Politics

Public services will wither unless the UK makes hard tax choices


The writer is director of the Social Market Foundation think-tank

For more than a decade, the British state has been in retreat. This ragged withdrawal has been unplanned and inconsistent, felt most keenly in the poorest places and by people who lack loud voices. Until this Conservative leadership contest prompted echoes of Margaret Thatcher’s call to “roll back the frontiers of the state” among Liz Truss supporters, it has also been largely overlooked.

Local government services, often the area where cuts have the most impact on the ground, receive little attention from decision makers concentrated physically and intellectually in the well-resourced capital. Library closures and reduced bus timetables don’t dominate Prime Minister’s Questions or front pages. Even hungry children needed the celebrity campaigning of Marcus Rashford to be noticed.

Fresh revelations of inadequate policing might make the question of where to set the boundaries more salient. What does the public have a right, even minimally, to expect? The victims commissioner notes that serious crimes, such as rape, are rarely even prosecuted. Last week, the police inspectorate criticised burglaries and robberies routinely going unsolved. Fit a tracker to your car or cameras to your home and provide officers with actionable evidence and they might investigate. If not, case closed.

The starkest failing is fraud. Stealing money via cards, phones or the internet has in effect been decriminalised, so poorly is law enforcement equipped to respond. When money was taken from my account, the bank’s fraud team was startled when I suggested contacting the police: “People usually don’t bother.”

The next place where the retreat will be sounded is schools facing falling rolls and high energy bills. Here again, affluent areas suffer less, as parents can raise funds to make up the difference. But will even this prompt a debate about what can be left to private funds or charities? The self-sufficiency demanded of citizens when services are left to wither may sound like David Cameron’s “Big Society” but the retreating state is not ultimately down to the former prime minister and his austerity agenda. It’s the result of structural failings in the way we raise and spend money.

Local government finance isn’t just inadequate, it’s broken. Ludicrously, council tax is based on property values made in 1991 but no politician dares extract money from housing assets that have enjoyed decades of unearned growth.

And an unreformed health and care system expands inexorably to serve (increasingly badly) an ageing population. On current trends, health will absorb half of all day-to-day departmental spending, leaving every other part of the state fighting over what’s left. Without major change, the only result can be further fraying of state provision across the board.

The structural shortfall in public services arises from an awkward truth of British politics: we want to pay American taxes and expect European services. Truss’s champions splutter that the UK tax burden is the highest for 70 years. True, but Britons still pay significantly less tax than most of those Europeans who enjoy more generous services.

Few politicians even try to bridge the gap in our expectations on tax and services, much less confront voters about dissonant demands. They offer comforting stories of lower taxes and a better NHS — nothing on debt interest that will soon cost more than the health service.

Braver leaders would tell voters there is more revenue they can and should raise, especially from inflated property values. And that there is fat to trim, starting with universal giveaways that needlessly favour the fortunate. Bankers’ infants don’t need free school meals. Their grandparents don’t need winter fuel payments. These families would save even without tax relief.

Politics comes down to hard choices. Tax better and spend better. Or accept the further retreat of the British state, in ways that more voters will notice — and resent.



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