Comment: The tyranny of the spending review

Make no mistake: this is an ideological battle to cut the heart from Britain's public services.

By Ian Dunt

I know these cuts are ideological. I figured it out. I didn't have to research, or meet up with contacts or use subterfuge. They're all overrated anyway. I just sat down for David Cameron's 2009 conference speech and had a little listen.

"Here is the big argument in British politics today, put plainly and simply," he said. "Labour say that to solve the country's problems, we need more government. Don't they see? It is more government that got us into this mess. Why is our society broken? Because government got too big, did too much and undermined responsibility. Why are our politics broken? Because government got too big, promised too much and pretended it had all the answers."

It is, of course, hysterical nonsense. Unfortunately, the shadow chancellor is too weak- willed to call it out. He has dallied around the accusation of ideology for 48 hours now, constantly backing down from properly making it, even when it's staring him in the face. We are seeing the latest attempt by the advocates of the free market to desecrate Britain's public services.

The equation is: public bad, private good. You can see it in the rhetoric. How much have we heard of excessive housing benefits this week? On the Today programme yesterday, George Osborne could barely contain himself. "£70,000 a year," he kept shouting, like some appalling toy being wound up by a child. Government spokespeople, from Jeremy Hunt to Grant Shapps, react identically on management salaries at the BBC or local authority bosses. I don't disagree with a word of it, but it's worth noting that they take the uppermost number in each category and then parrot it, as if all public sector workers were paid so well - as if all benefit recipients were so lucky.

Tough times mean something altogether more manageable for the banking sector. The much-trumpeted bank levy revealed in its draft form on Thursday was almost laughable. Taking, with a straight face, IMF suggestions as its guide, the Treasury aimed to extract £2.5 billion in annual revenues by 2012/13. Even this move, paltry and insignificant as it was, prompted complaint from the usual suspects - the wise old analysts traditionally invited onto the news networks. They did not mention the £19 billion of tax losses the banks made in 2007-09, which they then offset against the bailout we had to subsidise. I can handle big companies offsetting tax losses against future profits, but when banks do that against a bailout you have to call it what it is: a bailout on a bailout.

The signs are everywhere. The corporation tax cut is designed to spark up the private sector again. Lucky them. They're the only people getting tax cuts right now - the very people who need it least. Whatever happens, the private sector wins. In boom times, we are told to deregulate so it can keep thriving. When it creates a financial crisis, we must reduce the taxes on it, so it can recover.

The government's much hyped 'bonfire of the quangos' contained some important nuggets. One quango left untouched was the Commonwealth Development Corporation, the subject of years of Private Eye scoops, many of which concerned the extraordinary sums it pays its chief executive. That's OK though, because its mission is based on funding corporate projects. It is just a precursor for what the Foreign Office will become: a pressure group for British business interests overseas.

Everywhere you look, the signs of ideology emerge. Asked about the eye-watering 490,000 redundancies forecast by the spending review, the government was quick to point out that these wouldn't all involve letting people go. Instead, many jobs would simply not be re-filled. What if the job actually needs to done? Apparently this hadn't occurred to anyone. The public sector must, by definition, be useless, mustn't it? After all, it is referred to as if it is a social and economic parasite.

That's the grand illusion. Usually, it is the public sector which actually gives pride and warmth to this country. It's not just about frontline staff - nurses, teachers and police - the people who Cameron promised not to sack before the election only to suddenly change his mind. They remain, it almost goes without saying, the proper heroes of any civilised society. But the effect of the public sector is also about the small things, the things which you wouldn't notice.

Take Consumer Focus, which had statutory powers to investigate consumer complaints of a wider interest. It was scrapped, and its power handed to the Consumers Association and Citizens' Advice Bureau, neither of which have its powers.

