The Budget must overturn a catastrophic policy error made eight years ago

October 24, 2018   By Adam Lent, Director, NLGN

In 2008, Alistair Darling’s Autumn Statement as Chancellor of the Exchequer contained two bombshells. The first being that he was spending £200bn to keep the economy afloat following the financial crash of a few weeks earlier. The second was his forecast that many years of cuts would follow to get the public finances back to health.

A full decade later and a different Chancellor from a different Party will stand up in the Commons on Monday and declare that those predicted years of retrenchment are now coming to an end and it is time to start spending again. No-one is expecting a £200bn splurge of course but we do know that recent positive news on tax receipts, as well as a shifting political mood, means the odds of a relatively feelgood Budget are the highest they have been in a long while.

This is a reversal of priorities that millions of public service workers and users will welcome. But the Chancellor should also seize the opportunity to jettison a policy error that has turned the last decade into an unnecessarily malign one for the public sector.

That error was the decision taken by yet another Chancellor in 2010 to shelter acute care from cuts while exposing preventative services to the iciest blast of austerity. Nowhere was this clearer than in the ringfence afforded to the NHS while local public services endured 50% cuts to their central government grant. The political logic was pristine. There were not many Tory votes to be lost through the closure of community centres, the rise of homelessness, and the degradation of youth and children’s services. Similar treatment for A&E units, on the other hand, could have provoked electoral disaster.

But what made for good politics has made for terrible social policy. In an era when demand for public services is rising year on year due to an ageing population, George Osborne’s historic error has only exacerbated the problem. As preventative services have withered, ever greater numbers have required the acute care offered by doctors, nurses and police officers. More fundamentally, a decade has been wasted in which the public sector should have been determinedly transforming itself into a family of services focused on prevention.

The result is an utterly skewed system. One where average NHS spending per head is now around £1,700 each year while public health enjoys only £50 per head. One where the organisation tasked with keeping the nation healthy is estimated to spend just 4% of its budget on prevention.

Philip Hammond could start the process of redemption by making it clear that the £20.5bn already pledged to the NHS will be used to support ailing social care – a crucial service when it comes to keeping elderly and disabled people out of hospital.

Any further spending pledges should prioritise children’s, youth and community services as well as public health. Such a move may not be as eye-catching as ploughing further billons into cancer treatment and policing. But it will limit the need for the Treasury to keep raising funding for those acute services in what will ultimately be a losing game of catch-up with ever rising demand. The Chancellor need only cast his eye over the alarming data on diabetes to see the financial logic of this.

The NHS currently spends £10bn treating three million diabetics. There are, however, no less than seven million people at risk of developing the condition. It doesn’t take a Treasury spreadsheet genius to spot that without properly funded prevention in just this one area, the £20.5bn of extra funds for the health service will be swallowed up fast.

The UK cannot wait another decade for a Chancellor to signal that the priority for those making the big spending decisions is to keep people healthy and happy rather than fix them after they become ill and troubled. By then, our public services will have endured so much pressure from rising demand that widespread service rationing and severely degraded quality will have become facts of life.

This post first appeared in the Local Government Chronicle on 23rd October 2018

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