A Libertarian Budget?

The Chancellor has won praise from the Right for his innovative approach to pensions. This at first glance confirms him as a libertarian and opens a wide divide between the Tories and Labour, which must be welcomed as the arguments shift from managerial to ideological. Surely Labour can win in a battle over fairness?

However, closer examination may lead to this analysis being questionable. If a libertarian approach aims to remove the State from having any role in people’s lives, his policy on annuities fails. It purports to enable those retiring to have full control over their own pension pot, without being told by the State what to do with it. Libertarian? Apparently.

But if we compare this to the Right’s reliance on markets’ self-control, it can be shown how, when this fails to be the case, as it often does, it is the State which has to step in to bail out failures, again and again: the banks being a case in point. So when (not if) people fail to foster their assets effectively for their retirement, where will their needs be met? By the State, of course.

The fallacy of the Right is that its ideology sounds attractive – let everyone hold onto their own money as far as possible - but that this has been shown not only to be a recipe for failure but to place greater reliance on the State than it would claim. It also favours the ruthless over the fair and is likely to lead to the most unequal society, as we have now. How Labour can support this flawed policy is perplexing and should be challenged.

Neither the size of the cake nor of its slices are beyond choice

What does “public services” mean? These are not simply services used by the public, which can be offered by anyone. They are those services deemed essential to everyone, provided by the State. We now see that to the Right, these are a nuisance, to be minimised because of their drain on the exchequer. They have placed much delivery beyond true democratic accountability in the name of cost reduction [despite considerable reorganisation cost], at the same time removing  the State’s competence at delivery, resulting in dependency on corporates working under “commercial confidentiality”; and with little concern for the motivation of the remaining public sector workers.

So what about Labour from 2015? We know that the Coalition’s reforms of the NHS are to be repealed; and that care is to become one with health. We know that there will be a return to qualified teaching and some refocus on local government. But we also know that Ed Balls foresees further massive cuts in public spending. How then are public services even to be sustained, let alone restored to meet the needs of a growing, ageing population and generation of young people lacking proper prospects? Surely the size of the public services cake does not have to be determined by Osborne for a future Labour budget? Borrowing is not a dirty word; nor is taxation.

Where do we find the Party’s vision for the role of the State and the slicing of the budget cake? What are its spending priorities as between, say, social care and defence; or even between support for the City and infrastructure investment? When some areas of expenditure are ring-fenced or apparently sacrosanct, like defence or HS2, how come continued or reenergised public services – matters that affect the daily lives of people in need – are treated as the first port of call for cuts – by a Labour Government?

Yes, the [re-]advent of local strategy boards for health and education may help redirect funds in those silos but we see no clarity about how these bodies are either democratically accountable nor how their work is joined to other local strategic needs. Populating boards with temporarily interested but unelected parents or patients merely pretends public engagement, when the real expertise must come from professionals. How will transport strategy interact with health, employment or skills strategies under such narrow boards?

Surely we should be looking for a realignment of government spending – the whole cake - with the needs of the population over those of "the economy" as a  purely financial construct. Surely remuneration for public services workers could be set in line with the value recipients would place on their work. Is not the care worker looking after someone’s elderly parent more skilled and valuable than someone gambling with bank deposits? The size of the cake and of its slices need deciding by Labour values, not the inherited assumptions of this vicious Coalition.