Take the Audit Commission, which audits the £200 billion spent by 11,000 local public bodies. Those functions will now be transferred to the private sector and councils allowed to appoint their own external auditors. That's fine, of course, because the private sector is so much more efficient, isn't it? Not really. The big four accountancy firms were roundly criticised a month ago by the Financial Reporting Council's Professional Oversight Board, which said they needed to improve ethical standards and stem the lack of "professional scepticism in relation to key audit judgements" which came from the constant commercial pressure of chasing lucrative non-audit revenues.

Take the Government Offices for the Regions, which brings together the work of different government departments with the regions, passing on best practise, particularly in relation to child protection. Eric Pickles, local government secretary, shamefully saw fit to brand it - and therefore his own employees - "agents of Whitehall to interfere in localities". Those of us who fought Labour's nasty police-state tendencies don't enjoy watching our new masters use the rhetoric of civil liberties to justify their actions. He doesn't even understand what his own staff do. Its functions will still have to continue, by necessity. In all probability this move will cost more than it saves.

Take Becta, which advises schools on bulk-buying equipment. It was exactly the type of things Sir Phillip Green suggested in his recent review into efficiency. Union reps I spoke to told me Michael Gove's department didn't have any idea how they were going to redistribute its functions. They didn't even really know what it did. It had to go. Public sector, you see. Can't do any good. That decision was trailed to the press, so its Coventry staff suffered the humiliation of discovering their jobs were on the line by reading a newspaper.

It is ideological. They couldn't have made it any clearer, through their words or their actions. And the worst part is: they're wrong. The private sector is no more efficient than the public sector. Their suitability depends entirely on function. The private sector provides diversity. The quest for profit gives us interesting T-shirts and restaurants, and tends to kill off those which aren't popular. But it is only suitable for where diversity is an end in itself, in the realm of human desire. It is morally unfit to satisfy human need, things like health, education, consumer rights or, well, the purchasing of school equipment. In these areas - the exact kinds of areas being torn down by the government - the private sector performs much worse than the public sector, because the profit motive, which is so effective at catering for diversity, tends to distort singular goals. This is why no-one liked Blair's rhetoric on public service 'choice'. No-one wants a choice for a hernia operation or their child's maths classes. They just want it done right.

One such goal, an uncontroversial one, would be the free provision of antiretroviral drugs to those suffering from HIV. This is not possible, because the pharmaceutical companies, the third largest sector in Britain, refuse to offer the drugs off-licence, at a price poor countries' governments can afford. They kill millions. Make this point and you will be told that without the money from patents, they would not be able to put the funding into research and development.

This is the kind of babbling nonsense with which neo-liberals try to brand its critics as economically illiterate. Actually, pharmaceutical companies barely put any of their money into research. In the US, the sector spends 14% on research and development, compared to 31% on marketing and administration. Most of the research that does happen is towards making a drug just different enough from an already-existing one to justify a new patent. When they do throw resources at something, it goes toward what is most profitable - usually hair loss and premature ejaculation - rather than life-saving drugs for conditions which blight developing countries. The poor can't afford to pay, you see, so the drugs never get developed. The profit motive twists everything.

Make these points and you may find yourself spoken to in that patronising tone the neo-liberals reserve for those who challenge their dogma. But there can be nothing more economically illiterate than George Osborne's opening statement in his announcement on Wednesday - comparing a nation to a credit card. It's rule number one of economics. Alan Johnson, having now started his economics primer, will have already covered it. If public and government demand drop at the same time, you're in big trouble. Basic stuff. The chancellor doesn't understand it, and neither do most right-wing commentators.

"I am not a complicated person," Cameron told his party in that 2009 conference speech.

"I love this country and the things it stands for. That the state is your servant, never your master."

I couldn't agree more. Cameron and Clegg saved us from Labour's mad, authoritarian dreams - dreams that threatened to turn this country into something wretched, barren and fascistic. They stopped the state becoming our master. But if they keep on going like this, it won't be our servant either. It'll be us, alone, in the brutal jungle that is the free market, where only the strong survive.

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