Market and Economics

Bishop of Chester urges sound money – guaranteed by Budget quango

The Rt Rev’d Dr Peter Forster is a sound bishop. Having shredded the environmentalist papal encyclical Laudato Si’ (“shrill.. naive.. unclear.. unconvincing.. exaggerated scaremong“), his has turned his mitre to the national debt and the need for sound money. In a speech to the House of Lords, he explained:

I do not want to get into the details of the Budget, which are very political, but to talk about two broader, longer-term issues to which the Chancellor referred in his speech. The first, which has already been alluded to, is our national debt. Its rate of growth is forecast to slow in this decade, but that is stabilisation at a very high level, representing nearly £62,000 for every household in the country. Even at the current very low interest rates, servicing that debt costs £50 billion a year—more than the combined costs of defence and police services in this country.

I do not know what level of national debt is sustainable, because I am not an economist, although the economists do not seem too sure either and take different views. I believe, however, that the current level, which grew greatly through the financial crisis that broke about 10 years ago, is much too high for our long-term good, not least if a further, serious long-term crisis were to hit us, for whatever reason. The blame lies in the years before the crisis, when, amid favourable economic conditions—not least the bonanza years of North Sea oil reserves—the national debt was allowed to rise so much. This reflected a national mood that is summed up in the iconic advertisement for an early credit card: that we should “take the waiting out of wanting”. Whether for individuals or for our nation as a whole, I question whether it is right and healthy to prioritise taking the waiting out of wanting. Getting our national finances genuinely into a better state will be a very difficult challenge amid all the political pressures which arise in a consumerist society so resistant to increased taxation.

And he goes on to talk about the proportion of GDP dedicated to health and social care. He thinks it should be greater, which is fair enough, but more money doesn’t necessarily mean a better service. You can pour £billions into the state’s education and healthcare only for their structural deficiencies to devour all hope of betterment and kill off the intended gain. Year-on-year increased spending on education did not increase student attainment: there are simply far too many variables to make a reliable causal link. And the NHS receives extra £billions every year, yet people are still waiting, queuing, despairing and dying.

But that isn’t the quibble of this post: Peter Forster’s dissection of Laudato Si’ evidences acute awareness that increased social spending is contingent on market income, and that capitalism is essentially a good thing. The Bishop is sound on this. But consider his solution for neutering the “political battlefield” which debates over spending on health and social care have become:

We need to try to reduce the element of political controversy as far as possible in the basic decision-making processes, because once something becomes a political football, things tend simply not to happen because of the developing stalemate and the associated emotions.

I know that Governments are generally opposed to ring-fencing taxes but I have come to think that due to the inexorably increasing costs and unique political pressures involved, the future challenges to funding health and social care will best be represented by some form of hypothecation of tax revenues. There is something of a distinct anomaly here, which can be addressed separately. While individual Governments will have to take overall responsibility for what happens when they are in charge, the recommended Budgets and tax-raising plans would best be proposed by an independent and cross-party body—a bit like the OBR. That may not be politically palatable but, frankly, paying for what we need to pay for will be unpalatable in one form or another. We simply have to face up to that, and to a degree of austerity which seems simply unavoidable in the decades to come.

The Bishop’s soundness on the need for “a degree of austerity” is reiterated (though he gets scant appreciation for this). But in order to achieve the ‘right’ level of NHS spending, he suggests that the slicing of the fiscal cake must be handed over to some sort of budget quango: “an independent and cross-party body” whose task it would be determine how much of the public purse is set aside for the NHS and social care provision. This, of course, would make the chairman of said quango more powerful and influential than the Chancellor. Indeed, it would neuter the Chancellor’s tax-raising (and cutting) powers altogether. No longer would a party need to win a general election in order to effect its spending plans: just get your placeman (/woman) appointed to lead OfBudge. And how cross-party would it be, exactly? And in what proportions? Would it extend to Ukip or the SNP? Would its make-up be determined by number of votes, the number of MPs or their national allegiance?

Quangos are unaccountable, undemocratic, and invariably (over-)populated by the great and the good of the ever-circulating elite. The more of them there are, the more power over our lives they possess. Politicians cease to be able to govern when those who sit on these quasi-autonomous supra-legislative bodies call the shots. Indeed, with the proliferation of quangos, politicians are forever able to pass the buck, put their hands in the air and tell Parliament (rather truthfully), “It’s not my fault.” And too many of their influential appointments are in the gift of ministers: to lead a quango these days is far better than receiving a knighthood (though the two often go hand in hand), for the executive quango has real political clout which transcends the capricious whims and base desires of both the people and their political represenatives. How could a Conservative chancellor ever again effect real conservative fiscal policy if the Chairman of OfBudge happened to be one Sir Gordon Brown? How would John McDonnell usher in his Corbynomic revolution if OfBudge were led by Lord Lawson or Sir John Redwood? Not everyone can be conveniently bought off with a ‘K’ or a ‘P’.

Here’s a good idea: why not grant the European Commission the necessary supranational authority to impose sound fiscal governance upon all member states, to ensure that they comply with a prescribed level of expenditure in healthcare and social provision…

The Bishop of Chester needs to consider that doing democracy (properly) is inherently to create a “political battlefield”. The fraught and emotional arguments over how best to ameliorate provision in health and social care need to happen (as do those which are intelligent, reasoned and passionate), and the victor needs to be able to change the status quo. Political peace is best attained not by imposing an episcopal notion of fiscal orthodoxy, but by winning the difficult arguments and reaching consensus by showing – empirically – what works best. You cannot bypass the political fray by imposing a remote quango, or by pretending that a quango is somehow a ‘higher’, more enlightened settlement, for to do so simply frustrates and alienates the people. It isn’t unreasonable to believe that we who pay the piper should be able to call the best tune, even if you think it’s of the devil.