By Alex Callinicos
"CARRY ON Spending." That is how the left Labour weekly Tribune greeted Gordon Brown's public spending package last week. Alice Mahon MP summed up the welcome many Labour backbenchers also gave the package. "There's a bit of Old Labour in this," she told the Guardian. Meanwhile, Jack Straw took time off from persecuting refugees and increasing police powers to offer Tribune readers a bit of historical perspective. He compared Brown's boost to public spending with the grim record of past Labour governments forced by economic crisis to slash spending.
"Today," Straw declares, "we find ourselves in a different position because of the courageous decisions which Gordon Brown took while in opposition. The key was to hold to the Tories' spending plans for the first two years of office, and then allow spending to rise in the following years only by what the economy and the public finances would sensibly allow."
Straw is right to suggest that we should put what Brown has done in historical context, but he has chosen the wrong basis of comparison.
Forget about the Wilson and Callaghan governments. How well does New Labour's record match up to that of its Tory predecessors? Pretty poorly, suggests the veteran monetarist journalist Samuel Brittan in the Financial Times.
He highlights Treasury figures indicating just how savage Brown's spending squeeze has been. Total managed expenditure fell from 41.2 percent of national income during the last Tory year, 1996-7, to 37.7 percent in 1999-2000. "Even in the terminal year of the new spending review, 2003-4, it is expected to reach only 40.5 percent," Brittan continues.
"It will not only be lower than in the last Conservative year, but will be even further below the total reached in the early years of the John Major government, when it peaked at 44.1 percent."
So far from being a "give-away" or "bonanza", Brown's package will not be enough to bring public spending back to the share of national income it received under the Tories. Rather than, as Straw suggests, the key to New Labour's success, Brown's decision in January 1997 to adopt Tory Chancellor Kenneth Clarke's spending targets for the new government's first two years has proved to be its Achilles' heel.
Even some Blairites are beginning to recognise this. Philip Stephens, a journalist close to Downing Street, wrote last week in the Financial Times that adopting the Tory targets imposed "too tight a straitjacket on a party that had just won a crushing electoral victory. "Expectations of a transformation in the condition of the public services were allowed to run far ahead of reality. Much of the increased spending over the next few years will simply be repairing the damage of that early, self imposed, austerity."
The catastrophic effects of implementing a Tory spending squeeze can be seen everywhere in a blighted public sector. Most importantly, the austerity regime produced last winter's crisis in the National Health Service, fuelling public anger over an issue that was critical in bringing down the Tories.
It is here that the government's present crisis is to be found-in the fact that the main thrust of its economic policy has led not to better public services, but to their further deterioration. Of course, Blair and his advisers show no signs of comprehending this. To judge by the stream of leaks from Downing Street, they believe that apeing reactionary Tory attitudes on issues such as law and order and asylum seekers will do the job.
The New Labour clique's answer to the crisis in the NHS is not to spend more money on doctors and nurses, beds and equipment, but to privatise and to snoop.
The proposal leaked to last Sunday's Observer to introduce a so called "patients' champion" in every hospital to harass NHS staff illustrates this mindset.
It also highlights a key feature of Brown's approach. He is making government departments meet specific targets in order to get more funding. He told the House of Commons last week that "by locking in incentives, penalties, inspection and information we ensure new investment goes to frontline services".
So while Brown offers deregulation and the free market to private business, he imposes a quasi-Stalinist system of targets and inspection on the public sector. If the experience of schools and universities is anything to go by, the result will not be improved services, but demoralisation, cynicism, and management bullying.
Far, then, from being a watershed, or even marking a return to Old Labour "values", the spending package suggests that the government's crisis will continue.