A triumph of hope over experience

The day the stock market goes into meltdown with its biggest one-day fall for years is not the best day for the Chancellor of the Exchequer to announce he is off on a spending spree. But while it obviously did not strike the right note, it was enlightening. It underlined the unreality of yesterday's events at the despatch box. For once, it was Gordon Brown, not the stock market, which appeared to be a visitor from another planet, operating in a parallel universe.

It was the normally so downto-earth Chancellor who painted a picture of a dreamy Shangri-la where there are no hospital waiting lists, no failing schools, no crumbling railways and, most of all, no wasted government spending

It was the fact that he clearly thought this dream world could be made to exist, in spite of the bitter experience of the past decades, which left the rest of us shaking our heads in disbelief.

This was a Chancellor who could say that 80 pence in every new pound spent would find its way to where it was needed, when only last month the Government's own statisticians revealed that in the first quarter of this year, almost two-thirds of extra government spending was being diverted into wage rises.

It cannot admit to such things because to do so would mean an ideological crunch. Previous Labour governments had three great visions - nationalisation of the commanding heights of the economy, a national health service and comprehensive education. Blair courageously ditched Clause Four and its commitment to state ownership, but neither he nor the rest of New Labour can bring themselves to admit that the rest of the ideological baggage is suspect, too.

Instead, Government ministers pretend that "bog standard comprehensives" and hospitals which are dangerous for a patient's health are isolated examples of a failure in what is otherwise the best of all possible worlds. They cannot see the bad as the inevitable consequence of an inflexible and unmanageable system which is almost by definition as unresponsive as a dinosaur to the changing world in which we live.

They cannot understand that the only reason the rest of the system has not yet collapsed is because of the herculean efforts of those working at the coal face to manage the unmanageable.

Yet, bizarrely, on another level Labour does admit just this when it links its promise of more money - the unprecedented billions of it - to reform. In so doing it is admitting that what we have now does not work, and fails to work not because of shortages of money, but because the system cannot sensibly spend what it has already.

Yet this brings us to the most surreal part of all that the Chancellor said yesterday. His solution to public-sector waste is to create public-sector inspectors. He proudly, yes proudly, announced yesterday a new model army of snooping accountants and auditors who will be there at the shoulder of every front-line manager in the public sector, be they in prison, in school or in hospital, assuming they can still tell the difference.

One of the odd things about this country is that we persist in the belief that we are relatively lowly taxed compared with other European countries but ignore the fact that most middle-class families with any spare cash spend it on private health care, a private pension and private school fees - taking on a huge personal burden because they cannot bear to contemplate the free, state alternative.

This is what American economic professor Robert Reich calls the politics of secession - the process by which those who can afford to, or, more accurately, those prepared to make the sacrifice, detach themselves step by step from state-run services and gradually lose confidence in the Government's ability to deliver improvement.

This is the constituency which was crying out yesterday for something from the Chancellor in which it could believe, so it could see some chance of relief from the financial burdens it has taken on itself.

But surely in Europe not since Stalin has anybody planned to spend so much money in such fine detail as Chancellor Brown did yesterday. The budget for the national health service alone is bigger than the budget of many smaller nations and the whole £500 billion spend is bigger than Canada's or the entire output of the African continent.

Today, after the collapse of the Soviet Union more than a decade ago, there are only a handful of communist countries left in the world, including such joyous states as North Korea, Cuba, Laos and Vietnam, and our public sector is bigger than all of them, too.

Even in these countries absolutely dedicated to the central planning art the system has been shown to fail abysmally. It is intrinsic to the system. People know better than planners what it is they need. Anything planned from the centre will be run more for the needs of the planners than for the needs of the customers.

Government really does not know best. All these vast sums are going to be targeted by ministers who have no experience of a life outside Parliament, unless it was as a lecturer in a polytechnic, with spending planned by civil servants who have never worked in business or understand how to manage one, and vetted by members of that very accountancy profession which has just failed to see what was happening at Enron and WorldCom.

No one outside Government believes in targets because they know the whole system will be subverted to deliver the quotas the planners demand. Why is it that Government cannot see this, too?

Yet the Chancellor thinks this time it will be different, and in pursuing that belief to the ultimate spending of £500 billion he has set the stage for what promises to be the world's most costly misdiagnosis. It is not that we do not want to share the dream of world-class public services. We do, as everyone does.

But every instinct and every jot of experience from here and around the world tells us that the way Labour plans to do it is more likely to end as a nightmare.