Breaking the taboo on increasing public investment

You probably missed the Conservative Way Forward paper published on December 10th which argued that cutting the money allocated to equality, diversity and inclusivity staff and training in the public sector could save enough ‘wasteful’ spending to allow for tax cuts. You’re more likely to have noticed when the Daily Mail splashed the story across its front page the following week. You may also have seen this week’s coverage of the Taxpayers Alliance report that prisons have spent £11m over the past two years on equality, diversity and inclusivity staff and training, presented as another ‘gross’ waste of government spending.

The constant trickle of ‘studies’ like this has a clear purpose. They tell voters that waste in the public sector comes from politically motivated spending on ‘unnecessary’ projects. They distract from the money ministers spend on outsourcing to consultancies and private contractors, who overcharge for their products and services (and contribute to right-wing think tanks and the Conservative Party in return). And they justify continuing calls for tax cuts, rather than addressing the long-term need to increase public spending in response to Britain’s economic, educational and demographic challenges, and to the need to move towards a more sustainable economy and society.

Even after 12 years of austerity, the plain truth that public spending needs to rise substantially, over the long-term, if the UK is to remain prosperous, healthy and socially coherent, remains the biggest taboo in British politics. Keir Starmer has just promised that Labour has no plans to increase taxes – as Tony Blair did in 1996-7. Blair nevertheless managed to extract rising public revenue from economic growth; but Starmer will probably be inheriting a domestic and global recession. The business pages of the press, and the reports of non-partisan think tanks, all take it for granted that we need to invest more in education, health and social care, child care, public infrastructure, scientific research and development, and increasingly also key areas of industrial innovation, if we are to avoid becoming not only poorer but also shorter-lived and more socially divided than our neighbours.

Do we dare to break the taboo? We hinted that we would in 1997 when we promised to add a penny on income tax to increase investment in education. We now face a prime minister who is attempting at the same time to hold down teachers’ salaries and to demand that thousands of extra maths teachers must be recruited – which makes it easier for others to point out that maths teachers will have to be paid more. It’s also becoming clear even to readers of the Daily Mail that the social care crisis cannot be resolved without higher pay and better-funded childcare for women who might then be willing to take on such jobs.

We could also do much more, in countering the narrative of the anti-tax right, to point out where the Conservatives waste public money in enormous quantities. The scandal of PPE procurement in the pandemic is in front of us, which has wasted far more than the sums the Taxpayers Alliance protests about. The excess profits that private equity companies (often based offshore, to avoid UK tax) make in the social care sector steal from public subsidies. Spending on prisons has mushroomed because of accumulated delays in our justice system (caused in its turn by cuts in the courts and legal fees) and by lengthening sentences. Efforts to reduce our prison population to the same ratio of our overall population as our neighbours would pay to rebuild a decent probation service and in-prison rehabilitation, and still leave funds for other purposes.

It will take longer to make the case for public investment on the transition to a sustainable economy, for improving our public transport network outside the South East, and for strategic investment in scientific and technological innovation – though it’s worth noting that if Ed Davey’s drive to promote renewable energy had been sustained since the end of the coalition government in 2015 our government would not now have to spend so heavily on energy subsidies. What’s most important between now and the next election is to counter the ideological insistence of the Tory right that the answer is always to cut taxes rather than invest in public provision – and if Labour is afraid to make the case, that’s (again) how we should differentiate ourselves from Labour.

A liberal democracy rests on a careful balance between market and state, society and economy, private and public provision. We must defend that against the anarchists of the right and the hesitant leaders of the left.

* William Wallace has fought five parliamentary elections in Manchester and West Yorkshire. He is a former president of the Yorkshire regional Liberal Democrats.

Read more by or more about or .
This entry was posted in Op-eds.
Advert

16 Comments

  • Peter Martin 5th Jan '23 - 9:43am

    ” … we promised to add a penny on income tax to increase investment in education.” “, the plain truth that public spending needs to rise substantially, over the long-term”

    Possibly this does need to happen but we would all get a clearer idea of the problem, and so of the potential solutions, if we stopped thinking purely in monetary terms and started to think about the resources we might need.

