useful step in moving beyond the current silo mentality.

Positive News at Last for Ed Miliband
Ed Miliband has, in many ways, had a good week. Not since he took Rupert Murdoch to task on phone hacking has he seemed to be as energised or, frankly, as interesting. In the row over Conservative donor Lord Fink’s tax arrangements the Labour leader seems to have emerged victorious and gained the kind of credibility needed to rebuff accusations from the SNP and Green Party that he is merely a “Red Tory”.
Miliband can also take heed from the narrowing of a poll where Labour has generally suffered: ‘Who is to blame for the current spending cuts?’ commissioned by YouGov. Since the 2010 General Election Labour have been dogged by accusations that their profligacy led Britain down the road to ruin and that the coalition’s spending cuts are a temporary medicine. In October 2010, just 18 percent blamed the Tories and their Lib Dem partners, a figure that has now risen to 30 percent. In tandem, the number blaming Labour has fallen from 48 percent to 33 percent.

A 3 percent gap is still significant, but this narrowing suggests that public perceptions on culpability is changing. The Tories have long established that they want to fight this election on economic competency and a shift in momentum, however subtle, could well prove costly for them, especially in fiercely contested CON-LAB marginal. Importantly, this poll suggests that Ed Miliband’s strategy, though lambasted by the popular press and the Conservative front bench, could well resonate with voters, something that Labour insiders will be hanging on to, not least if the much vaunted television debates go ahead.

This article was originally published last Friday in Whitehall Weekly. You can subscribe here.

Jack Taylor

Jack Taylor

Consultant at Keene Communications
Jack’s background is in domestic politics, having worked in various research position in both the Commons and the Lords. He has a particular interest in matters pertaining to infrastructure, transport and development.
Jack Taylor

About the Author

Jack’s background is in domestic politics, having worked in various research position in both the Commons and the Lords. He has a particular interest in matters pertaining to infrastructure, transport and development.