Steve Richards: It's time people knew how their money was being spent

Is it possible that we are moving on from the silliest pre-election public spending debate in modern times to one that is more modest in its silliness? For a while we had, on the one hand, Gordon Brown promising to increase investment for years while magically balancing the battered books and, on the other, David Cameron proclaiming the need to cut, but in ways that would improve hospitals, schools, transport, build more prisons and increase resources for the army.

Now the silly debate moves in a slightly more sensible direction. Cameron managed to elicit a more candid answer from Brown on his expenditure plans at Prime Minister's Question Time on Wednesday. The week before Brown had given the impression that under Labour it would be "spend, spend, spend" before, during and after the Olympics. Last Wednesday he was a little more circumspect, having been advised by a range of despairing ministers that while dividing lines are important they require a whiff of credibility.

There was good cause for his circumspection. Irrespective of the near meaningless projected sums being thrown back and forth across the Commons despatch box, senior ministers have made it clear in public that a period of painful belt tightening is around the corner. They contradict openly Brown's upbeat declaration.

The Chancellor, Alistair Darling, could not have been plainer in his Pre-Budget Report last December, not exactly an event held in secret. The PBR was an underestimated pivotal moment. Politically it was a disaster for the government, but the substance was fairly impressive. Darling's main theme was that the government planned to return to balanced budgets through a combination of tax rises and a series of tough public spending rounds. In the frenzied build-up to the PBR the main source of tension between Brown and Darling was the latter's insistence on a prudent narrative, partly in order to reassure the markets that at least he had some plans to pay back the borrowing.

In his statement Darling stated explicitly that the books would be balanced by 2015. He got a laugh for doing so, although it was not clear whether Tory MPs were laughing because the date was ridiculously optimistic or so far away that we would all be doomed well before then. Anyway Darling's theme was emphatically not one in which voters could look forward to increased spending for years to come.

A few days later an array of opinion polls gave the Conservatives a double-point lead. There had been no ministerial groundwork to prepare voters for the bleak news. The PBR was the moment when they turned away from Labour after a tentative flirtation, but the actual proposals charted a faintly credible route away from indebtedness. Or as the new Chief Secretary to the Treasury, Liam Byrne, put it as he tried desperately to explain the actual figures rather than Brown's fantasy ones, "We have built the schools and hospitals so we don't have to spend money building them again". In other words prepare for cuts. Byrne has not given interviews since, but perhaps he will be back now that Brown moves a little closer to candour.

There are important differences between the two sides. The Conservatives would have started cutting last year, and this is not a course even recommended by the Governor of the Bank of England, Mervyn King, the unlikely vandal who spends most of his time in hobnail boots kicking away at the government. The Conservatives would also cut more quickly and deeply than Labour in the coming years, a move that would meet the approval of the Governor. But how or in what form would they do so? And how would a Labour government adapt to a more stringent climate now that it is almost daring to admit that there is one?

In a speech yesterday Cameron gave a partial answer. The Conservative leader and his shadow Chancellor, George Osborne, are on to something in recognising that much clearer lines of accountability are one way of addressing the inefficiencies of the public sector. He pointed out that information could lead to a more robust link between user and provider: "There are over 100,000 public bodies producing a huge amount of information. ... And what is published is mostly released in formats that mean the information can't be searched or used with other applications, like online maps. This stands in the way of accountability."

Cameron cited the example of adverts for public sector jobs being placed in a few newspapers making it almost impossible to find out how many vacancies there are in total, what level of salaries are being offered, how these vary from body to body and whether functions are being duplicated. This might sound like an echo from the Taxpayers' Alliance, but it also happens to be true. Those of us who believe that public investment is the key to a decent quality of life must be as stringent in calling for every penny to be spent efficiently as groups that regard public spending as sinful.

More specifically I am pro-BBC in the sense that there is an overwhelming case for a publicly funded broadcaster. But I do not see any case for one which apparently needs more than one hundred "senior managers". Yesterday it responded to the new culture of transparency by publishing the expenses of its senior executives. The salaries of its one hundred "senior managers" will follow. This will make some of those in relatively cosseted jobs think about their expenses and will lead to fewer overpaid managers.

The public will not tolerate the extravagance when they know more. But it will take time. The BBC published the bonuses of senior managers for years. The bonuses continued to be paid in spite of the anger that arose from the transparency. Senior employees who have become institutionalised can rationalise external criticism as being unjust and carry on taking the cash. There are limits to what transparency alone can achieve.

In the end the debate about public spending involves "tough choices" – to revive a phase deployed by Blair and Brown when the economic boom allowed them easy options. So far the political focus is – conveniently – on process, the need for transparency, the possibility of emergency cabinets if the Conservatives are elected, the strategic doubts in the cabinet.

Whoever wins the next election should open the whole process up and debate public spending priorities more openly. Tony Blair gave near daily press conferences in the build-up to the war in Iraq, and we are about to have another inquiry into what happened. Yet decisions about how money is spent are taken without much debate. Almost certainly we will need to consider more ear-marked taxation, co-payments and targeted rather than universal benefits. A more transparent public sector must deliver efficiently. How to have civilised levels of public provision and how much are we willing to pay for them? These are the central questions. We might be moving away from extreme silliness but still the questions are rarely asked let alone answered.

s.richards@independent.co.uk