The Public Sector Cuts Must Go Further
Peter Watt predicts the public will need to get used to a drastically smaller public sector.
4 Dec 2011, 16:22
A smaller public sectorr?
Last week a friend of mine needed some legal advice to do with a problem they were having at work. They had arranged to see a solicitor and they were entitled to legal aid. I spoke to them on the evening after the appointment to see how it had gone. They said that they had received good advice and seemed happy enough. Great. But then they made a joke about how it was lucky that it was a free service as they had turned up to the appointment forty minutes late. For some reason this really irritated me, and I felt compelled to point out that it wasn’t free at all and that the solicitor was being paid from taxes. They didn’t understand the point I was making at all and, probably sensibly, changed the subject.
Now I readily accept that in fact I was probably being a grumpy git! But I don’t think that my irritation was entirely unjustified. In his Autumn Statement, George Osborne set out the truly appalling state of our finances. Despite the massive package of cuts, debt is still increasing so that it is projected to peak at £1,360 billion. That is the equivalent of £54,000 for every household in the UK. £54,000! In fact the deficit will only be cleared (and debt stop increasing) if we keep making cuts to public services until 2017, two years after the general election. And what’s more, the proposed cuts in the two years after the election are more severe than those in this Parliament. Whichever way you cut it, as a country we have clearly been spending more than we have been earning for some time.
So by 2017 we will have been cutting public sector budgets year-on-year for seven years. It is hard to comprehend just what that means or might mean. And I have come to the conclusion that the Government, any Government, can’t do it. Well, at least they can’t do it on their own. They will simply not be able to achieve the required and sustained reductions in state activity that is needed by imposition alone.
The problem is that we have got so used to things been done for us that we can’t decide what the state should do less of. Sure we accept the need for cuts. But should we cut road building? Hell no that’s what I spend my car and fuel tax on. Let’s stop cutting NHS budgets and leave nurses pensions alone. Leave my library alone and the Sure Start Centre needs a revamp. I don’t care how much I earn, child benefit is my right. And on and on.
But the Government need the public to move beyond acceptance that the cuts are necessary. They need the public to understand that things will have to change. That the State will not be able to provide everything that it did. To understand that there will be things that right now are seen as sacrosanct that may not be by 2017. Who knows where this will end up? Charging for food in hospital or a fee to see the GP? Greater use of road charging? An end to final salary pension schemes in the public sector? The scrapping of all benefits for people over a certain salary? Private policing to top up a scaled down state provision? Sharing our defence provision with the French? Oh I forgot that we are already doing that!
In any other organisation that was trying to achieve this level of change it would be vital that managers set a clear direction of travel. But then that they empower their teams to deliver the change. It is only at that level that the reality of the change impacts or doesn’t. It is only at that level that innovation can happen or not. And critically staff need to understand what their budget is and what it will be. They need to know what things cost and what the costs are of the things that they are dependent on. And that is the problem with the austerity measures. They are all top down leaving little room for innovation. And those most affected are the ones who understand them least. The result is likely to be that by the time we get to the business end of the cuts in 2016, the limits of the imposition model will be plain to see.
So there needs to be a change over the next couple of years. The general election will be fought on the basis of who can see through the delivery of the required cuts. But also who can help people make sense of a changed world and redefine what the relationship is between the state and individuals. I suggest that this needs a step change in thinking and I offer two suggestions for Party manifestos.
Firstly people will need to better understand exactly what they pay to the state and exactly what they receive. In other words they need to have a sense of a personal income and expenditure account with HMG. So people should not just get a tax code and statement, but a personal statement from HMG of what they have paid to and received from the state. This could also include a sense of the overall national financial position and the level of national debt that they are personally sharing.
On the debit side they will need a much clearer sense of how much tax they pay and to whom. And on the credit side they need to understand how much they personally get from the work of government. This would include the value of any benefits and credits received set against the cost of the NHS, education, roads and so on in their area. In addition tools could be provided online that allow people to estimate the additional costs of their lifestyle on the Government’s coffers. The impact on the roads of their annual mileage say? Utility companies increasingly do this on our bills so why shouldn’t Government? One implication may need to be that tax is simplified. Perhaps tax and national insurance need merging for instance?
And secondly, there needs to be a commitment that in future Government will be doing less and that people will therefore need to do more themselves. And so Government needs to be more explicit about what it does and critically what it does not do. It needs to be honest for instance that there are limits to what the NHS can do and that the welfare state is finite. And that choices need to be made.
