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Financial complexity can prove a 'useful distraction'

Tony Travers
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The destruction by fire last weekend of part of Didcot power station has raised the question of whether Britain can get through the coming winter without power cuts.

The clocks go back on Sunday as a timely reminder of the final end of long, warm, days. If there were to be a protracted cold snap, evidence suggests the National Grid would be at the very edge of its capacity to keep all the lights on.

But it is hard for the public to be sure. Ministers, inevitably, sound optimistic. They and their predecessors have been responsible for energy policy. They cannot suddenly let us know that successive governments have failed to ensure that the electricity supply, in particular, is resilient to the not-so-unlikely risk of a freezing winter coinciding with another challenge such as an interruption of gas from Eastern Europe.

But the country’s limited energy capacity is only one of a number of policy spheres where the complexity of the issue makes public comprehension difficult. 

Strange as it may sound, it is not particularly easy to measure total local government spending in, say, England. Figures produced by the Treasury are unhelpful as they generally consider Whitehall departments’ spending. In so far as there are local government expenditure analyses, they are no more than aggregations of income streams. 

Moreover, annual local authority revenue spending figures are beset by reclassification issues. Academies are transferring out of council budgets, while public health has moved in. 

Further education has been classified as being within the public sector and then the private sector. Council tax benefit reform and business rate retention further affected consistency from year to year. The better care fund resources are double-counted in both the NHS and local government expenditure.

None of this would matter if politicians could be relied on to make consistently rational and far-sighted decisions. The near-impossibility of understanding what is happening creates the political space within which ministers can avoid spelling out the consequences of their actions or inaction. 

When the public cannot reasonably know the facts, political pressure to take action will be muted. Of course, if the lights were to go out, we would immediately understand the defects of energy policy in Britain.      

Tony Travers, director, Greater London Group, London School of Economics

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