POLITICS

Published: 25/07/2002, Volume II2, No. 5816 Page 19

Six days after chancellor Gordon Brown's latest comprehensive spending review, that clever young columnist, Matthew d'Ancona, noted in The Sunday Telegraph that the best slogan in the doomed Tory election campaign of 2001 might yet have a resonance for voters as they observe the impact of the review on cherished public services.

The slogan was, you may dimly recall, 'You paid the tax, so where's all the money gone?' It usually accompanied grim photos of teachers, nurses, police folk and harassed-looking citizens. An idea ahead of its time? Many of the post-comprehensive spending review commentary seemed to imply that it might be, some of it in sorrow, some in glee and The Economist with stern rectitude.

Thus the thoughtful Anatole Kaletsky in The Times: 'Can Labour Give Us Value for Money?

A Sense of Foreboding', and Hamish McRae, another shrewd-but-kind economic analyst in The Independent, whose article was headlined: 'In this bold experiment, the stick is as important as the carrot.'

Speaking for myself, I cannot remember such an important event producing such a feeling of anti-climax so quickly. True, most of it had been well trailed in advance and, as HSJ noted last week, health was not centre stage because the big moment was Budget day.

Perhaps it was because the world's major stock markets took such a beating on the same day - the day incidentally that Conservative health spokesman Dr Liam Fox was involved in a head-on crash with a motor cyclist who died of his injuries.

Health secretary Alan Milburn was sensitive to Dr Fox's shock when they sparred during health questions next day. There again, the spending review barely registered in the exchanges and the government was quickly engulfed with its trade union problems.

They have a bearing, of course, on Mr Kaletsky's forebodings. After years of trailing behind the private sector, public sector workers now see money in the kitty. Tory John Redwood was unkind enough to point out to the secretary of state that shorter hours for doctors seems to be reducing productivity.

On some estimates that half the extra£40bn for health in the coming years will go on pay catch-ups.

In the circumstances, Mr Milburn's rejoinder that 'we expect a 2 per cent increase each year in both efficiency and quality in the NHS as we expand it' was an inevitable tribute to the restless Mr Brown's zeal for public service agreements (PSAs) with every Whitehall department. In his own statement Mr Brown had repeatedly stressed reform and observed that 'a sustained commitment to better public services demands responsibility in setting public sector pay'.

Easier said than done. On Saturday I attended a left wing/union conference which felt unloved - and ungrateful to Gordon.

Horrid Tony hadn't even bothered to attend the Durham Miners Gala; he'd opened a shopping centre five miles away instead.

Mr Milburn is by nature an optimist and a booster. But it is worth noting that controlfreaky Gordon's PSAs have been sharply reduced again in shape and number, as the Tories said they would be. In return for an extra 7.3 per cent real-terms annual growth by 200708, the NHS must cut waiting times for ops to three months maximum.

Tricky, though not as tricky as cutting teen pregnancies by 50 per cent, as local authority PSAs must do. Therein lies the basic source of those forebodings, five bodings if you count the flagging stock market's impact on pension prospects and consumer confidence.

Mr Milburn is trying to unleash consumer power and choice as engines of NHS reform (just as The Economist wants), but public sector inflation is now 6.5 per cent - double the private sector, though only half the soaring cost of US Medicaid (which The Economist overlooks).

All sides agree that Gordon's friend Prudence means that Britain can afford these huge spending rises, at least for now. They may even help boost the economy just when they are needed. But if you need proof that Mr Brown will not let go, let me draw attention to weekend reports that he is blocking Mr Milburn's wish to give foundation hospitals freedom to borrow without Treasury approval.

Unblushing, my Treasury chum tells me this is true. It is called 'financial discipline', you know.