There’s no logical connection between £10m to pay for more doctors and the £1bn in fines levied on banks for Libor rigging
So £10m in ‘golden hellos’ for extra GPs in deprived areas is to be funded from £1bn in fines levied on banks for the Libor scandal; what’s not to like? Well, for this commentator, quite a lot actually.
First, it is clearly a lie. The £10m will come from the Exchequer. It is true that £1bn will also come to the Exchequer in fines – but there is no logical connection between these facts.
Or rather there is, but it is a sordid one: namely that the politicians are again at the business of having their cake and eating it. The cake is the spending on GPs, which they reckon will be popular. However, if it had to be paid for by the taxpayer, it would be less popular. So summon up the villainous banks, say you are making them pay for the virtuous doctors, and the best of both worlds is yours.
The willingness of George Osborne to peddle this stuff is a measure of the man. Previous chancellors have understood the value of austere Treasury doctrines for the long-term control of the public finances. Hypothecation, for example, using one source of revenue to pay for a bit of spending, is terribly dangerous. If the money is used for purpose A, it is not available for purpose B – and before long you end up without the general taxes to pay for wider public spending.
Another heinous example of poor government behaviour is the coalition’s decision, backed by every national political party except Ukip, to lay down by law that 0.7% of national income is to be spent on aid. This means that at the end of each year there will be an unholy rush to push aid spending out the door to meet the target: as the independent National Audit Office has pointed out, that means the best money may be poorly used. Nasty dictators who hope to purloin it for their own pockets will be purring with pleasure at this misguided measure.
Every time you say how much must be spent on one bit of public spending, you lose budgetary flexibility. So now aid spending is fixed. That comes on top of health service and education spending, which is ringfenced against cuts. So health spending is protected. But spending on social care is being squeezed so only those with the most substantial needs receive help. Result: hospitals stuffed with patients who could be cared for in the community if help was available. Accident and emergency departments this winter have been bursting with elderly people who could have been cared for better and more cheaply at home – had the budget been available.
Paul Johnson of the Institute for Fiscal Studies points out that if some bits of spending are guaranteed while the total is being cut, other bits of the budget end up being slashed. By the end of the next parliament, spending on unprotected budgets will be down 41% over the period from 2010. You may look in vain for a copper on your street.
Of course, this is not the first government to try to find ever more ingenious ways of bribing voters with their own money. However, a measure of continence used to apply. Yes, Cabinet ministers would seek to bend the rules to buy popularity, however, the official Treasury remained an austere bastion of righteousness. Invariably it had in this the support of the chancellor – a politician, but a responsible politician, with an eye on the long-term national interest as well as the next election. Can anyone imagine Roy Jenkins or Nigel Lawson, let alone Stafford Cripps, behaving like Osborne?
Politicians bend the rules of sensible governance more and more to try to grab votes by illegitimate means. Yet – here’s the strange thing – the more they do it, the less they succeed. The public may not be expert in the rules for sensible management of the public finances, but can spot a fiddling chancellor when they see one.
David Lipsey is a Labour peer
This opinion piece was first published in the March issue of Public Finance magazine
