Anthony Browne is MP for South Cambridgeshire, the Chair of the Conservative backbench Treasury Committee and a member of the Treasury Select Committee.
What is the right level of public spending? It is a question at the heart of national politics, in the UK and other countries, but rarely directly addressed. Most economists expect public spending in advanced nations to creep up over time, as populations age and we spend more on care.
It is also a truism of politics that public spending is popular in general – who doesn’t like more spent on public services? – but that tax rises to pay for increasing public spending are not popular. Balancing the desire to have more spending but not to pay more taxes is the challenge at the heart of any budget process, but will be particularly acute for Jeremy Hunt as he tries to work out how to fill the Budget black hole.
The supposed economic philosophy of “Cakeism” – having your cake and eating it – was an attempt to pretend such a trade off doesn’t exist and that all public spending is good. It is part of the reason the black hole is so deep. The return to fiscal discipline under the new Prime Minister is a very welcome.
Our national debate on public spending has become very skewed in recent years, and it is partly our fault. Almost every Government announcement has a headline of the amount of money being spent on it, on the basis that all spending pledges are good. The communications people always want a release with a “big number”. The briefing notes given to MPs by the Conservative Research Department are often long lists of spending pledges, and MPs are left to defend policies saying there is £150 million for this and £750 million for that. Conservative MPs like complaining to each other about the briefing notes that urge us to boast how much the Government is spending on everything – with barely a mention of what we are actually trying to achieve.
There are two major problems with this with this approach. The first is that we fuel the idea that all public spending is good, and end up in a competition with Labour on who will spend the most (rather than who will deliver the best outcomes). It is a competition that we cannot win: Labour can always promise to spend more on health and education than we can. We are spending record amounts on the NHS, both in absolute terms and as a share of GDP, and are still accused of starving it of cash.
The second problem is that people do not really care about the actual amount spent – not least because so few really understand those big numbers. What people care about – passionately – are the services that public spending brings, and how it affects their lives.
Every weekend, I go knocking on doors in my constituency to hear the thoughts of voters, and occasionally they complain about thefts from farms, and that they do not see any police about in my rural area. But no-one has ever said to me: “we need to spend £2 billion more on the police”.
People complain about the time it takes to get a GP appointment, but not about the amount spent on GPs or even the overall numbers of GPs nationally. Down the Queen’s Head, the chat is not about the size of the national Government’s bus budget, but that the Number 4 bus didn’t turn up. Yet again.
No one outside Government values something primarily because of the amount spent on it. When someone buys a car, they try to get it as cheaply as possible, and don’t boast how much they managed to spend on it. People will tell family and friends “I bought a house!” not that “I spent £245,000”.
In management-speak, the Government tends to talk about inputs – the amount of money spent – but not on the outcomes, which is what the voters care about. Occasionally, the Government talks about outputs (as opposed to outcomes), such as the number of police and GPs and nurses.
But again, that is not what people are directly concerned about. If someone complains about local crime, it is not very satisfying to hear their MP say “we have record numbers of police officers in Cambridgeshire” – even if it is true. What they want to know is that crime rates are coming down (also true). We make endless announcements about the amount spent on health care, but talk very little about out cancer survival rates, which are poor compared to our peer countries.
It is understandable that Ministers talk about the amount they are spending on something, as that is what they have managed to get out the Treasury after hard negotiations. It is also their point of control – they can decide how the money is spent.
But outcomes are far more complex, and can depend on many factors. People care far more about their likelihood of being a victim of crime than the amount spent on policing, but it is difficult for governments to pledge to cut crime rates, which depend on many factors outside the Government’s direct control.
There are risks for any Government focussing on inputs rather than outcomes. The first is the input – the amount spent – becomes an end itself. Spending public money wisely in a way that gives good value for taxpayers is very difficult. If someone’s aim is to spend £500 million, they are likely to spend it less well. When I was responsible for the £600 million a year London Development Agency, I was shocked at how much management focus was just on getting money out of the door, in any way that didn’t break the law, rather than on achieving specific outcomes that Londoners cared about.
Another risk is that you only look at ways of achieving a desired objective that involve spending money. It is an old adage that “you manage what you measure”, and if your measurement of success is spending, then that it what you manage. Things that don’t cost money, or cost less, can be useful but overlooked.
You can also target the wrong things. A long overdue national political focus on improving cancer survival rates would identify shortcomings in our cancer services that we should aim to fix, some of which would cost money, but many of these solutions would be a change in the way of doing things.
It’s the same with cutting crime: there are all sorts of factors that influence crime rates, but focusing on how much we spend on the police, or on how many police officers we have, is only part of the picture.
In education, more money is only part of the answer of achieving better literacy and numeracy, and preparing pupils for the world of work. The way teachers teach matters as well as how many teachers there are.
Refocusing national debates away from the amount being spent to the actual outcomes we want to achieve will lead to more constructive and nuanced, and indeed interesting, national debates. Unlike an unwinnable bidding war with Labour, we can actually win these debates on how to achieve the outcomes we want. As public spending comes under ever greater pressure, it is time for government to focus more on outcomes and less on inputs.