Programmes aimed at allowing individuals to make choices about their health care, their education and so on should be speeded up so that the extent of direct Governmental provision is reduced and people can both innovate in the delivery of services and understand the limits. This will certainly mean that provision will vary across the country as people and communities make different priority choices. But this should be welcomed and not seen as failure.
So at the next election the only way to deliver further austerity is to allow people to see what their personal account with HMG looks like and to allow people to drive efficiencies themselves. And then maybe, with a greater sense of personal and shared sense of rights and responsibility, my profligate friend will turn up for their appointment with their ‘free’ solicitor on time.
And I won’t get so irritated.
Comments (10)
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It's a nice idea, but no-one will believe it. No-one (by which I mean 80% of the country really) is going to believe that they're actually net recipients.
Those few of us who are actually net taxpayers are ACUTELY aware of how much we pay, how much the public sector is "spending on our behalf" and how bad those services are (because we usually have to pay again to have the services actually delivered privately).
Everyone else simply isn't interested and doesn't need to be because there are enough of them to keep voting themselves more and more spending.
04/12/2011 18:49We need social justice not Tory cuts: http://bit.ly/viEQyL
04/12/2011 20:43I think the cuts ought to have been done short and sharp, like Estonia, not drawn out and fairly little, which has achieved little but a decade-long psychological dread and years of opportunities for counter-attacks.
Irrespective of the cuts, thought, charging a nominal fee for GP/hospital/legal/etc appointments might just encourage people to treat such services with more respect. Quite a few doctors have suggested it (£10, returned if you attend or cancel with a week's notice, say), and having seen the 'no show' rate at consultants' clinics pushing 30%, I'm inclined to agree.
Also, Mr Watts, had I not known your political history, I'd have thought this was written by a centrist version of John Redwood!
04/12/2011 21:24Richard, 2 things. 1, there's nothing progressive about running an unsustainable deficit. 2, my point is that whoever wins next time will have to keep cutting. It's how we do it and to what that will differentiate.
04/12/2011 22:49It is worth having a look at the TV series Nick Robinson's doing right now on the BBC. He addresses a number of these points.
All sections of the political spectrum need to think about the corrosive use that has been made of debt, the size of the state, and the nature of state provision of duties that are ascribed or reserved to it.
This will be far harder for the left than the right. It will be especially hard for Labour due to its relationship between the public sector Unions.
But you need to make a start somewhere.
04/12/2011 22:59I agree as at the present time we are tinkering with reducing costs for political reasons only.
The NHS.
1. I am not wealthy but feel I should pay for any prescriptions I need regardless of age. I do feel free prescriptions should be available for long term conditions or for those who are on welfare benefits.
2. Everyone should pay for food when in hospital. I believe those on benefits so contribute after some weeks. This is common practice in many countries. Exceptions will always exist - the elderly without family. However, the NHS should be able to bill estates.
3. A fee to visit a GP. I am happy with doing this. Again there would need to be exceptions. France introduced this fee some years ago.
4. Hospital Transport. This should not be free. I have many examples were people used this service when their partners could easily have driven them to clinics. In
addition, volunteers should be used when this service is needed and everone using the service should contribute.
5. We do not need so many hospitals. It is quite wrong to have routine procedures undertaken at expensive hospitals when GP surgeries could quite easily undertake them. We should have smaller units in communities for other procedures too. I tire of MPs who know it is right to close hospitals but oppose closures for political purposes. Many of us have to travel 20 miles to a hospital and we do not moan.
Pensioners.
1. I have a bus pass which I do not use. I do feel those on pension credit should be given passes or introduce means testing.
2. Winter fuel allowance. I get this but really do not need it. This should be given to those on pension credit and be increased to £400 a year.
3. Only those on pension creadit should be provided with a free licence.
Libraries.
1. I have used this service for over 60 years. It does not provide the service it once did. Too many DVDs, computers etc etc at the expense of books. This service could be better provided by the Community. I would willingly volunteer and having an extensive personal library would willingly share books.
Community Action.
1. Volunteers could do many tasks in the community and we have seen these tasks reduced in recent years. My local police office was always staffed by volunteers. Now we have a paid employee! My surgery had lots of volunteers for transport and helping those with long term illness or indeed loneliness. now these services are paid for.
2. I still put weedkiller on my road twice a year and pick up rubbish as necessary. We rely on Councils to do everything these days. Volunteers could join together to collect rubbish and keep their immediate neighbourhoods clean.