    We all might agree the primary resource we have in the UK lies in the skills of our people. There would be widespread agreement that we need more of them to be medically trained. More doctors, nurses, dentists etc. Plus we need more teachers, more scientists and engineers etc. At the same time many in the centre ground of politics fret that finding enough jobs for our young people is a big problem and we’d have to introduce something like a Universal Basic Income to keep them out of poverty. They also fret about the extent of youth unemployment and come to the conclusion that finding everyone a course, just about any course, to follow in higher education is at least a partial solution.

    We have this entirely the wrong way around. Instead of worrying that we can’t provide enough jobs for everyone, we should be worrying that we don’t have enough people with the right training to do what we need them to do.

  • Michael Cole 5th Jan '23 - 5:55pm

    Even given our limited media coverage, our spokespeople should be sending out this message at every opportunity:

    ” … it’s worth noting that if Ed Davey’s drive to promote renewable energy had been sustained since the end of the coalition government in 2015 our government would not now have to spend so heavily on energy subsidies.”

  • William Wallace 5th Jan '23 - 6:01pm

    Peter Martin:

    You’re right that the lack of adequate provision for skills training (for doctors, nurses, computer programmers, engineers etc.) is one of the things that holds our economy back. But cuts in funding for technical education have played a major role in this shortage. If we want to find more computer technici0ans we need to fund and pay more maths teachers! So funding, employment and growth are closely linked.

  • Steve Trevethan 5th Jan '23 - 6:09pm

    Thank you for a most important article!
    Might we publicise the vital and life improving connections between taxation and democracy?
    Those who would have us believe, and those who are well paid to have us believe, that taxation is “an inherently bad thing”, are promoting smaller and weaker government so that the oligarchs, and their associates, have ever increasing wealth and power and regular citizens and their children have less of both.
    A decent/optimal taxation system is essential for an efficient, equitable and sustainable society.
    Our party has a duty and an opportunity to make this crystal clear by denouncing the promotion of the society harming attitudes of the Conservative and Labour Neo-liberal parties.
    Neoliberal policies have wounded our infrastructures and caused some 30% of our children to be permanently underfed.
    Do, please, read “The Joy of Taxation” by Richard Murphy!

  • Nonconformistradical 5th Jan '23 - 7:28pm

    “A decent/optimal taxation system is essential for an efficient, equitable and sustainable society.”
    And without the opportunities which seem to be available to the rich to avoid taxes.

  • I’ve posted before that in 2020 the UK Government spent around £2.5bn on external consultants. France, with a similar sized economy and civil service, spent less than half that.

    I’m not sure if the TPA has commented on that, but £11m over 2 years sounds like peanuts in comparison.

  • William Wallace 5th Jan '23 - 9:33pm

    Nick Baird: The TPA never comments on waste that arises from outsourcing contracts – which is a giveaway about its underlying bias. I raised a laugh in the Lords in December on a Question about Bain Consultants, to whom the government has paid £40m since 2018 for ‘advice on Brexit Opportunities.’ I simply asked if the minister could assure us that it had received value for money…

  • William Wallace 5th Jan ’23 – 9:33pm:
    The TPA never comments on waste that arises from outsourcing contracts…

    ‘The secret arm of the state: Unaccountable government contracts’ [August 2020]:
    https://www.taxpayersalliance.com/the_secret_arm_of_the_state_unaccountable_government_contracts

    For taxpayers, it doesn’t get any worse than this double whammy of high costs and poor outcomes, with little light at the end of the tunnel. 

    This has happened time and time again.

    ‘Reforming Public Sector Procurement’ [August 2017]:
    https://www.taxpayersalliance.com/reforming_public_sector_procurement

    Outsourcing titans continue to dominate public procurement despite well-publicised failures.

    ‘New Year Waste Round-Up’ [January 2008]:
    https://www.taxpayersalliance.com/new_year_waste_round_up_mf_7hmupprydrfmbwfmtzxo_tcu

    Outsourcing overruns cost £9bn -…

    Etc, etc.

