We're a long way from a mature debate on public spending. Gordon Brown seems to have convinced himself that electoral time has frozen, flat-footedly insisting that our choice remains between a Labour party that will spend on public services and a Conservative party that will cut them. The Tories have easily parried this tired attack. In fact, they have used it rather deftly to position themselves as a serious government-in-waiting capable and ready to take the hard decisions. David Cameron repeatedly promises to look voters in the eye and cut spending.
But his look is still pretty shifty. Since Andrew Lansley was a bit too honest for his leader's taste in suggesting that most departments could face spending cuts as deep as 10%, Cameron has advanced proposals that are belied by the sheer enormity of the £175bn the government expects to borrow this year. Most recently he has suggested reducing the size of parliament, appointing fewer ministers and axing the pay of senior civil servants. Andrew Marr, his interlocutor, must have struggled to contain himself at this radicalism.
As Allegra Stratton recently reported, there are a number of sacred cows blocking the road back to solvency, of which health spending is perhaps the most prominent. Both Labour and the Tories have pledged to maintain real-term growth in the NHS. To finance it, tax rises or deep spending cuts elsewhere will be required, no matter who is in power and no matter how much they insist otherwise. Last year we spent £110bn on health, over one-sixth of total managed expenditure. A "plan" for improving the public finances that excludes health (never mind education) is no plan at all.
Nor should healthcare be excluded from scrutiny. After all, the causal link between greater healthcare spending and better health is poor. The US healthcare system accounts for 15% of economic output; we spend a comparatively frugal 9%. But healthy life expectancy is worse in the US, as are other outcomes. This suggests that the way money is spent makes a difference and that there are real opportunity costs to dogmatically preferring health spending over other public services or priorities.
Indeed, a period of constrained expenditure may be no bad thing. One interesting inference to be drawn from the American debate is that policy-makers find it easier to reform systemically and radically when they don't have money to throw around. A similarly trenchant approach here might, for instance, conclude that we should not be spending over half of the NHS's budget on hospitals, which are remedial by nature, and poor at managing the most expensive diseases. It might note that we have a system of health delivery centred on fixed assets and institutions appropriate for last century's diseases, not this one's.
Politically, both parties feel hemmed in. The Tories fear ceding ground for attack, as the Lansley episode demonstrates. Labour feels obliged to stick by Brown's obsolete dividing line between spending and cuts, even as this drives Labour further from electoral credibility. The government needs to gather its courage and use the ineluctable constraints on public spending as an opportunity to reconstruct an argument for public sector reforms. This is a meaningful alternative to the slash-and-burn cuts we all want to avoid.