Politicians are in denial. The public finances – already facing meltdown – will need up to £80bn more to meet soaring care costs. No-one is facing up to what it means.
This, in brief, is the message from yet another doom-laden report on our post-recessionary future – this time from the 2020 Public Services Commission.
Chaired by former Audit Commission controller Sir Andrew Foster, this cross-party body has thrown down the gauntlet at an opportune time.
Ahead of next week’s Budget, and a likely May election, the political class does seem to have an increasingly shaky grasp on reality.
Big ticket spending promises – whether for high-speed rail (see cover feature) or free personal care – are being bandied about by ministers, alongside pledges to halve the deficit by 2013/14.
Chief Secretary to the Treasury Liam Byrne has partially retracted his read-my-lips claim that no new taxes will be needed. But the fact that he made it with a straight face is alarming.
Not that the Opposition is faring any better. Shadow business secretary Ken Clarke has had to soft-shoe shuffle away from his endorsement of the European Commission’s draconian line on the UK deficit.
But tax rises are anathema to the Conservatives, and they are no more willing than the government to spell out the spending cuts coming down the track.
All this displacement activity and dissembling is leaving the electorate in a conflicted state. The polls indicate that voters want ‘change’, but not austerity and cuts – especially in areas heavily dependent on public sector jobs and welfare benefits.
So what does this mean for the 2020 Commission’s Beyond Beveridge deal?
Co-payments for services, greater reliance on insurance models and raising the pension age are some of the familiar solutions on offer.
There is little evidence, though, of a public appetite for any of them – or for the ‘citizen-centred’ ideas floated by other think-tanks, such as making less use of GPs, hospitals and other services.
The challenges – on climate change, child poverty and long-term care – are beyond doubt. And the commission is right to say they cannot be fully met by traditional fiscal means. But why the collective silence on the tax side of the tax and spend equation?
Any serious analysis would show that the level of savings required cannot come from spending cuts alone without decimating public services. It’s good to talk. And sometimes, chancellor, it’s good to tax.
Judy Hirst is the deputy editor of Public Finance
Two comments on Judy Hirst’s leader article:-
I agree with the first bit that politicians are in denial and are just not facing up to the future financial burdens that will result from the health and social care needs of the elderly. Figures from the IMF show that the costs of the ageing population over the next 40 years vastly outweigh the impact of the financial crisis.
But I dont think we can just increase taxes. The tax burden on the UK population has continually been increasing under Labour and there must come a point (if we are not there yet) when the marginal tax rates become an inhibitor to effort and enterprise. The alternative to tax increases isn’t crude ‘spending cuts’ but a consideration of what services truly add value and what services can be delivered at lower cost due to innovative thinking and elimination of professional restrictive practices. Also we need to consider how public services should be paid for in future and the balance between tax and charges for services.