A Rare Act of Costly Ambition

Steve Richards writes:

There is a dangerous fantasy taking hold in England.

Since the announcement of last week’s spending review, I have heard or read many times that we can get much better public services for a lot less money. Columnists anticipate the dawn of high-quality provision without paying very much for it.

George Osborne argues that services improve and will continue to do so with less money being spent on them. Other columnists write that the current level of spending on the NHS is justified for political reasons alone, implying that there is no longer a substantial case for such expenditure.

Unlike the circuitous debate about whether the Coalition cut too fast too soon, there is real evidence all around us to reach a judgment on spending. Higher investment leads to improvements.

Of course it can lead to profligacy too, and inefficiencies must be addressed. But remember what living in England was like before 1997, when public spending was much lower than in other equivalent countries.

To take one tiny example, such was the rotten state of public transport in London, the National Theatre adopted a policy of asking audiences to leave more time for their journeys, as so many spectators were arriving late, struggling on unreliable tubes and buses.

It was an era when waiting lists for operations were obscenely high, trains were unreliable and pupils shared ancient textbooks because rundown schools could not afford new ones.

It should be a statement of the obvious that higher levels of investment, closer to the sums spent in other equivalent countries, made a significant difference.

The current, fashionable argument that the ringfencing of the NHS budget is too generous is especially perverse and parochial.

As a country we spend around the same, and in some cases less, than other EU members. The level is not uniquely lavish. We were unique when we spent so much less than others and then wondered why the service was not as good.

My friends who write columns arguing that good services can be delivered without spending much money do not apply this rule to their own lives. I note that they spend to improve their homes, holidays and cars.

But as Roy Jenkins once observed, we expect Scandinavian-style public services and US levels of taxation and spending. The current danger is that this is not only an expectation. There is now an assumption that both are possible.

In every publicly funded institution there is waste. Much can be done to get more “bang for our bucks” as Oliver Letwin likes to put it. But even if savings are made, there will be other demands.

Listen to Boris Johnson putting forward the case for more spending in London, where puny levels of expenditure lead to some of the highest fares in the world. Note the third world-style potholes on the roads.

Consider another obvious point: our ageing population will need more NHS provision and social care. Contemplate the global economy and wonder how we can make the most of new, growing markets, without the best training and education available.

I am sorry to make the unwelcome assertion, but these all cost money. If it is not found, the services will decline, and we will return to the third world squalor that foreign tourists noted and, to some extent, still do.

It is in this context of fantastical assumptions about public spending that I note with alarm the growing backlash against HS2, with Peter Mandelson the latest to declare that he has changed his mind, a highly significant intervention.

Mandelson is an admirer of Lord Adonis, the former Transport Secretary who framed the proposals for high-speed rail and who remains a passionate advocate. But, like others, he wonders whether the billions would be better spent on updating existing creaky lines.

It would not work like that if high-speed rail was dropped. The money would disappear rather than be re-allocated. There would be no transfer from one rail project to another.

Existing lines would get more overcrowded. Rail companies would propose to deal with the increasing demand by pricing people off trains rather than invest in more capacity.

The opposite would happen if high-speed rail goes ahead. This rare modernisation would galvanise other rail companies, Network Rail and Government to raise their game across the railways. The contrast between one rail project and the rest would be too marked if they did not do so.

There are many parallels with the Olympic Games. Yes, they were absurdly expensive, but the benefits made the investment worthwhile. Ken Livingstone once told me he supported the bid because he knew it was the only way to get money for regeneration in London.

A gimmick was required to justify spending, in this case a very big sporting gimmick, and in order to generate the political will for investment.

Unusually there was a similar will in relation to high-speed rail, with consensus across the parties in favour. This happens so rarely that, whatever the project’s flaws, it must go ahead because we will not see such consensus to invest again for a long time.

Mandelson argues that the decision to back high-speed rail was made rather superficially by the last government, endorsed partly to seem forward-looking in advance of the 2010 election, and because the Conservatives were supporting it.

These might have been factors in the minds of some cabinet ministers, but long before then Adonis had made it a condition of his taking the job as Transport Secretary that Gordon Brown would back high-speed rail.

Subsequently, Adonis worked so intensively on the project that by the election a parliamentary bill was ready for whichever party won. The preparation was far from superficial.

When we secured the Olympics, there was no getting out of the commitment. No such lock guarantees HS2. In the current climate I expect to read soon that we can modernize the railways without the need to spend any money.

The leaderships of all the main parties should keep their nerve and carry on with a rare act of costly ambition.