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What are private-sector lessons for Osborne?

Robert Peston | 10:45 UK time, Monday, 4 October 2010

I am escaping from the Heironymus Bosch hell of central London on a day of tube strike, to what I hope will be the still-functioning metropolis of Birmingham.

That's where the Chancellor, George Osborne, will attempt to reassure delegates at the Tory party conference that his planned public-spending cuts, to be unveiled in higher definition on 20 October, are not as bad as they seem.

If implementation ushers in the kind of industrial action that has brought the capital to a standstill, the transition to a leaner, meaner, state may not be without trauma.

But I was particularly struck by these remarks made by David Cameron to the News of the World:

"Let's put these cuts into perspective. Many businesses have had to make far great reductions than us in one year".

Hmmm. Is that so?

Well it's certainly not true in respect of the absolute monetary value of spending reductions, £83bn over four years (which include the unspecified cuts of £52bn that the previous government factored into its budget forecasts).

And nor is it true of the sheer variety and diversity of operations that will be pruned and axed: there's no private-sector conglomerate in the world that provides the dizzying number of services of the British public sector.

But what about the proportionate reductions: between 25% and 40% for most departments (excluding the protected health and overseas aid budgets, and the semi-protected defence budget, which "only" has to find 20% savings)?

Yes it's true that private-sector businesses, big and small, have periodically been obliged to slash overheads and costs to that degree.

There are typically two cases where that's happened:

1) where a business has been seconds from insolvency and creditors have demanded draconian cuts as the price of not putting the business into bankruptcy;

2) where some kind of commercial genius has taken control of a business and spotted how to radically re-engineer the delivery of a service or product.

Now is the UK in the first category? For all the imperative of reducing the public-sector deficit, probably not. I don't think George Osborne would say that the UK is one minute before midnight in a solvency sense.

What about the second category? Well for all the talents of ministers and civil servants, what they're not are the Google boys, or Lou Gerstner - saviour of IBM - or Jack Welch, who reinvented General Electric.

Also, quite apart from the skills gap between a typical British politician and messrs Gerstner and Welch, there's an interesting disparity of time frame: the reconstruction of GE and IBM were relatively organic processes which lasted the best part of a decade, punctuated periodically by big disposals, job losses, acquisitions and outsourcing.

So what's a better private-sector analogy for what Mr Osborne and Mr Cameron wish on the state?

Well, the cost-cutting programme at Royal Bank of Scotland looks relevant.

How so?

With the generous support of taxpayers, it has time to reconfigure itself to become more productive - so that in time it can generate the profits that would allow taxpayers to be repaid.

And it is well into a programme of three to four years to reduce costs by £2.5bn, involving the loss of around 30,000 jobs.

It's an enormous undertaking. But those £2.5bn of savings represent just 15% of so of running costs - less even than the relatively protected Ministry of Defence has to find.

One similarity between RBS and the classic public sector (some would argue that RBS is actually part of the public sector, with taxpayers owning 84%t of it) is that it was pretty flabby.

Its current directors say that the nickname of the previous chief executive, Sir Fred "the shred" Goodwin, was a misnomer. They insist he did relatively little shredding of costs as he expanded the balance sheet.

Even so, they say that the 15% cuts are at the limit of what they can achieve without impairing the quality of service they provide.

Which carries an unavoidable implication, which few private sector bosses dispute when I discuss it with them: if you're cutting up to 40% from a budget, either you have to stop providing certain services or the quality of services provided will suffer (or both).

Update 1505: So what did I take from George Osborne's speech to his party's conference?

1) The FATwa on banks is still in place. That's FAT for Financial Activities Tax, which he'll levy if banks pay humungous bonuses without providing sufficient credit to wealth-creating businesses. But he didn't specify either what an acceptable quantum of lending would be or what would be tolerable pay for bankers.

2) Much of his rhetoric was about directing public spending to those areas that will stimulate private-sector growth - viz transport infrastructure, medical research, "green" investment, and so on. This has to be more than a woolly aspiration: without an expanding private sector, to offset public sector shrinkage, we'll be back in recession before you can say "defence of the AAA rating". But the business people I meet here would much rather have a bonfire of planning controls, another Heathrow runway and immigration caps - which populist politics have deemed to be off limits for the coalition.

3) Osborne has no intention of simplifying his public sector reconstruction ambitions: reform of delivery and budget cuts are partners, not alternatives, he insists. But reform almost always brings up-front costs, which may be huge. Think about the IT for new GP commissioning of medical treatments, or rewards for private-sector contractors that help those on disability benefit acquire the confidence and skills necessary for work, or the redundancy costs of reducing the labour component in some service provision. I am very little the wiser about where Mr Osborne will find the funds for what is in effect a huge investment to secure desirable but intrinsically uncertain long-term productivity gains.

