Boris Johnson has proposed the public ‘bung a bob for a Big Ben bong’ to commemorate Brexit. Is involving the public directly the best way forward as a method of funding public spending?
First published in January 2020.
An unexpected debate to emerge from Britain’s planned departure from the EU at the end of January 2020 has been over whether Big Ben should ring to commemorate the moment of Brexit. The clock tower of the Houses of Parliament is undergoing renovation and Big Ben – the name of the bell within it – is out of action.
To allow the clock tower to “bong” for Brexit would cost an estimated £500,000 – £120,000 on installing the bonging mechanism and a temporary floor, along with up to £400,000 on the cost of the delayed construction work. Not wanting to appear flippant with taxpayer’s money in this instance, the prime minister, Boris Johnson, suggested that the cost could be directly funded by the public. Though none have gathered steam yet, a successful campaign could shake up government financing and set a precedent for future spending on public projects.
The traditional method of tax and spend governance has undergone a process of transformation in the last three decades. For example, Private Finance Initiatives (PFI), where the private sector joined in the provision of public services (with often questionable results), have been around since the 1990s.
Plus, as the persistence of charity fundraising has shown, the public is not averse to giving large amounts, so long as they choose where the money is going. One could argue that the opposition Labour Party’s failure in the recent election to make headway on a traditional tax-the-rich economic programme, demonstrates a wider popular shift away from taxation as a method of funding public spending.
Government funding for the future?
If one discounts borrowing as a way of raising money for governments due to costs (or ideology), perhaps involving the public directly is the best way forward. The phenomenon of crowdfunding private projects took off with the rise of websites like Kickstarter and IndieGoGo. Applying this idea to public projects soon followed and civic crowdfunding has been around for a few years now. A number of local government projects have been financed this way. The main benefit is that citizens get to choose directly what and when to fund.
So it would be possible for the prime minister to crowdfund a temporary suspension to the renovation of Big Ben as part of its Brexit-related fiesta at the end of January. There is nothing technically wrong with this, nor is there any legal impediment, so long as government spending (after funds have been raised) complies with relevant procurement rules.
The clock’s hour bell nicknamed ‘Big Ben’. / Flickr - UK Parliament-Jessica Taylor
But should the government run with this idea and expand public fundraising to other, larger projects? It is always tempting to policymakers to fund their pet projects without raising taxes or increasing external borrowing. The executive may also have more flexibility in setting up such schemes, avoiding parliamentary scrutiny that applies to other types of funding.
There is precedent of a sort for this. One example of project-specific fundraising carried out by government are war bonds. These, leading up to and during the second world war were an essential part of financing the war effort in Britain and the US. They were also used during the American Civil War and the first world war. They were effectively loans from private citizens to the government and helped alleviate reliance on external borrowing during wartime.
In the US they also became an iconic part of the home front war effort through a series of propaganda posters. They were promoted by highly recognisable Hollywood stars of the era and buying these bonds was deemed a patriotic act, a small sacrifice compared with that of men drafted to fight. But bonds, by definition, pay interest upon redemption. Crowdfunding differs in that it is a grant of money from the public that would not be repaid.
From bongs to Brexit and beyond
The idea of using something like a war bond to finance targeted modern-day government spending was floated during Obama’s expansion of military operations in Afghanistan in 2010. Could a bond issuance be used to fund a larger specific project, like Brexit or even President Donald Trump’s wall with Mexico in the US? Technically yes, but it all depends on whether enough people can be persuaded to participate in the fundraising.
There is little precedent of this being successful during peacetime. A programme by the US Treasury Department to sell so-called Patriot Bonds after 9/11 raised limited amounts. Lack of public uptake could be an embarrassment for a government and even sink a high-profile project. It could also expose thinning support among the electorate for a project, or indeed the government. Large-scale fundraising exercises could also reduce consumer spending, eating into economic growth.
Dangers aside, crowdfunding politically charged projects such as making Big Ben bong for Brexit will be tempting to Downing Street. It opens an avenue for funding that is cheap, politically useful and novel. As the amount sought is relatively small, it could gather enough support to become a successful test case for alternative financing.🔷
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