Reform certainly, but cuts will still be necesssary


In that speech to Demos on Tuesday, George Osborne told us that “we face a choice between progressive reform with the Conservatives and front line cuts under Labour." This is how the Tory leadership wants to fight the battle over public services, and this message will be at the heart of their election campaign.

It’s true that reform of the public services is desperately needed: as Osborne pointed out, the United Kingdom currently ranks 76th out of 134 countries in terms of public service efficiency. And it’s true that the Conservatives have some genuinely radical and exciting policies to improve the situation.

But, as Daniel Finkelstein explained in The Times last month, the full rewards of public service reform may not be felt for years, or even decades. The fiscal crisis will not wait: government borrowing is set to total £700bn over the next five years, and there is a real risk of the UK’s credit rating being downgraded. An incoming Conservative government will have no option but to cut spending sharply and severely.

Even when the potential efficiency increases are realised, they will not balance the budget. The Conservatives’ most radical proposals are limited to education, which makes up less than 6% of central government spending. Even substantial improvements in the delivery of bigger budgets like welfare and health would not be enough. There will have to be a reduction in service provision as well.

The Tories are right to be finding ways that public services can “do more and cost less". And if the voter buys it, the message of salvation without sacrifice may be a winner at the election. But in reality cuts will have to come, and frontline services will have to be reduced. As a nation we must face up to fact that every penny spent by the government is a penny that must be found from taxation. We must ask ourselves what level of public provision we want, and where our priorities lie. We cannot pretend that efficiency reforms are the whole answer; we must make the case for a smaller state.