Hold the celebration

Author: Public Finance - Oct 8, 2009

We are all in this together’, shadow chancellor George Osborne informed delegates at the Conservative Party conference this week.

Well it doesn’t feel that way for those working in or for the public services. It might have been the bankers who got us into the current financial crisis, but it’s the public sector that will pay the price.

Osborne outlined the pain ahead if the Tories win next year’s general election. All non-military public servants earning over £18,000 face a pay freeze, Whitehall costs will be cut by a third and there will be restrictions on the salaries and pensions of higher earners.

The man most likely to be chancellor in eight months’ time painted a bleak picture; so bleak in fact that fellow shadow ministers were implored not to be photographed quaffing champagne or looking in any way pleased with themselves.

Osborne’s message might have been stark, but his savings were surprisingly small fry. He estimated £7bn a year or £23bn over a Parliament – not a huge amount given the £175bn that we are expected to borrow this financial year alone.

Bigger savings will be made by bringing forward plans to raise the state pension age. But these will not kick in until 2016, and the country’s debt problem is urgent.

As Malcolm Prowle points out in our main feature, ‘Weathering the storm’, this is much more than a cyclical downturn. The ageing population and concerns over energy shortages and climate change require radical solutions.

Prowle rightly calls for an end to ‘top-down command and control techniques’ via an empowered local government. This would enable Whitehall to harness the innovation and efficiency of town halls.

His approach has been supported by two influential think-tanks, Policy Exchange and Localis, which released a report at the Tory conference calling for a more radical devolution of power to local government.

Of course, the Conservatives do talk the talk on localism. Party leader David Cameron has previously pledged support for a power of general competence, saying that councils should be able to do ‘whatever they like, as long as it’s legal’.

But opposition parties almost always advocate localism; if elected, they rarely see it through. Shadow Cabinet Office minister Francis Maude admitted as much in Manchester this week.

Pledges are all fine and dandy. Only when they are acted on will the Tories – and local government – be entitled to crack open a bottle of bubbly.

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