A commission to write up a fantasy Budget in Britain today feels like an invitation to drink from a poisoned chalice. Much that we know about our world and its economy, society and democracy is under the pressure of change. We need to deliver results for more people and more quickly, or the authoritarian extremism we have seen across the pond in America will be visited on us. The only way to respond in this article is to lean on the ‘dream' part of the request: to imagine a better future.
So I'm taking it as read that when the chancellor gives her Autumn Statement this month, she will rebase the national finances, putting in place the tax rises needed to pay for the services the British electorate demand to be provided and to do so with minimum economic damage. Likewise, that she will start the process of tackling how we raise money locally with a plan to reform and revalue council tax as well as enabling the state to capture some of the almost untold wealth it creates through development but which is currently enjoyed as windfall gains by landowners.
The path to both of these reforms is difficult but no less necessary for that.
It's time to put the weight of experimentation on the Mayoral Strategic Authorities (MSAs), and their constituent members, that the Government has laboured over recent years to create.
But beyond fiscal realism, what really limits Britain's progress is how we make policy itself. My fantasy, and one shared by my colleagues at Metro Dynamics, is that we get much more serious about how we do policy in this country. The Nobel Prize winners in economics this year make the argument that what drives growth is innovation. They also argue decentralisation has a key role to play. Enabling competition, exit, and policy experimentation tends to be good for innovation and therefore growth (and by implication, public service reform). We need a system that encourages innovation without stifling those who experiment with new ways to solve old problems – especially locally, before they escalate nationally or globally. This is, of course, the opposite of how our system of Government works. It is time to change that.
It's time to put the weight of experimentation on the Mayoral Strategic Authorities (MSAs), and their constituent members, that the Government has laboured over recent years to create.
Chris Giles argued in The FT last month, there is ‘no need for a moral panic about the welfare system'. He is right. But he would also have been right had he argued there is insufficient incentive on Whitehall to bring the welfare bill down, and national reform is very difficult indeed. So it is time to let the most developed MSAs have a go at welfare to work with an incentive to cash in on the savings. The same is true on skills where Whitehall still calls the shots on a system whose power it hoards despite its manifest failure. In innovation, the Department of Science, Innovation and Technology has again kept its hands on the levers of innovation through the Local Innovation Partnerships Fund with a budget other advanced democracies would view as laughable. We are making baby steps instead of step changes. Why? Britain needs more workers, better skills and in innovation, Britain remains a pro bono lab for the world with a near stagnant science economy.
I don't know a single mayor who wouldn't want to play a bigger role in these areas. But I can almost hear a collective gasp at the idea of managing the downside risk. What's the alternative? My fantasy Budget is to plan for the big stuff nationally and cut local leaders into the work of innovating better solutions to some of our knotty issues in the meantime. Local leaders might just help us understand how better to run our national programmes.
Mike Emmerich is founding director of Metrodynamics
