Tackling the deficit
Andrew Haldenby 6:39pm
Reform’s report, The Front Line, focused on the how of the public finance question – how to get the deficit down in practice. We pointed out that since the public sector workforce accounts for around a third of the total government deficit, it should contribute a third of the reduction in the structural deficit. That would mean reducing the costs of the public sector workforce by £30 billion, equivalent to a reduction of one million of the six million public sector jobs in the UK. That would take public sector employment back to the levels of 1999 when the recent period of major spending increases began. It means reducing the costs of front line workers such as doctors, teachers and police officers and changing their terms and conditions, contrary to the pledges of Gordon Brown and David Cameron to “protect the front line”.
The TUC and two of the public sector trade unions do not support our plan. Debating with me on Today, Mark Serwotka of the PCS said that reducing public sector jobs would turn “the recession into a depression”. Brendan Barber called the proposals “appalling” because “you can't make big spending cuts without hitting public services”. Mary Maguire of Unison said that we should “go back to the drawing board”. All three argued that the right approach to the deficit is to raise taxes (in particular on “bankers, financial institutions and tax avoiders”).
These arguments prefigure the debate in the next Parliament, when all main parties are committed to cutting the deficit by cutting spending. Mark Serwotka (and David Blanchflower) are wrong that the economy would go into deep freeze. Aggressive monetary policy and the automatic stabilisers are powerful boosts to the economy over and above any discretionary fiscal changes. Tax rises would leave all of the inefficiencies of the public sector unchallenged.
I don’t think that this is evidence of universal trade union opposition to reform. Other unions (including the public sector) are aware of the need for change and want to play their part. In fact it is more evidence of the need for reform in public services, and the consequent improvement in management. Employees in poorly managed organisations are more susceptible to proposals of radical action. Reform will support the efforts of moderate trade unions.
As various Coffee House posts say, the Pre-Budget Report is not likely to shed much light on the plan to eliminate the public sector deficit. But whoever comes to write that plan should include significant reductions in the costs of the public sector workforce.
Andrew Haldenby is director of Reform
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Nick
December 8th, 2009 7:39pm Report this comment"That would mean reducing the costs of the public sector workforce by £30 billion, equivalent to a reduction of one million of the six million public sector jobs in the UK."
Alternatively one could just cut every public sector worker's salary by 15%. Or, to be more "progressive", the higher paid by 20% and the lower paid by 10%.
No impact whatsoever on frontline services, or backline services.
Mitch
December 8th, 2009 7:57pm Report this commentCant we just go back to 97 and try again without this donkey and Blair? no wars,no lies(less anyway) and no multi-trillion pound debt for no return.
Irene
December 8th, 2009 7:59pm Report this commentI am not surprised they disagree, rhe names you mentioned, in particular Blanchflower, come from the Brown school of thought.
Luke
December 8th, 2009 8:12pm Report this commentFewer police, fewer nurses, fewer teachers. That is not the basis for a strong and prosperous country. We should be cutting the things that value the least, not frontline jobs which are the reason we are all willing to pay taxes in the first place.
toco
December 8th, 2009 8:35pm Report this commentWhy do public sector final salary schemes not get binned as they have done in the private sector thanks to the dysfunctional Brown's attack on dividend streams and ACT?Should these schemes be curtailed there may be less need for 1.5 million redundancies in the public sector to save us from the IMF.
welease woger
December 8th, 2009 8:45pm Report this commentSo to summarise, you are saying that a high level of unemployment is a price well worth paying?
I seem to remember that one not going down too well before.
Victor Southern
December 8th, 2009 9:05pm Report this commentQuangos were to be consigned to the dustbin of history by Tony Blair. That did not happen and since Brown became PM they seem to have increased by over 60 or roughly one per fortnight.
There are now something over 900 of them. in many instances their functions overlap.
Their main reason for existence appears to give sinecures to apparatchiks of the governing party. Prettily they are described as making government smaller by putting some functions at arms length.
Lola
December 8th, 2009 9:34pm Report this commentHaving just been forced to spend 6 weeks incarcerated in the NHS I took the opportunity to quiz the 'front line' staff and many more than you would expect are more than ready to take on genuine reform, even radical reform including privatisation, to save money and are fully aware of the attrocious inefficiencies of sclerotic and useless management legacy of the Brown Terror. They are ready for it. They want it. They want liberating from this Terror just as much as every other taxpayer.
david hambly
December 8th, 2009 9:35pm Report this commentMight I suggest as an alternaive sieze the bankers bonus pool and take control of the banks. To call for cuts in public sector workers is criminal. If you want to see blood on the streets do it, we will fight back we will not take this shit lying down. Bankers are all scum let tem feel the pain.
