Public Funding and the Tipping Point

by Ken Gibb

Alex Marsh tweeted a link to a word press blog this morning raising concerns about the future of public services. The excellent post on (‘Sleepwalking into tomorrow’s state’) drew incisively on the prognostications of Paul Johnson from the IFS regarding the June spending review by HM Treasury.

The points being made are essentially twofold: the budget deficit reduction strategy was designed to be predominantly spending cuts rather than tax increases. Government chose to initially increase taxes, cut capital spending (e.g. at DCLG) but leave the more painful current spending cuts on services till later on when it was presumed that growth in the private sector would lessen some of the pain at least on the jobs front. As we now know, economic growth did not play by these rules and George Osborne will now cut deep into public services in the run up to the election and beyond.

The second point of interest made in this morning’s post is that we are now approaching a tipping point where state spending has been transformed from being primarily about the delivery of our public services to one of welfare spending on pensions, social security and other (less predictable) annual managed expenditure. Partly this is a transitory effect of the whopping debt interest we have to pay but underlying the story is a relatively unheralded shift way from our public services like libraries, museums, roads, local amenities and the like, towards welfare (bearing in mind the funding protection of welfare giants like health, and education by the UK Government), which makes it harder on all of the other services.

So, while we understandably worry about the cuts and benefit restructuring underway – there is something much larger, significant and insidious underway. Meanwhile we see English Conservatives obsessing over Europe in quite incredible ways and all of it adding fuel to the Scottish referendum debate. But shouldn’t more media and commentariat focus be on the economy and services?

I was on a visit five years ago to Cleveland, Ohio, six months before Obama’s first election victory. It was my first experience of this part of the United States and it was a highly resonant one. Cleveland is a hollowed out city with affluent suburbs two significant universities, and a few neighbourhoods wiped out after the sub-prime crisis (we were still only on the cusp of the GFC when I was there). A post-industrial city, Cleveland’s core had a low resident population, marked spatial segregation and notable city investment only in sports stadia and the rock n roll hall of fame and museum. But what I really noticed was the parlous public finances. The roads were in terrible condition and my host told me of the then on-going political struggle to raise a special tax to fund basic education in the city.

Some urbanists have argued that the rise and decline of Cleveland is a similar trajectory to that of Glasgow and one can see commonalities. However, this all came flooding back to me last week driving in Glasgow’s grid based city centre when I saw decaying roads (worn away down to the cobbles alongside deep holes in the ground) on a par with what I saw 5 years ago. As the author at flipchart fairytales says – it is only when we see our libraries shut and when we start paying for previously free local public goods (or, as in my council area in Lanarkshire, voters are consulted on what is being cut out altogether) that public service users will recognise the depth of the cuts in the same way that local public sector workers clearly already do.