COLIN TALBOT A LURCH TOWARDS ‘CLIENTELISM’?
MINISTERS CAN’T USUALLY INTERVENE TO DETERMINE THE ALLOCATION OF FUNDS CONSTITUENCIES. ARE WE
Loser’s consent
This isn’t an irrelevant question because we have experience in recent history where many voters decided not to accept a decision about public money by a duly elected government. Many of the losers in the 1987 general election clearly did not consent to the Poll Tax.
The Poll Tax was a flat-rate tax per head to pay for local government, introduced by Margaret Thatcher’s government and implemented in 1989 in Scotland and 1990 in England and Wales. It led to widespread demonstrations, riots, and up to 30% of those eligible to pay refusing to do so in some areas.
The Poll Tax revolt was not normal – usually everyone goes along with tax changes, even when they don’t like them or the government that introduced them.
So how and why does this happen?
The answer is that in modern democracies, there is an array of what are usually called “checks and balances” to ensure the proper management of public money in the public interest.
These rules and institutions are there to stop politicians or public servants stealing public money – and to stop them from unfairly rewarding or punishing individuals, organisations or communities for purely political reasons. In other words, to stop the private (political) government of public money.
Getting and spending
Let’s start with the “getting” side of public money.
There are two main general rules that apply to taxation. The first is that all tax rules should be universal – that is, they
apply to everyone in the same way in the same circumstances.
The second is that tax administration is kept at arms-length from politicians. That is why in HMRC, and its forerunners the Inland Revenue and Customs & Excise, were always “non-ministerial” government departments. There is no politician in direct charge of them so they cannot interfere with individual taxation decisions – either to favour their friends or punish their enemies.
This separation is common across nearly all advanced democracies, and a lot of other countries too. And there are plenty of examples of the corruption that follows from not having this division in place.
Of course, politicians can still make tax policies that favour or penalise whole groups or classes of people or organisations, but those are public policy decisions subject to the usual democratic processes. On the “spending” side, the controls to prevent private political corruption are rather more complicated and diverse.
One of the biggest, and least discussed, is “formula funding” for public bodies. This is the idea that public funds are distributed to public bodies through some sort of formula used to decide who gets what.
In England some of the biggest areas of public spending flow through various public bodies in health and social care (£169bn), education (£83bn), local government (£24bn), and so on. Traditionally this has all been done through some sort of metric based on population, demography and economic criteria combined in a complex formula.
It’s also worth mentioning that a huge chunk of public spending – about £70bn – is decided by the Barnett Formula that is used to calculate how much money is allocated to the governments of Scotland, Wales and Northern Ireland. They control how much areas like health and education get, but this is in turn mostly allocated within policy areas by formula funding.
While politicians in government can, and often do, fiddle with these formulae to the benefit or loss of various areas and groups, they cannot usually intervene to determine the allocation of funds to, say, a particular town or constituency – any more than they could decide an individual’s tax liability.
What has changed in England recently – especially under the Johnson administration – is the growth in funds distributed through “competitions” that are subject to far less obvious criteria for “winning” and far more susceptible to political interference. As the Guardian has reported, mysteriously most of the funding was going to Tory-held areas – 39 of the first tranche of 45 towns – and the criteria that resulted in this outcome have remained opaque to say the least.
This is not entirely new; similar selective, as opposed to universal, schemes date back to the Major and Blair governments at least.
What is new is the size and, crucially, the political importance when so many MPs were elected on a “levelling up” promise – a promise they need to be seen to be fulfilling.
Moreover, the current government is extending the reach of this effectively discretionary funding into the devolved governments’ territories as part of what has been dubbed “muscular unionism” – asserting central government’s continued role in devolved areas.
For those who have read The Private Government of Public Money (1974) – an excellent analysis of the murky world of Whitehall decisionmaking about tax and spend by Hugh Heclo and Aaron Wildavsky – much of this will feel familiar.
Many of the secretive practices they identified nearly 50 years ago still exist. Britain has one of the least transparent and open budgetary and public finance systems in the democratic world.
Threatening to remove public funding from specific MPs’ constituencies was not only almost impossible in the past, except in a few exceptional ways and conditions. It was also not acceptable.
It would be a lurch in the direction of “clientelism” – a system where political support is rewarded or punished through the giving and withholding of public money or services.
Further evidence we may be moving in that direction comes from the so-called “VIP lane” for procurement of PPE during the pandemic. It was declared unlawful by the High Court and was a classic example of politicians finding a way to award public contracts to private friends.
The awarding of top jobs to politicians’ relatives and the outsourcing of NHS
Test and Trace to yet more private sector allies are yet to be fully scrutinised.
But if it is now becoming common practice in government to use public funds to reward or punish, we are entering a new, much darker, place.
“Britain has one of the least transparent budgetary and public finance systems in the democratic world”
Colin Talbot is emeritus professor of government at the University of Manchester and a research associate at the University of Cambridge