  • Jason Connor 6th Jan '23 - 9:50am

    I disagree and agree with the article. I am not sure what evidence there is that money allocated to equality, diversity and inclusivity staff makes a workforce more equitable? These functions should really be ingrained in HR or equivalent in some companies and fully integrated across the working culture. So it’s the method of achieving diversity I would query. Not forgetting monies spent on PFI by hospitals originally introduced by the Conservatives and expanded under the last Labour government. How much does this cost the NHS as a pay-back, money which should go on staffing. Totally agree on the last sentence, that’s what a social liberal mixed economy is all about.

  • William Wallace 6th Jan '23 - 10:18am

    Jeff: strange that the TPA didn’t offer peers any briefing when we were examining the Procurement Bill in the autumn – with ministers who were resisting any constraints on outsourcing. Good to see that they cover this; sad that they give it so little publicity.

  • Peter Martin 6th Jan '23 - 11:18am

    @ William,

    Thanks for your agreement but I’m not sure it was to the point I was actually making. There has been a huge expansion in higher education which I would hope we all would agree was a good thing. But, at the end of it all we are still talking about the poor state of mathematics, science and technical education. The proportion of graduates studying these subjects has not kept pace with the growth in higher education generally.

    Of course, when we look at the closures of various departments the justification is given as a lack of funding. This does not address the underlying issue that not enough students are wanting to follow the courses offered. The funding is reduced accordingly. So, as I was arguing, it is isn’t entirely about money. It’s about resources and our young people are are our main resource for the future.

    We do naturally want students to study the subjects they are interested in. On the other hand we’d like them to study more of the subjects that would help create a more vibrant economy. We can’t have it both ways!

    https://www.ucu.org.uk/article/2154/Report-reveals-that-latest-physics-closure-is-part-of-decline-in-UK-science

  • William and Jeff – consultancy is different to outsourcing.

    Outsourcing is paying a private company (or sometimes charity) to do something Government employees used to do.

    Consultancy is paying a well-renumerated outsider to tell less well paid civil servants how to do their jobs….

  • Nonconformistradical 6th Jan '23 - 10:24pm

    @Peter Martin
    “We do naturally want students to study the subjects they are interested in. On the other hand we’d like them to study more of the subjects that would help create a more vibrant economy. We can’t have it both ways!”

    Perhaps we should have it both ways. A bit more breadth – e.g. those wishing to specialise in STEM subjects also studying something other than STEM

  • Peter Hirst 11th Jan '23 - 3:21pm

    I don’t know how important it is to reduce inflation during a cost of living crisis. I do know inflation hits hardest those with significant wealth and savings and so could be progressive. I also know economics should be our servant not our master. I heard recently that the thatcherite view of looking at government finances like we do with our family ones is innacurate and unhelpful. Perhaps the love of having money is the source of all ill after all.

Post a Comment

Lib Dem Voice welcomes comments from everyone but we ask you to be polite, to be on topic and to be who you say you are. You can read our comments policy in full here. Please respect it and all readers of the site.

To have your photo next to your comment please signup your email address with Gravatar.

Your email is never published. Required fields are marked *

*
*
Please complete the name of this site, Liberal Democrat ...?

Advert



Recent Comments

  • Zachary Adam Barker
    "Ed Davey is the likeliest leader of the current crops of MPs" Then perhaps we should consider allowing the party leader to come from outside of the Commons ...
  • Chris Cory
    The fundamental point behind this piece, that the typical family is £1200 worse off since Rushy Sanuk (as Joe Biden likes to call him) came into office, seems ...
  • Chris Moore
    Ed Davey is the likeliest leader of the current crops of MPs. He may not be particularly charismatic - a common criticism on here - but he's decent and solid an...
  • Chris Cory
    @Steve Trevethan. Dividends paid to the the owners of any company are not inflationary because they are simply a distribution of profits from the companie...
  • Chris Moore
    "Neo-Liberalism" is not dominant. All main parties support a mixed economy with transfers to the poorer off. The devil is in the detail, not in over-arching ...