Comments

Page 1 of 2

  • Comment number 1.

    Basically, the inevitable outcome of these cuts will be that public services are affected. Which ones, and how much remains to be seen.

    When people can't get their bins emptied, or can't find a library within 30 miles, or simply get refused access to a public service because of funding cuts, then we will see how much this affects people and what the public appetite is to get rid of the public sector.

    I think the public sector should slim down, but ripping it apart so quickly will not work well.

    Roll on the people who will say that public sector workers earn too much and don't do any work....*sigh*

  • Comment number 2.

    Exactly so Robert.....nobody in government has said what services are to be cut apart from the list of Quangos but even then some of the work is to be shifted to other Government Departments where someone will have to do the work. Even though I am an ex-civil servant (redundant through the last round of DWP cuts) I am in favour of reducing the public sector. We cannot afford the burden of the current sector. However, to do this to any real effect and to be fair to the people who work there, two things must happen. Firstly, tough decisions have to be taken on what services will no longer be provided and secondly governments have to stop passing legislation like its going out of fashion. Every time and Act is passed and army of public sector workers are required to enact/enforce it. Saying you are going to cut 40% without knowing where it is coming from is totally the wrong way to go about things. Work out what each service costs and then decide what you are not going to provide in future.

  • Comment number 3.

    You can't cut nearly half a budget (40%) and do business as normal. Research suggests a private sector company can cut up to about 30% of costs and operate in the same fashion although obviously with reduced workforce and productivity. Assets can't be sold in a recession and become a liability, storage, maintenance, etc so above 30% cuts and research suggests you are in a downward spiral.

    Government may want to reduce overheads but it has a lot of property it is tied to which no one will relieve them of due to the depressed market. Cut all you like but the property portfolio aint going anywhere and properties attract overheads like nothing else so the only real option is people. Cut people and the service is reduced to unacceptable levels, we're doomed.

  • Comment number 4.

    "1) where a business has been seconds from insolvency and creditors have demanded draconian cuts as the price of not putting the business into bankruptcy;"

    How much closer do we need to be insolvency to start cutting the unsustainable deficit (and then eventually the stock of national debt)?

    "2) where some kind of commercial genius has taken control of a business and spotted how to radically re-engineer the delivery of a service or product."

    Compared to the bunch of idiots in charge for the last 13 years, the top brass in the coalition are geniuses.

  • Comment number 5.

    I would suggests that banks, like RBS, could usefully cut deeper without materially affecting the services they provide. How? By slashing pay and bonuses. The Government is able to dictate to the public sector in a way that the cosy clubs of senior bankers are not prepared to.

  • Comment number 6.

    "Yes it's true that private-sector businesses, big and small, have periodically been obliged to slash overheads and costs to that degree."

    And where are those businesses now? Statistics please, not anecdotes about one in a thousand that rebuilt and succeeded.

  • Comment number 7.

    Will someone just explain the following equations to Gorgeous before he makes a complete dog's dinner of the UK economy?

    GDP = C + G + I + (X-M)
    GDP = C + S + T
    G + I + (X-M) = S + T
    (G-T) = (S-I) + (M-X)

    Then tell him again the consequences for GDP, private consumption and private debt when he takes his sledgehammer to the deficit.

    This is my last attempt at this. It's time to hit the streets.


  • Comment number 8.

    I have to agree that the public sector will have to change in terms of the services it provides to be able to have these cuts and still function. The question is what is going to be lost to it comes back to what is the public sector meant to do.

    I would suggest:-
    Education (maybe even some relevant higher degrees)
    Health
    Municipal services (emptying waste etc)
    defence
    policing

    Now what I don't really think we need from the public sector is advertising campaigns telling us how well they are doing. I do realise this obviously has a knock on effect on all those media companies, printers etc but we might get back to some semblance of a rational economy and maybe they'll have to sell the ad spots cheap to some company trying to actually do something.

    And of course the other elephant in the room is the retirement age. This will have to go up simply because of the increased longevity.

  • Comment number 9.

    I think the point is the public sector will soon be a business.
    Like the BBC. I mean why liken a public service to a business when they aren't? Nurses, teachers, grave-diggers will all be profit driven will they?...

    Anyone seen Krugman yesterday - Fear and Favour?

  • Comment number 10.

    The key factor in this type of analysis is the starting point.

    A private company generally has to maintain staffing and costs at a point where it is able to trade, otherwise the first scenario is fulfilled.

