Editorial Comment:
The Tories were elected in a landslide promising a radical overhaul of the way government works – and the coronavirus has shown why reform is needed, particularly given Whitehall’s hostility to the talents and resources of the private sector. Our system is outdated, inefficient; movement on vital projects is slow and costs run high. So it is very good news that this week the Government will dump decades of orthodoxy and import a Silicon Valley, venture capitalist-style approach via the most backwards and over-mighty department of all – the Treasury.
Stephen Barclay, the Chief Secretary to the Treasury, will announce that the Treasury will begin encouraging departments to embrace innovative schemes that deliver fast on the Government’s promises on infrastructure, roads and energy. Those departments will have to ensure efficient use of the taxpayers’ money: they must “rigorously agree outcomes” during the spending review, allowing ministers to be held accountable for their use of funds.
This strikes the right balance of innovation, accountability and agility: projects can be started quicker but, subject to review, can be dropped more rapidly if they’re not on track. It’s a dramatic change from the usual approach that either sees the public sector failing to get projects off the ground or else sinking money into slow-moving concerns that fail to deliver value for money, such as Labour’s failed attempt to computerise the NHS. Thanks to the pandemic, voters have seen what the country can do when it puts its mind to it – especially when public and private sectors work together – and there’s appetite to sweep away failed practices and get things moving.
Unfortunately, while Rishi Sunak and Boris Johnson have the right idea, the Treasury has quietly dredged up one very old and very bad proposal that betrays its ancient prejudices: the HMRC wants every business or self-employed person registered for VAT to switch to its dire Making Tax Digital System, which means (almost certainly) having to employ an accountant. The scheme will later be extended to everyone earning over £10,000 who files for self-assessment – a move that betrays the civil service’s paranoid fantasy that self-employment is some kind of tax dodge. Paradoxically, many will try to avoid this bureaucratic nightmare by working cash-in-hand, or simply cutting productivity.
If the Treasury intends to reform, that’s excellent – but it can start with itself, by dropping this hideous proposal.