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Days of "disinvestment"

Betsan Powys | 07:00 UK time, Tuesday, 16 March 2010

I never did study Franz Kafka's work, though a course analysing his work was offered to the young and keen student of German that I was many years ago. I'd had a stab at the first few pages of Die Verwandlung/Metamorphosis and baulked at the sentences that seemed never to stop until they suddenly did, with an unexpected bang.

Today's report from the Wales Audit Office may be just 36 pages long and the construction of its sentences infinitely easier to follow but in its doom laden tones it has more in common with Kafka, that dark theorist of intractable bureaucracy, than the dispassionate public auditor.

It's a no-holds-barred examination of the public sector,just where we are and where we need to get to in terms of reform. It makes for pretty grim reading and will send a shiver down the spine of public sector workers and management.

In her foreword, the Auditor General, Gillian Body, says that the impending squeeze means if public sector bodies carry on with business as usual "they will simply run out of money". There. I told you the sentences were shorter .

The analysis couldn't be simpler but the medicine, I imagine, will be very hard to stomach. Perhaps the key phrase in the report is this: "In considering disinvestment, public services will need to identify novel ways of reducing their staffing bills."

It certainly adds another euphemism - "disinvestment" - to the ongoing "when is a cut an efficiency saving and vice versa" argument.

There's been some surprise among economists that unemployment hasn't risen higher during the recession. The most common answer put forward has been that many employees have accepted wage freezes or cuts, unpaid holidays, or a move to temporary part time working. In return the number of redundancies due to the downturn in demand has been kept to a minimum.

The report lays out a truly frightening scenario for an impending public sector spending downturn and looks across to the private sector for solutions in trying to deal with it. Why, the report reasons, since staff costs make up the bulk of public sector spending, shouldn't workers here emulate their private sector counterparts - more flexible working, reduced hours, a move from full to part-time working? This way, says the report, experienced staff can be retained and services can still be delivered.

If you're a worker at a car parts factory, then you might have some sympathy for that. You may already have had to practice what the WAO raise, if not exactly preach, in their report today. But how will it go down with the public sector unions? After all, the PCS is already locked in industrial action with the Government about redundancy entitlements.

You can judge for yourself. Here's the response to the report from Unison: "Transposing a private sector solution to the public sector is fraught with difficulty. The reason why the private sector went to short-time working and reduced hours was a reduction in demand for manufacturing goods etc.

"With the public sector the demand is high and increasing. For example, social care demographics show an increase in demand."

I think that roughly translates as "no thanks".

Yes, the reason why the private sector went to short-time working and reduced hours was a reduction in demand but it was also directly due to a reduction in companies' income. And the public sector, according to the Audit Office's projections, is about to start swimming in exactly the same red coloured ink.

Of course mothballing a production line in a factory means making fewer alternators or car seats. Once demand picks up, it's simple enough to flick a switch and start turning them out again.

What the unions will argue is that stopping, or slowing, a production line in public services - social care, for example - has a very real impact on people. Not as easy to flick the switch when there's a bit more money around either.

The next few years are going to be all about balancing the books. If this is an opening chapter - Kafka or not - it's going to be a long and difficult read.

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