Moraymint
December 8th, 2009 9:55pm Report this comment"... reducing the costs of the public sector workforce by £30 billion, equivalent to a reduction of one million of the six million public sector jobs in the UK ..."
Sticking another million people on the dole would lead rapidly to civil unrest. Whilst I like the ideas - of both one million public sector workers made available to the wealth-creating sector, and civil unrest (it would focus politicos minds) - it would mean bringing the troops home from our various overseas adventures.
Small wonder, therefore, that our politicos have no intention whatsoever of releasing resources from our grotesquely bloated state to be made available to the Richard Bransons of this world.
Bring on the revolution; democracy is dead.
2trueblue
December 8th, 2009 10:19pm Report this commentThis is visiting the same ground again and again. Blanchflower is riding on a reputation that so far has not delivered.
No one knows what the result of pulling in the reins in for sure, but doing nothing but spend and pouring more debt on debt can not be a real long term solution.
The number of quangos has to be cut drastically and there is no reason for the public service wage increases that were agreed in better times to be honoured, neither should there be any bonuses in the public sector.
The bonuses to any bankers that are working for a bank that the tax payer has propped up should also be srutinised. It is unrealistic to expect to pick up a bonus when the debt is still outstanding and we have not exited the crisis. Pensions that are gold plated need to be reorganised, the rest of have had ours totally reorganised by G Brown when he first hit no11.
But none of these things will happen, those who have lived within their means, saved fo rthe future, those who are in work and have already made sacrifices, in fact anyone who has anything they have worked for will be taxed, and texed, and taxed beause that is the only way Labour knows. To fix the problem that they have put us in will be fixed by someone else.
Number7
December 8th, 2009 11:13pm Report this commentAs I seem to remember, the result of "Thatcherism" in the private sector was to flatten the management structure.
I can remember, many years ago, "The Rule of Seven". Simply put, one manager to seven under-managers. This was thrown out, BIG TIME, and surprisingly enough the UK grew through the Eighties.
We Seem to have gone backwards over the last (please remind me when it started, 1997?) decade with the resulting chaos we have now.
Ihave just heard Blanchflower on Snoozenight, spouting the same sort of nonesense I heard in the late Seventies.
The only question that I would ask is:-
Is he just a dinosaur or a complete tosser?
Personally I would vote for the latter!
Fergus Pickering
December 8th, 2009 11:19pm Report this commentNobody is going to sack a million public sector workers. You are living in an alternate universe if you think so. Do you think Cameron would be elected on a promise to sack a million people? Do you think Cameron should say something else and then leap forward when elected, cast aside the sheep's clothing and cry 'AHA! You're all fired!' Well, he's not. You'd better plan to put the tanks on the streets. Do you KNOW a few colonels?
Number7
December 9th, 2009 1:10am Report this comment@ FeRgus Pickering
Your name gives you away!
60% of the population either employed in some sort of "government job" or on benefits. Now where would that be??
Basic maths - If the cost of production exceeds the the income the enterprise is not viable.
Public sector pay exceeding MOST private sector pay - RESULT, bring in the IMF.
God help those of us who can't emigrate!!!
Archie
December 9th, 2009 6:53am Report this commentWell the problem with all this of course is that when any "cuts" are made it invariably results in fewer nurses, police, etc. but absolutely no reduction in middle to upper management, most of whom are completely surplus to requirements and upon whom the cuts should fall, but as they are the people directed to make those cuts they naturally preserve their own skin and toss the "lesser" fry to the wolves. A bankrupt New York in the seventies provides a classic case study.
HJ
December 9th, 2009 1:07pm Report this commentCuts have to be made in public sector (or public sector-funded) jobs.
However, there are many easy savings that won't affect jobs and which are pretty painless. Most of these can be done instantly.
For example, we have by far the best paid medics in Europe. There are 40,000 GPs and they are paid well over £100k on average, thanks to their over-generous new contracts. Cutting their contracts by £25000 each would still leave them paid over £80k and would save £1bn p.a.. Similar figures apply to hospital medical consultants, so there's another £1bn that can be saved easily.
Then let's go through Quango spending and RDAs. It would take about an hour to identify the useless/duplicate ones and identify a few more billions that could be saved.
These easy cutbacks won't solve the problem on their own but they would be quick and relatively painless while the next government looks at more fundamental reform.
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