In the wake of the Brexit vote how can public finances and the services they support be made affordable, writes Martin Sime
However the current European imbroglio ends the prospects for Scotland’s public finances do not look great.
The Chancellor is already taking up the need for an emergency budget and further spending cuts. On the morning after the Referendum the Welsh First Minister took to the airways to call for a reconfiguration of the Barnett Formula so Wales could recover its lost euro millions. And we are all familiar with the financial challenges which an independent Scotland would face. None of these scenarios offers the immediate prospect of more funding for our public services.
This makes it all the more strange that the cacophony of voices demanding more for their cause or interest carries on unabated. In fact a large part of what we call political debate in the parliament and media is conducted around the need for more. Usually this takes the form of more nurses, doctors, teachers, police and the like. Or it’s a general need for more investment in health, housing, education or transport. Will the government promise to spend more... is the start of too many a plea.
This is not to say that our public services couldn’t use extra investment, although that does rather beg the tricky question about whether more is better? It is never clear where any of this more is going to come from because it is always built on top of what we already have. As a rule we are much less comfortable talking about relative priorities with its prospect of losers as well as winners. Maybe our public services are too used to the times of plenty?
A debate about how to get more from less, about how to begin the onerous task of making our public finances and the services they support affordable and sustainable, seems well overdue. Even without the prospect of further Westminster imposed cuts coming on the back of years of so-called austerity, it is becoming ever more evident that we cannot carry on as we are. Something – maybe a lot of things – will have to give if the books are going to balance.
There are multiple reasons for this. Health costs and demands are rising faster than any budget can afford – the drugs bill alone rose by 6 per cent to a staggering £1.4 billion last year. Demographic change and the extra years which many now enjoy will add more health and care costs every year for at least the next decade. The public sector pension bill, like pensions everywhere, is spiralling out of control. Each year we repay rising amounts to the private finance houses who build our schools and hospitals. All of this more happens without anyone arguing about it.
Other bits of more fly under the radar. An extra 500 Health Visitors to undertake named person duties; 250 new jobs for people to act as link workers in GP surgeries; the welcome introduction of the Living Wage for care workers; more cash to mitigate the impact of UK welfare cuts. It is one thing to be able to afford all of this for now, but in five or ten years’ time?
Of course the other side of the argument is now also up for grabs – can the Scottish Government use its tax raising powers to fund more? There’s an understandable nervousness here. Whilst there’s a good case for doing it anyway, raising the top tax rate won’t generate all that much. Taxing the rest of us more requires, at the very least, a convincing argument about the real difference it would make, as opposed to just papering over the cracks. In any case tax revenues look set to fall sharply in the wake of the post-Brexit recession so higher rates may be needed just to stand still. There are no tax-raising panaceas which get close to dealing with more.
Service redesign is still the most promising option even if the last few years of experimentation in things like change funds have yielded very little. We now know how difficult this is – vested interests need to be confronted and stood down; cultural change needs insinuated into the public sector ethos; the public needs convinced of the need for change.
All of this would be more doable if the chorus of more didn’t drown out everything else. Our politicians could take a lead and debate health and education without recourse to the ‘m’ word. The rest of us could give them a break by doing likewise. Let’s get our best minds thinking about how to make vital public services future-proofed and affordable. Oh and let’s invest time and energy in the capacity that we all have to help each other. A stronger society is the best antidote to the shallow and mostly futile pursuit of more which still dominates public life. More seems unlikely.
• Martin Sime is chief executive of SCVO