Many names have been proposed for our pathology: Thatcherism, Reaganism, austerity, Trussonomics. But they are all synonyms for the same ideology, a doctrine that virtually no one in public life can call themselves: neoliberalism. It has dominated decision-making in Britain for 44 years. One result is that the cumulative underfunding of public services is now approaching crisis point, potentially threatening state failure. Wednesday’s autumn statement will do nothing about this.
Every week we see another neglected problem emerge: collapsing classrooms, crumbling flood defenses, failing high-rises, overwhelmed hospitals, understaffed social services, gushing sewers, deadly housing. What would it cost to right the country, restore general prosperity and a functioning state?
This article is a preliminary attempt to tally up the deficits and provide an overview of what Britain would need to spend in twenty years’ time to create a viable, safe and inclusive public sphere. Some of the following figures apply only to England, others apply to the whole of the UK, so more work is needed to solve them correctly. I hope others will improve it.
Some estimates are well-founded. The NHS funding gap – the cumulative difference between the 4% annual increase that a modern healthcare system needs to cope with an aging population and technological change, and what it has received since 2010 – is £200 billion. The current annual increase is 0.1%. Restoring the right funding increase would start at £7 billion per year, while tackling the historic deficit would amount to a further £10 billion per year.
The government estimates the price of a modern sewerage system in England alone at £350-£600 billion. Of course she doesn’t propose anything like that. Currently, privatized water companies are spending just £1.4 billion a year to get their act together.
We also need a major overhaul of water supplies. The water companies say they will spend a total of £96 billion between 2025 and 2030 (believe it when you see it), but at the current rate of repairs they will replace our leaky pipes in just 2,000 years. Since privatization, hardly any new reservoir capacity has been put into use. Fixing the water network may cost an additional £100 billion, but in the absence of useful industry figures this can only be a guess. With the lower estimate for sewer replacement, we can expect an additional £22 billion in annual expenditure over 20 years.
The government could save some money on flood control by investing in natural flood management, but there is little doubt that the budget will need to rise faster than rising seas and rivers, from the current £5.2 billion over a period of six years. Floods are one of 34 climate risks listed as ‘requiring urgent attention’ by the government’s Climate Change Committee. But addressing our climate shortcomings may not require an across-the-board budget increase because so much money is being wasted right now. For example, if the government spent £8 billion on making 3 million homes more energy efficient, it would save a large chunk of the £78 billion used over two years to subsidize our energy bills. But out of respect for the fossil fuel industry, the country refuses to invest.
In 2019, Shelter calculated that building the 3.1 million social homes needed to meet housing demand would cost a gross £10.7 billion per year. As this would save money on housing benefit and generate tax, the estimated net cost over twenty years would be £3.8 billion per year. .
In 2021, a construction industry estimate suggested that the actual cost of removing flammable cladding from residential blocks would be £50 billion. But the government has only budgeted £5 billion. The inability to resolve structural defects in 575 major panel tower blocks has also been evident in the evacuation of Barton House in Bristol after it was deemed unsound. Enfield council in London estimated that refurbishing two such blocks would cost £53 million. If this is average, we are looking at £15 billion. Set aside £3 billion a year to tackle these two crises.
Labour’s Building Schools for the Future programme, which the Conservatives scrapped in 2010, peaked at £8 billion a year. The repair bill alone was estimated at £11 billion in 2021. That was before the inflation of construction costs, the aerated concrete scandal and the discovery that 700,000 students now study in dilapidated buildings. Current total expenditure is £1.8 billion per year. Restoring the old funding formula and clearing the backlog could cost £10 billion annually.
Other public buildings are in a similar condition. If Parliament were to use the cheapest option alone, the renovation would cost £7 billion to £13 billion. Across the whole of government, we would be happy to see an additional repair and upgrade bill of less than £2 billion a year, perhaps much more – I can’t find total figures.
So much public money is wasted on transportation that a modern, efficient network would cost far less than our outdated, failing version. The government has set aside £27.4 billion for road construction and improvements until 2025. By comparison, electrifying every kilometer of track would cost around £15 billion in total. Subtract from that a saving of £5 billion per year once the road building programs are scrapped.
Shortcomings in social security ruin the lives of millions of people. The £20 universal credit increase cost £9 billion over 18 months. Its restoration would require £6 billion a year. I don’t yet have a single figure for the total benefits lost by disabled people, but it is unlikely that this will be less than £2 billion per year.
Local authorities face an annual deficit of £3.5 billion. There is a huge backlog in central government processing everything from asylum applications to probate. Supervision of fraud and other white-collar crime has virtually disappeared. Throw in another £2 billion a year.
Although this catalog is not comprehensive, it amounts to a conservative £65 billion per year. This is roughly the difference between persistent, predatory chaos and a functional, inclusive country. Once things like the shortfalls in NHS funding to devolved parliaments are added and errors in my estimates are corrected, this could increase. We could be looking at £100 billion.
Anyway, it’s a lot of money, but is it impossible? No. The current budget is £1.2 trillion. During the bank bailout, the government issued £124 billion in loans and share purchases. In two years, the country has spent between £310 billion and £410 billion on the pandemic. Tens of billions were wasted on corrupt contracts, fraudulent aid claims and failures such as Nightingale hospitals and test and trace services. The fact that this spending did not cause an economic crisis (although some elements were inflationary) is a partial vindication of Modern Monetary Theory, which holds that the government does not need to raise all the money it spends. And £100 billion will cost far less than a state bankruptcy.
The obstacles are not economic, but political. We need a government that wants to improve our lives instead of saving an abstraction called money. Throughout the neoliberal era, the people have served money. Let the money serve the people.