    A government organisation, however, does not start from this point and it will expand even though there might not be a need for any expansion, but to keep the unemployment figures low.

    This was seen in the 70s and 80s in that our nationalised aircraft manufacturers were full of excessive labour and so the cost of production was too high. When privatised, the planes were still built, but with fewer people, showing that the factories were overstaffed in the first place

    This is why there needs to be apparently heavier cuts in the public sector for they are starting from an over-inflated position

  • Comment number 11.

    Generally speaking the demand for public services is increasing not decreasing the latter of which is often the necessity and opportunity for cuts in the private sector. I suspect RBS is not a lean and mean organisation and large cuts in the private sector have often been a question of survival. Of course there are costs of cutting particularly with severance costs and no reduction in cost base results for months even years. Rapid emergency cuts will always generate unintended consequences and these usually result in addition expenditure like bringing temporary staff or contractors usually at premium rates. Finally the activity of government in this area has serious wider and negative consequences on the economy as a whole.

  • Comment number 12.


    I noticed this this morning.

    http://www.bbc.co.uk/news/business-11458615

    If the assumption of last week remain correct, and the name of the game is to avoid a collapse in property prices leading to a second wave of bank defaults, then we seem to be going the wrong way about it.

  • Comment number 13.

    Greece and Ireland today, us tomorrow. It aint going to work, we will simply will create a death spiral for the economy. Dempster summed it up nicely a few weeks ago;
    "The total amount of debt created to date is understood to be in the region of:
    Public sector debt £927.4 billion
    Private sector debt £1456 billion
    Total £2,400 billion

    Based on an average interest rate of say 5% (after defaults have been taken into account), the total debt at the end of next year would need to be £2,520 billion.

    In a debt based monetary system such as ours, contraction of debt means less money and less money means more defaults.
    If the government and private individuals start reducing their overall respective debt, defaults will rise and we may again face the insolvency of banks.

    To keep a debt based monetary system functioning, the total amount debt in a given system must rise. And if it rises past the level at which the debtors can service the debt, the system must collapse.

    So for Mr Osborne, he can’t reduce overall government debt, unless there is a corresponding + 5% rise in private debt.

    However given the consummate torture that private debtors are currently being subjected to, their appetite for more debt may well be rather limited.

    I suspect that over the course of the next few years we will find out whether (as a nation) we have reached the tipping point in a compound debt trap. "

  • Comment number 14.

    8. At 12:02pm on 04 Oct 2010, EmKay wrote:

    Russish!

    So you missed out on the 70s then if you think they don't need to worry about waste!

    I don't know why Boris is worrying about needing new laws to stop strikes. I mean it's not as if there will be any workers to go on strike if this lot carve up the country!

    It'll just be slaves willing to do anything for a crust of stale bread and another night of life.

  • Comment number 15.

    We are heading for trouble because GO does not seem to understand the basic sectoral flows of money in the economy. The deficit does need attention, but does it need it this rapidly? The economy is far from working at capacity and the measures being taken by the government will put more people onto the dole and drawing benefit. Some benefit will be gained by the government finances due to the cutting of spending programmes, but as a result industry will suffer again, more people on the dole, increasing the pressure on the government finances.

    We are in a race to the bottom if cutting is all that GO can think of. The fact that the IMF and other organisations praise the UK should give us pause for thought. They only ever praise when measures concentrate wealth and power in the hands of the haves. Their advice in my opinion is usually not in the best interests of most of the general public. We need to note the way many economic indicators around the world are turning down at the moment – they spell trouble ahead, no export led growth anywhere. Eventually, growth of a sort may return, but under present policies, our country will have been enfeebled greatly.

    I just wish it were more generally understood that mainstream economic ideas are wrong and implementing policies based on them will produce unwanted and most uncomfortable results for most of us.

  • Comment number 16.

    What you are forgetting is that businesses work hard every day to reduce their costs, making them far more efficient than public sector organisations. A cut of even 10% to a company already operating at the margins is a massive amount to find. In the public sector there is a lot more scope when it comes to cuts.

  • Comment number 17.

    7. At 12:00pm on 04 Oct 2010, Morpheus wrote:
    Will someone just explain the following equations to Gorgeous before he makes a complete dog's dinner of the UK economy?
    GDP = C + G + I + (X-M)
    GDP = C + S + T
    G + I + (X-M) = S + T
    (G-T) = (S-I) + (M-X)

    could you please explain to to non-gorgeous me and, I suspect, many others

  • Comment number 18.


    Yet again the focus is on what can be cut in the Public Sector.

    This is propaganda.

