Why we need public service reform

Hamish McRae, whose coverage of the crash has been prescient and authoritative, sets out the key question that comes out of the state of the public finances in his column today:

“We have had over the past decade the largest increase in public spending that has ever taken place in peacetime. It is also the largest increase that has occurred, proportionate to GDP, of any major economy during that period. So we have in effect been carrying out a huge experiment: to what extent can you improve public services by spending much more money on them. (The tax take, by contrast, has actually declined as a proportion of GDP.) I think most of us now recognise that this experiment has failed. You can have a debate as to whether public investment had been squeezed too hard in the middle 1990s and during the first two years of the Labour government.