3. We should not contribute to charities. At one time they undertook extensive fund raising but now rely on the State. If state funds are needed then they should not amount to more that 10% of operating costs.
Public Sector Workers.
1. We forget that it takes years to reach the top of the salary scale. The spine should be reduced as it often involves 2% of salary each year. No public sector worker should have to wait more than 5 years to reach the top of their scale.
2. No pension should be based on final salary. We all know of examples of workers going on night duty the last year of employment to boost pension.
3. The public sector is too large with many non jobs. We have permitted this growth. We could reduce by 30% without suffering a loss of services.
4. We should provide pool cars for all organisations that are publicly funded. Travelling expenses cost us a fortune. In addition, meetings are also called (my local council) from 11am which obliges the taxpayer to fund lunches. We need to look at the high cost of meals and dramatically reduce what we pay out. A sandwich and cup of coffee should be the amount given regradless of status of those claiming.
Legal Aid.
1. An absolute disgrace. No other country contributes so much to this service and no other country provides a service to those who are not permanent residents. Neither do lawyers earn as much from the system as those in the UK. Why should I pay the lawyers fee for divorcing and argumentative parents? Why should I fund advice centres for those claiming asylum? This should be done voluntarily by communities and high earning lawyers should give a couple of hours of their time.
I could go on and on covering every service provided. I am ashamed that in the past decade we have permitted a culture of the State will provide. At he same time we have permitted fit people to believe that it is Ok to live on benefits. Perhaps we can get the balance shifted to ensure that we take personal responsibility for our well being and we have a smaller state that really does provide well for those in need and treat them with dignity too.
05/12/2011 12:35Peter I really shouldn't like you but I do
05/12/2011 14:37Very good thinking and a good post; good post from Jane as well.
06/12/2011 02:34Good article Peter - you hit a few nails firmly on the head.
One good thing about all this austerity is that it is making people think more clearly about what is and what isn't important and what things really cost. It is just a shame that there will be so much pain associated with making changes but much of the change will not be effective in the long term.
Having worked in both the public sector and the private sector I have found that it is in the nature of most people to make even the simplest of things complicated. And then when it comes to addressing problems they would rather use a "quick fix" to report a quick result rather than sort the problem out properly. After years of quick fixes, systems and processes really do get complicated so when change is eventually introduced then someone, somewhere is materially affected.
Governments and oppositions are the worst, not only do they fail to understand the real issues but when faced with doing the right thing in the interests of the country as a whole or the popular thing in the interests of keeping voters and vested interests on board they invariably go for the latter.
And where oppositions propose good policies they won't be adopted by government and if the government propose sensible changes they get shouted down by the opposition. And all the time we carry on doing things inefficiently and wasting money. The coalition and labour argue about the austerity measures as if there was a real difference between them - as opposed to a real difference between their respected vested interests.
I am convinced that the Public Sector could be cut in size and cost dramatically and still be able to deliver much of the existing services.
Taxation could be simplified no end, lowered and still raise as much money as now. Banking and investment could be simplified so people undertood what they were getting and charges lowered (its criminal that most people don't have pensions or long term savings because they don't understand them and charges are too high. Utility charges, telephone charges etc could be simplified and reduced.
I fear that until or unless we have a proper coalition, made up of sensible people from all three parties with the determination to take on vested interests and no concern for their own individual popularity (pigs might fly) we are going to have years and years of austerity without bringing about real change.
06/12/2011 15:10One thing we could cut and cut now, with cheers from all sides, would be the appalling waste of taxpayers' money on huge IT projects which never, I said never, deliver. Only this morning there are reports of a further £2 billion that has to be spent on the failed and cancelled NHS IT project. We seem to have the knack of tying ourselves up in hopeless contracts that put all the risk on the taxpayer and none at all on the supplier. The public sector must take a realistic view of procurement, and stop wasting billions of our money. Then maybe the cuts we all have to endure will start to have some real effect.
And I'm with Jane, to some extent: we should indeed all ask ourselves 'why should the state provide [insert name of service] rather than it be provided privately?' Then maybe we could have a sensible discussion about the extent and limits of state provision. I, for one, have never quite understood why I have to pay for other people to borrow books, CDs and DVDs which are available cheaply on Amazon, or from video shops. In this digital age, libraries on the current publicly funded model are surely defunct?
08/12/2011 16:19