    Let's concentrate our attention on the people who actually precipitated this mess, the greedy bankers, and see how we can get our money back.

    And for heavens sake, don't give them any more money through QE!

  • Comment number 19.

    Does this mean that the ConDems view public services as they view business?

    So the House of Commons is a business is it?

    It's not productive and isn't fit for purpose. Let's sell it to the Saudis or someone who bids the highest price?

    Call Murdoc.......

  • Comment number 20.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 21.

    Robert

    Your conclusion is right. It will be impossible to cut 20-40% from budgets without reducing services or impairing the quality of service.

    But like all the other left-leaning siren voices saying that we can't cut or pointing out the damage cuts will do, you miss the main point.

    The public finances have been destroyed by Labour, who have left this country in the worst financial mess in our lifetimes. Even the 20-40% cuts that are mooted don't solve the problem. That's how bad it is. We will be saddled with high debt and low growth for years to come if action isn't taken.

    The only reason it doesn't appear so bad now is because the markets believe that the Coalition is serious about cuts and so the Governement remains able to borrow. Without cuts, the markets will lose confidence and we'll find ourselves in as deep trouble as Ireland and Greece.

    By the way, what all those business leaders will also tell you that if you want to cut 10-15% from a budget you have to aim to cut 20-25%

    What is your alternative?

  • Comment number 22.

    Unfortunately many people in the UK don't appreciate the high level of service they've traditionally had, and which is probably unaffordable going forward.

    Here in France we pay higher taxes than the UK, and we do get an excellent health service, good schools and cheap, fast trains. However out in the countryside in particular, expectations of public services are much lower. Our nearest village, on the equivalent of an 'A' road, gets only 2 buses all day - one in the morning, one late afternoon. All the streetlights in all the villages round here go off at either 10.30 or 11 pm.

    We pay a 'bin tax' but our bins aren't collected - we have to take our general waste to communal bins half a mile away, and our recycling to a separate site another half mile further. The post is delivered only to your front gate in France, not your front door, and outside villages there are literally no postboxes in the countryside.

    Both the fire service and the more crucially the ambulance service is entirely staffed by volunteers outside large towns - the ambulance service in particular is of a much lower quality in vehicle equipment and staff training than is the norm in the UK. Plus there is no universal call-out: if you can't persuade the phone operator that your need is a genuine emergency you're simply told to phone your GP instead.

    Many people in the UK need to realise that in a time of austerity, the high levels of service they've been used to probably can't continue.

  • Comment number 23.

    8. At 12:02pm on 04 Oct 2010, EmKay wrote:

    Oh sorry! You meant keeping the rubbish collections!

    And there was me thinking at least you wanted to shred the military budget and stop us stomping over the world like bullies!

  • Comment number 24.

  • Comment number 25.

    14. At 12:32pm on 04 Oct 2010, copperDolomite wrote:
    8. At 12:02pm on 04 Oct 2010, EmKay wrote:

    Russish!

    So you missed out on the 70s then if you think they don't need to worry about waste!

    I don't know why Boris is worrying about needing new laws to stop strikes. I mean it's not as if there will be any workers to go on strike if this lot carve up the country!

    It'll just be slaves willing to do anything for a crust of stale bread and another night of life.


    >>>

    Eh... my list contained municipal services which includes.... getting rid of rubbish (russish - are you Vasilav?)

    Why dont you read it properly before you jump at someone.

  • Comment number 26.

    Despite the cuts government spending is to increase: to pay the interest on the debts incurred from not running a balanced budget when we should have been.

    This means that taxes are going to go up and public services constrained at the very best.

    This is the direct consequence of the fiscal incompetence of the Blair-Brown administration which someone has to sort out.

    The political issue is not that cuts will happen but more by how much, where and when. This is a judgement call. We will have to wait for that judgement later this month so let's not count the chickens before they hatch.

    What is more bothersome is the froth self-described members of the middle class are causing because they are going to lose out in one way or another. To my artisan mind the middle classes are the posh people who make the country function: they are supposed to do duty. No more it would seem. We are all losing out in one way or another at the moment. I agree it is not fair but sometimes bad things happen: adjust and grow up.

    The issue for the entire country is productivity. With better productivity we will all get more from a smaller input. This is how businesses do it: remodel, reconfigure, redefine, encourage initiative, cut down the hierarchy, empower the staff to make decisions.

    Hmm: no wonder the middle class is worried. I have just made it redundant.

  • Comment number 27.

    Case 1 is not relevant for the government of a country, such as the UK, which owns a central bank which can provide that government with all the credit it needs and at the same time keep public debt interest rates at any level deemed desirable. It is also possible for a government to increase its income by tax increases. These are the reasons why the rules that apply to private debt are not relevant to public debt.

