What kind of state do we have?

26 06 2009

As we are are trying to work out what our approach should be towards the state and public spending, I would heartily recommend James Heartfield’s new essay on the nature of the modern UK state. In it he examines the way in which the state has  weakened its control over key economic developments by contracting out key aspects of its economic decision-making and responsibilities to consultancies and private companies,often in dubious circumstances.

Yet while the state has contracted out these key public services it has also created a more intrusive system of regulation over society through intervention in public and family life. This is one of the key aspects of the state that many of you objected to in the discussion of public spending we can do without.

James Heartfield’s conclusion is, 

All the time the established boundary between ‘state’ and ‘civil society’, between ‘public goods and private benefits’, is being redrawn, or broken down altogether. What emerges is neither an enhanced private sector, nor coherent state provision, but rather a hybrid, dependent on public finances to survive, and increasingly operating according to a mixture of political, administrative and business models that makes little sense.

 In his essay he looks in detail at some of the ways that state intervention into the banks, the railways and the NHS amongst others has acted as an indirect subsidy to private industry. More analysis along these lines would help us to understand what it is about the modern state that we object to and what we can do without.

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What the state is for

22 06 2009

News that the Tories are planning to scrap a new government body aimed at fast-tracking planning decisions, such as for airports or roads, should be met with qualified approval. The creation of this body, The Infrastructure Planning Commission, by Labour was an attempt to bypass the need to politically convince people that large infrastructure projects are necessary.

As Frank Furedi argues, the state in the UK is failing to fulfil many of its key functions, the creation of a modern infrastructure being one of them. There are many things that are socially and economically necessary which private capital cannot or will not do. The creation of large scale infrastructure projects involves levels of investment, planning  and coordination which necessitate the involvement of and leadership by the state.

The dependence of the UK economy over the past ten years on financial services , which require little more than offices and telephones in order to function,  has allowed growth to take place without  basic infrastructure upgrades. The probable decline of financial services as a driver for the UK economy makes the infrastructure issue even more vital.

New Labour, despite having increased public spending in almost every area of the economy, has conspicuously failed to modernise the basic infrastructure of the UK.  Dieter Helm recently listed the main areas which require attention,

Major upgrades are needed to the electricity and gas networks, smart meters, high-speed trains, upgrading the London Underground, Crossrail, new runways, new water resources and sewerage systems, and broadband roll-out, …new power stations, energy efficiency and renewables

Many of these projects are controversial and politically sensitive, nuclear power probably being top of the list.

Rather than confront directly those who cannot see the big picture requirement for investment in infrastructure New Labour has resorted to inquiries and bureaucratic means of pushing things through. It has often abdicated the need for government leadership by handing the decision making process over to third parties in an attempt to seem neutral and objective.

There are many aspects of life that the state should not involve itself in, (see the comments on this blog for some good examples), but it has a major responsibility for keeping the traffic running and the lights on.

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