The FT Agrees with Me!!

Some things were ever so. As William Moyes, chairman of the foundation trusts regulator, confirmed this week, reform of the National Health Service has been slower than was hoped. The same can be said of the UK’s other wasteful state services. The Conservative party, which is likely to win the general election due by next summer, has rightly focused itself on public sector reform. But this, sadly, will not help it cope with the UK’s gruesome fiscal position.

The next government will need to close a deficit of about 12 per cent of output. The Treasury’s current plans leave the deficit at a still-cavernous 5.8 per cent in 2013-14, but even reaching that halfway house will require cuts in real terms to departmental budgets of 2.3 per cent each year. This ever-tightening fiscal straitjacket should be the salient feature of British politics. But neither main party has recognised the scale of the task.

The Labour leadership, rather pathetically, has had real trouble simply admitting that spending cuts are a necessity. And, last week, George Osbone, the Tory shadow chancellor, said that, under a Conservative government, “reforms to public services ... mean cuts on the frontline can be avoided ... ” This, sadly, is something of a fantasy.

The Tories are pointing in the right direction on schools, welfare and healthcare: they hope to drive up productivity by introducing competing private providers into these arenas. Such policies would improve public sector value-for-money. In the medium term, they would create room for savings, for example, by helping to contain the medical costs of the greying population.But, in the short term, these reforms would be expensive. During the grim years of restraint, they would be a fresh drain on the exchequer. And, even if they were costless, they could not boost productivity by the amount needed to shelter services from the axe.

Whoever wins the election – and however strong their reforming zeal – the next government will be remembered as a cutter. No reforms can save the British state from its coming resculpting: this is why both parties must unveil coherent political agendas.Labour and the Tories must both explain which functions of government they regard as sacred and which, if forced, they would sacrifice. It is absurd that we do not know what the UK’s national parties would like the British state to be doing in 10 years’ time. One now wonders whether the parties themselves even know.