Shadow Chancellor, John McDonnell, has been clear that Labour only supports state spending for a purpose, as the best means to an end. But we should go further. Tackling financial waste should be Labour’s key message, hammered home repeatedly. We need to hold the Tories to account when they’re wasting the people’s pay. I think we’d find all our other messages a lot easier to get out if we put ending waste first.
The state must provide housing. Its first duty to every citizen is security, in all senses, and housing is clearly part of that. But it’s estimated that this year we’ll spend £25bn on housing benefit. Much of that money is wasted on landlords who charge inflated rents because they know the state will pay. We need to control rents and get people out of the private rented sector, into their own homes. We also need to build more council housing.
For years when I was growing up, my family wouldn’t have had the bare necessities without working tax credits. My mum is a widow and she brought me up on her own; as a freelance TEFL teacher she wasn’t able to work all the time with a child. Tax credits helped us get by. But like housing benefit, the system has got bloated. A basic income could help here. I’m not sure it would need to be universal – I’d support a kind of negative income tax below a certain income point. Each child in a household under the limit would receive money like anyone else.
£3500 per household in 2014-15 (£93bn overall) went on corporate subsidies of various kinds; some of that money might be necessary for our economy, but I’d bet that a lot of it could be cut out by having a properly run public company perform the same job, and by properly auditing where taxpayers’ money is going. Companies like Capita and G4S, which seem to fail at everything we pay them to do, keep getting contracts. That’s waste.
£1.3 billion of tax payers’ money went on bringing in private consultants in 2014-15. Just 9% of that money went to small and medium enterprises (SMEs), and 43% of the consultancy contracts were awarded through “single tender action,” meaning the government agencies buying services didn’t even shop around for a better deal. Much of that is waste as well.
Tax handouts to the richest also cause waste – according to Andrew Harrop of the Fabians, under Conservative plans “households in the top fifth of the income distribution will be receiving an average of £9,400 a year in tax allowances and welfare payments” by 2020.
The NHS needs to start using its influence as a large and powerful buyer to negotiate the very best prices on every drug and treatment. It would help if the trust system were softened, streamlined or even abolished, allowing the whole of NHS England to bargain together. The current system wastes money.
There are too many layers of bureaucracy in our public services that don’t improve what the ordinary citizen gets out. Sadly, much of that expansion of middle management took place during the Blair government – and the public know it did. That’s a legacy Labour has to live with. These layers of ineffective public servants are paid with ordinary working class people’s money. That’s a betrayal of our people. Taxpayers rightly expect their money to have a concrete purpose and to benefit society.
We also need to examine our foreign aid budget much more closely, to make sure it’s getting to the right places and having an impact. In 2013, the Department for International Development gave £21.2 million to Bangladesh for road maintenance. It then found that less than 10% of the money had been spent on roads. According to Tanzanian journalist Erick Kabendera, when aid was given to build schools in his home country “the cost of each classroom would officially be put at £3500 or thereabouts, but it would be built with half the amount… going into the wrong people’s ever hungry pockets.” Corruption is endemic in many countries where foreign aid is most needed. We should be very careful that our money is going to the right places and to the people who need it, and not enriching officials or businessmen.
If socialists make the fight against waste our fight, then we can counteract the right-wing rhetoric that says all public spending is wasteful. We can show the difference between the kind of spending we’d do as a democratic socialist government and the kind of spending that previous governments have done. We can show that every penny we spend will be for a purpose and will be for the common good, and that our major investment programmes are the opposite of waste.