Political independence for public services? Hogwash!

The Bank of England’s backflip from high interest rates and a focus on inflation to low interest rates and economic recovery was almost certainly a response to government pressure. That much heralded Independence-of-the-Bank-of-England, that we were told was so good for our economy, was compromised as soon as things began to get difficult.

Received wisdom over the last ten years said that the model was working. Many began to suggest that the same formula should be applied to other areas of public sector governance.

A senior economist at Goldman Sachs proposed that education should be managed by a similar independent body. Inevitably, the same solution was also prescribed for the NHS. I have spoken to a number of senior NHS managers over the past few years who advocated the removal of the NHS from direct government control to be run by a board of worthy experts along the same lines as the Monetary Policy Committee. Take away the politics and the whole thing will run much more effectively, they argued.

But, as with many fads, it was all pie-in-the-sky.

Did the independence of the Bank of England really deliver economic prosperity? Or was it perhaps the other way round? The Bank of England was allowed to remain independent for so long because the economy was growing and there wasn’t a problem. But as soon as things started to go wrong, the politicians stepped in again.

That was always going to happen. Politicians are accountable to the electorate and they get punished at the ballot box if the voters are unhappy. There is no way they are going to let a panel of experts get on with setting economic policy if they think their decisions might lose them an election. The same applies to education and the NHS. The very minute there was a crisis or scandal in schools or hospitals, the politicians would have to intervene. The voters expect them to.

The whole idea of public policy and public services being independent of government control is a pipe dream. Even the BBC barely manages it and recent events indicate that Auntie’s cherished independence isn’t all it seems.

Now that the economy has crashed and the Bank of England is back under the influence of politicians again, can we stop talking about independent groups of worthies being brought in to run things? How public services are run and how public money is spent are subject to political decisions. They always have been and they always will be.

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3 Responses to Political independence for public services? Hogwash!

  1. hovis says:

    Surely the independence was always illusory, unmasked with the the measure of inflation has House prices removed ?

  2. Rick says:

    Yes, I think you’re right. It looked as if the BoE was independent but that was because things appeared to be running smoothly. As soon as it became clear that things weren’t running smoothly, the government steamed back in.

  3. Rick – there are many long, detailed and historically proven studies to show that country’s with independent central bank’s do better economically than those with state controlled ones.

    The rest of your analysis is spot on.

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