For public services and public sector staff this is a bankrupt budget | David Walker

This is a bankrupt budget. Not in the strictly financial sense, though how much more threadbare core public services can become without collapsing and causing social mayhem the next few years will prove, if the government lasts. Even with faltering economic growth, public spending is to go on falling as a proportion of GDP.

It’s bankrupt in ideas, in understanding, in preparedness to examine what has been happening to public services.

Housing offers a glaring example. For all the bells and whistles in the budget, and some welcome augmentation of council powers, the government fails to make an obvious connexion.

Building houses, allocating land, encouraging development, and policing the delinquency of private developers all imply an active and financially lubricated local government. Housing is and always will be about places, streets, brownfields – and public acceptance of schemes that will abut on their property or where they walk their dog. That’s what councillors do. Ace ideologue of the free market Oliver Letwin, of all people, can’t substitute.

What is obvious now, as it was to Harold Macmillan 65 years ago, is that if you want big building, you give councils elbow room, meaning hugely expanded freedom to borrow, well beyond Hammond’s £44bn, which is spread over several years and includes loan guarantees and backup as much as frontline provision. Tory councils are these days as willing as Labour to gear up, and face down neighbourhood opponents. The Royal Town Planning Institute and National Planning Forum will shortly publish a study by Janice Morphet and Been Clifford detailing the many and imaginative ways in which English local authorities are already doing a lot of building, using local companies, sleight of hand and financial imagination.

Just think what they could do if Hammond had said the national debt can surely sustain more productive investment and what is more remunerative in the long run than the construction of homes that people can afford. Early calculations suggest the number of affordable dwellings likely to be built from Hammond’s scheme will not rise to anything like the level needed.

But accepting an expanded, “forward” role for councils means, for Tory ministers, swallowing 30 years of Thatcherite suspicion bordering on contempt of local government, even when it’s heavily coloured blue. Maybe if Nick Timothy had lasted at May’s side, things would have been different. But he didn’t and Hammond’s budget prove they are n0t.

A few days before the budget, in a suspiciously hole-in-the-corner way, the Treasury published a report by Michael Barber. In many ways a valiant attempt by the Blairite stalwart to synthesise thinking about productivity and public value, it ends up as a mish-mash of ill-coordinated suggestions. It’s made all the less plausible by failing to address the perennial question of who manages the state: the Treasury (which lacks the skills and enthusiasm) or the Cabinet Office (which lacks financial clout and enforcement powers).

But the problem exemplified once again in this budget, is that Tory ministers are still deeply uncertain about whether they even want to be running the public sector. Some including Liam Fox, Sajid Javid, and Michael Gove, have never disowned Thatcherite commitments to pare government back to bare essentials, to privatise and outsource to the max.

Hammond weeps crocodile tears over his inability – thanks to an ideological commitment to austerity – to do much for public sector staff; that promise to meet the cost of a payrise for nurses was qualified. But underpinning his fiscal calculations is the deepest ambiguity, shared with Theresa May and the rest.

They are not at all sure they want to be in charge of this thing, public services, whose values, culture and skills are so antithetical to their most cherished political beliefs.

Sign up for your free Guardian Public Leaders newsletter with comment and sector views sent direct to you every month. Follow us: @Guardianpublic

Looking for a job in central or local government, or need to recruit public service staff? Take a look at Guardian Jobs.