The Anaemic State

As Britain’s Coalition government struggles to suppress state spending, key institutions of state bear the brunt of cuts. At home, the NHS budget is ‘ring-fenced’, but budget challenges remain, whereas the Police cling firm to their priorities despite facing deeper cuts. Pivotal in promoting British interests abroad, two institutions, the Armed forces and the British Council, face drastic cuts and wide-reaching reforms. As these essential institutions embrace the challenges set, the risk remains that cuts and reforms may seriously damage our ability to project British influence abroad.

Having evolved from the ancient residue of power and politics in Britain, the unique character of our institutions has, for centuries, shaped our ability to influence the world.

Tasked with operating to remove a fiscal tumour growing at the nation’s heart, the government has embarked on a radical programme of reform. As ever, where cuts are concerned, politics dictates which departments are put to the knife.

When the anaesthetic wears off, will the vital organs of state recover from emergency surgery, or will the British body-politic reject the changes? Reform will either strengthen Britain’s ability to deliver in the new age, or it will emaciate it.

Uncertain auspices

In 2010 the newly-elected British Prime Minister heralded the annual Queen’s Speech as a “radical programme for a radical government.” However, neither David Cameron nor his partners in the anomalous Coalition government could claim a clear mandate for reform.

Beset with a meagre working-majority in the House of Commons, three years on from this statement of intent and the sheen of the government’s reforming zeal has dulled. Ravaged by Coalition cleavages and fractious Tory internecine, some flagship reforms have died a quiet death.

Yet despite this mid-term malaise, the Prime Minister has unleashed two forces which will irrevocably alter the fabric of governance in Britain: deep departmental budget cuts and institutional reorganisation. Not since 1945 has the twin-headed spectre of change loomed so large over our institutions.

A matter of priorities

Despite the government’s narrative of austerity, state spending is rising, just not as quickly as before. Government spending rose between 2010 and 2012 and, according to the Institute of Fiscal Studies, represented a real terms spending cut of only 1.58% after inflation.

Like predicting weather patterns, such forecasts are subject to unpredictable fluctuations in the economic climate. However, by 2017-18 the government will still need to borrow to meet its spending commitments, as public sector net debt is expected to rise to 84.8% of GDP.

If cuts seem deep, it’s because political judgement-calls prioritise some departmental budgets over others. At home, much has been made of Cameron’s decision to ‘ring-fence’ NHS spending, a central policy designed to detoxify a Conservative Party seen to have a bad reputation managing public services.

Prof. Martin McKee CBE is Professor of European Public Health at the London School of Hygiene and Tropical Medicine:

Although ministers constantly repeat the words that the NHS budget has been ring-fenced, they omit how there was a real cut in expenditure of £2.2 billion (3.5% of the budget). Consequently there has been a real cut in NHS spending at a time when we would expect demand for health care to increase, as is usual in a recession.”

Other domestic institutions, however, were not ‘protected’ by ring-fenced budgets. Chief Constable of Thames Valley Police Sara Thornton CBE QPM has tried hard to retain Police capabilities despite cuts, and has, “Largely succeeded [as] there has been no reduction in the number of officers in neighbourhood teams or on local patrol.”

It is clear, however, that institutions require a bottom line of funding in order to maintain essential capabilities. For Thames Valley, it is their neighbourhood policing capability. “You cannot underestimate the importance of local officers who know, and are known by, their community”, said Thornton.

Asked if the current fiscal environment provides the Police with opportunities to reform and improve, Thornton was unequivocal. “Yes.  We have introduced new ways of working, collaborated with Hampshire Constabulary to share specialist resources, delayed, reduced our estate and cut overtime working.”

Certainly, a reassuring response. But if even ring-fenced budgets are shrinking in real terms, two institutions, the Armed Forces and the British Council, have borne the brunt of the Coalition axe. The impact? Britain’s ability to influence abroad.

Hard Power

With a black-hole in the annual defence budget of £38 billion, the government plans to cut 20,000 full-time jobs by 2017. According to the 2010 Strategic Defence and Security Review, the purpose of reform is to make the Armed Forces ‘more flexible, adaptable and agile’, including the doubling of reservists to 30,000.

As Britain pulls out of Afghanistan, new commitments arise in Libya, Syria and Mali with alacrity. The profoundly uncomfortable question is, how can we ask our Armed Forces to respond to threats in an increasingly volatile world whilst we give them less?

Former commander of British forces in Afghanistan, Major General (retd) Andrew MacKay CBE, predicts that cuts will produce two “opposing versions” of Britain’s ability to project enduring force at range.

Despite promises to retain the “full panoply of force projection capability – new aircraft carriers, better aircraft, adaptable Brigades”, he pointed to, “the lengthy lag time of new carriers and their aircraft, the dramatic drawdown in the size of the Army and the likelihood of further cuts to the defence budget.”

Asked which version we will see, MacKay expects a third narrative of “muddling through” to emerge. “After all”, said MacKay, “it has been the strategy for Iraq and Afghanistan, so why change now? Only time and events will determine which version gains an ascendency.”

Soft power

Central to Britain’s ‘soft power’ in the spectrum of global influence, the British Council aims to “Create international opportunities for the people of the UK and other countries and build trust between them.” Director Communications Mark Herbert clearly identifies the challenges, stating that, “our grant is being reduced by 26% over the four years to 2015.”

The British Council has strived to embrace the opportunities too. In a bid to deliver, even improve, its range of cultural and educational programmes, the Council has become more entrepreneurial, working with international businesses such as Intel, Microsoft and HSBC. However, the fact remains that “the grant funding is absolutely critical for us.”

This is apparent in conflict-states such as Afghanistan, whose development is considered as vital to Britain’s national interest. Mark Herbert recognised the British Council’s need for such funds. He believes that, “our work to improve the education system and train teachers simply could not happen without the core grant funding.”

These institutions lie at the core of Britain’s aspirations to play a leading role in world affairs. Time and again, they’ve proved their resourcefulness – their unique ability to seize opportunities to improve and ‘muddle through’ against the odds.

Effective or Anaemic?

However, there’s no hiding the effects of cuts on Britain’s ability to influence the world around us. Surely, for a country still hoping to meet the challenges of the twenty-first century head-on, cuts to such institutions make the task that much harder.

It comes down to a matter of priorities. When times are good, spending usually grows in all departments, but when times are bad, difficult value judgements must be made about where and how deep to cut.

Politically, it may be easier for the Coalition to cut institutions which are often less in the public eye. Yet, their success is crucial both for the functioning of the state at home and in our ability to build and manage effective webs of influence abroad.

With the kaleidoscope of governance in Britain truly shaken, will the pieces, when they finally settle, leave institutions emboldened – able to provide more adaptable and cost-effective services – or immolated – starved of state funding and support?

The anaemic state.

Jonnie Beddall is a Master of Public Policy student in the inaugural cohort of the Blavatnik School of Government.

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