Ring Fence Me In

Nick Clegg’s announcement this morning that over the next four years £7 billion is going to be spent on improving the education of England’s poorest children through nursery school and university, is clearly a ‘good thing’, however cynically timed to reduce the embarrassment over his u-turn on tuition fees. What bothers me is whether this is a well thought through measure or something that has been pulled out of a hat for the sake of political expediency.

Ad hoc spending announcements that sound good worry me. They smack of PR not public interest. They just add to the opaque mess of revenue allocation.

From time immemorial, all tax revenues have been put into a large pot and then allocated to ‘spending departments’. This is a straight forward and simple system, but it lacks accountability and transparency, particularly in key areas such as health, defence, education and law and order.

The missing ingredient in the whole process is a clear mechanism for public preferences to be brought to bear on the political process. You might argue that it is the role of our elected representatives to take note of our opinions, but as we all know this process is distorted by many things: party interests, the whipping process, lobbying, and the unfortunate disconnect with the electorate which the institution of Parliament imposes on its members.

In order for there to be accountability and transparency, and for the tax consequences of public service demands to be fully understood, we need to take a fresh look at hypothecated tax, or ring fencing tax.

Isn’t it better that we know how much of the tax we pay goes on health, for example? Seeing on our pay slips how much we are paying for health would surely focus our minds on the efficiency of the service and encourage a responsible attitude to what we demanded from it – as well as influencing our behaviour as far as our own health is concerned?

Whatever any government may say, its priorities do not always match those of the electorate. The overriding priority is to stay in office and get re-elected. We get to voice our approval or discontent once every five years, and then we are effectively ignored. It is a sad fact that, as an electorate, we have become powerless bystanders.

Hypothecated tax would help connect us to the consequences of our demands and the efficiency of the system. It would inform us, involve us, and ensure that our preferences are continually brought to bear on the political process. Politicians wouldn’t like it, but is it about them or about us?  Time for a re-think on tax?

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