Andrew Haldenby

Alistair Darling needs to tell us that frontline services will be affected by cuts

Alistair Darling needs to tell us that frontline services will be affected by cuts
Text settings

The credibility of the Chancellor’s Budget tomorrow depends on the policy changes that he announces for the public sector.  It won’t be enough for him just to announce a series of public spending totals that decline gracefully in the years to come.  Within some broad limits, anyone can do that.  What counts is whether he backs it up with practical ideas to target the big government costs, which lie in two places - benefits and the public sector workforce.

In retrospect, the general election has fallen at the wrong time for the UK public finances.  Since early last year, the prospect of an early election has allowed the Government to put off the date of publication of its full plan to address the deficit.  The most negligent decision was to put off the spending review which was due last summer.  That would haven given a sense of the Government’s new priorities for each of the big public services.  Philip Hammond is right that the Chancellor really needs to publish that spending review tomorrow.

While the UK has been waiting for its election, the other heavily indebted EU countries - the PIGS of Portugal, Ireland, Greece and Spain - have been getting on with it.  They have had to publish plans to restore their deficits as part of the terms of their membership of the Stability and Growth Pact (here is Portugal’s).  Those plans give an idea of what we need the Chancellor to say:

They are cutting public sector headcount.  Ireland, Greece and Spain have imposed recruitment freezes so that the headcount falls through natural wastage.  This can bring down headcount quickly - the annual turnover rate in UK education is 11 percent, for example, and 15 percent in healthcare.

They are cutting pay.  Some Irish public sector workers are facing pay cuts of 15 per cent.

They are reducing benefits.  Portugal is increasing means-testing benefits and Ireland is reforming public sector pensions.

One of the most encouraging moments in the run-up to the Budget has been Liam Byrne’s comment that the NHS should save billions by closing hospitals and designing new services based around primary care.  That is right in itself.  More importantly, it is the kind of detail that gives you some confidence that the Government actually envisages real change in the public sector to make it more efficient.

This doesn’t mean that we need Alistair Darling to announce that government ministers will personally ensure a certain level of cuts in headcount.  No - he needs to announce a programme of reform that holds local managers locally accountable and allows them to make the right local decisions.  But he does need to make it clear that public services are going to change and reduce in size and scope - and that includes the frontline.

Andrew Haldenby is director of Reform.