An economical plea for Reallocation

Last Thursday The Telegraph reported comments by David Blanchflower who warned about a ‘lost generation’ of workers, which will be attributed no less to George Osborne and his plans for deep cuts in the public services. He said that such plans ‘could force unemployment up from its current 2.5 million to four million over the coming years.’ Gone, also, are the days where Labour can say with a grin that the Tories are the party hell bent on slashing spending, for Brown, just days before Blanchflower suggested that any changes should be put off until at least 2012, himself accepted the “need” for cuts.

To my surprise Ed Balls was one of the first high profile names to put a figure to the amount of cuts in public spending. Balls, earlier this year, was lambasted for his insistence that we avoid spending cuts, why the U-turn? From my own experience with working in schools I learned something very interesting about allocation of funds, namely that a school is allocated so much to meet the needs of the children it accepts, for example children requiring special educational needs, that require increased funding. A school, in knowing that it will need increased funding for the next school term or year may perhaps keep quiet about the fact that it doesn’t need as much funding in the present term, in order to secure that increased funding for the next, often resulting in unnecessary spending, that is to say the obligation to make it look like the school needed that money (the school I worked in had twice as many televisions as it had classrooms, and with the new term bringing a child with severe special needs, spending seemed like the only guarantee to match that same money again).

This can be seen as a kind of microcosm for local and national spending in general, that the wrong things are being prioritised, and silence is a safeguard for a rainy day. But with swingeing cuts looming, rather than waste that money to ensure it is matched next time, another system should be sought. The system I propose is called reallocation, which in other words is the renegotiation of necessity in spending, rather than huge cuts, that also protects provisions where necessary. So for example if one service in the public sector has enough money leftover after necessities to, say, build a state-of-the-art sports centre or visitor centre, but another is struggling with plans to build adequate social housing, the choice should be there for the former service to reallocate that money to its counterpart, but still be entitled to receive that same money from local government the next year.

What’s good about the idea is that when local government allocates the different sectors its varying amounts, if one sector realises that it has been allocated too much, or to meet its target it must spend unnecessarily, that sector can opt to reallocate that money to another, perhaps less off sector, or at least a sector of more importance. What’s unique about the idea is that the sector itself is responsible for the reallocation, dialogue with local government would most definitely be promoted in order for further decision making at the top, but more options would be delegated to the public sphere, while the state sustains a position of financial overseer, in charge of maintaining the established standard for what is necessary spending, and what can be shelved for the common good.

Reallocation is partly inspired by, this infamous turn of phrase, left communitarianism, in that the local authority, with necessary input from renewed civic institutions, takes a large portion of control over the way it spends its money, with the state acting as the bastion of sensible spending.

Some naysayers will say that those in central and local government haven’t got it within them to dictate what is and what isn’t sensible spending (I wonder where such an opinion could’ve ever been formulated?). However that is not true always. Many influential politicians have signalled to what is for keeps and what is frivolous and can be shelved in a time of economic struggle. Some rather idealistic commentators have pointed to curbing excessive pay, extending inheritance taxes, and even getting rid of the Royal Family, the latter apparently making the saving of £185 million. Though I’d be happy to see some of these put into action, we don’t even have to get that radical (though, obviously, sometimes it helps). The Trident missile programme is priced at £16bn, ID cards luckily are as good as shelved, why before almost the entire political establishment is in favour of cuts isn’t the 50p top rate taxation not set in stone, why are top earners able to get tax relief on pensions.

There are those who are always going to say that taxing the rich like this is akin to punishment, but if measures like this are not taken, then it is the poor who suffer, and why should they be punished?

The basic premise of reallocation is to take from extravagant spending – usually, as with Trident, mandated at a more optimistic economic period – and not draw anything away from the public sector, who at once have done nothing to deserve it, but will bear most of the burden. Furthermore, it is a way of re-engaging civil society back into decision making over how local authorities should best spend their money, as well as bringing authorities together and sharing – not wasting – money in hard times, without jeopardising the way in which central and local government allocates money in future.

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