The unintended consequences of ring-fencing

It would seem reasonable to expect any government that was implementing a substantial restructuring of public services to do so only after a major in-depth review, asking fundamental questions about the economic and social priorities of the time. Yet, while today’s announcement of public spending plans for 2015-16 is another step in the biggest restructuring of the UK’s public sector since the 1940s, no such review has taken place.

The result is a somewhat arbitrary reallocation of resources - and not just between departments. Real spending on schools is protected while resources for early years and for Further Education are cut. Is there any evidence to show this is the best use of more limited resources for education? Not that I have seen. Benefits for pensioners (other than those living in warm countries) are protected while in-work benefits are cut. How does this square with the Coalition’s claim that ‘we are all in this together’? Not very well.

The ring-fencing of welfare benefits for older people and of departmental spending on health and schools and the salami-slicing of other areas of spending is based as much on political considerations as it is on a vision of what the public sector should look like. By the time the cuts have been fully implemented in the next parliament, the Coalition’s current approach means spending in areas other than health, schools and aid will have been cut in real terms by over one-third, and in some cases by as much as a half.

This represents a massive reallocation of government spending. It should not be emerging almost incidentally as a by-product of massive spending cuts and government promises made at a time when the full extent of these spending cuts was not appreciated. But this is exactly what is happening.