    The important consideration is not the level of public debt, but the quantity of money and credit. Almost any businessman will tell you that at the moment money is in short supply, because of lack of bank lending. This should take priority over public debt levels.

  • Comment number 28.

    17. At 12:46pm on 04 Oct 2010, AnotherEngineer

    Enginner
    This time look it up !
    Any macro economics text book will do

  • Comment number 29.

    Robert,
    No mention of cuts in overall package for employees here. cuts in salary, bonuses benefits, employer pension contributions etc . Private sector organisations can and are cutting these. My private sector business wage bill has dropped by 25% since the boom years with no loss of staff. There are lessons for public sector employers and the unions here.

  • Comment number 30.

    4. At 11:54am on 04 Oct 2010, Dr_Doom wrote:

    "Compared to the bunch of idiots in charge for the last 13 years, the top brass in the coalition are geniuses."

    ...and the idiots before them?

    ...and the idiots before them?

    ...and the idiots before them?

    You need to research your 'deficit history' a little better before accusing the last encumbants of creating it. It's all too easy to simply blame the last lot - like the Tories consistently state at every opportunity - when their own party left a deficit the last time they were in power.

    Here's the deficit (note only on 2 occassions did we dip into surplus - one under Labour and the other under the Tories)

    http://www.debtbombshell.com/britains-budget-deficit.htm

    ...and more importantly here is the DEBT.

    http://www.ukpublicspending.co.uk/debt_brief.php

    Note how on the third graph you can see the only real impact on national debt in the 20th century was through high inflation in the 70's - cuts to public services (and the sale of public assets) - hardly made a dent in the 80's and 90's - and yet George Osbourne thinks this is the right way to go about tackling this humongus debt?

    I'm not advocating inflationary policy to evapourate the debt - but past history tells us this is the only solution to debts of such magnitude.

  • Comment number 31.

    The other way to try and improve public finances is to claw back unpaid tax - which is indeed going to happen - but in the most inefficient and expensive way possible which is to target the taxpaying public. What WON'T be done is to target the tax avoiding corporations, even though investing in this area of HMRC enforcement would be massively effective by comparison. Quite the reverse in fact - HMRC is giving up chasing the big corporations and will concentrate on battening down on us.

    Why would that be I wonder?

    Obviously this is a party political point but in reality it continues a trend started years ago - which is why suggestions that it is all the fault of the previous government are irksome and miss the point - the two main parties have ALL been doing it for decades, the magnitude of the debt is down to the bankers bailout (it was relatively low by western standards before). The rulers of this country seem to have been hypnotised by the City into believing their expertise wasn't all smoke and mirrors, and have allowed themselves to be persuaded to stand by and watch the wealth generation capacity of the country to be eradicated or sold off cheap overseas. I'm sure the many many City directorships and consulting posts among former MPs and ministers will have helped them sleep a bit better though

    Meantime even Sky News is prepared to admit that that there is a really enormous banking cataclysm probable in a year or two - the recession not being over, but barely started.

    http://uk.finance.yahoo.com/news/uk-on-cusp-of-second-banking-failure-skynews-5809d3acd179.html?x=0

    The only way out would seem to be yet another huge payout by the taxpayer to the mega-brains who have done so much to wipe us all out while lining their own pockets recently.

  • Comment number 32.

    Very few global economists see any other way of bringing down our overall dept as a country. The reductions need to be phased in over a period of time not all at once but maybe if we cannot afford to import as much as a nation because of the weakness of the £ then were get back to manufacturing ourselves rather than relying on India, China etc That would create more private sector jobs and reduce imports. Consumption in the 90s & 21st century is unsustainable in the longer run anyway just simply from the supply of resources. Move away from a reliance on banking & services, marginalise bankers who only motivation is greed.

  • Comment number 33.

    Great article from Chris Martenson
    http://www.chrismartenson.com/blog/prediction-things-will-unravel-faster-than-you-think/45297
    Hopes for economic recovering becoming more illusive by the day.

  • Comment number 34.

    10. At 12:19pm on 04 Oct 2010, yam yzf wrote:

    "This is why there needs to be apparently heavier cuts in the public sector for they are starting from an over-inflated position"

    ...or the private sector finds it easier to make those levels of cuts because the 'customer pays' - as long as the failures resulting from those cuts don't loose you a lot of business - then they can be made.

    The problem with the public sector is that there is a lot more scrutiny, so when they cut 400 jobs from the council and that means the service deteriorates, they have to take emergency action and hire private sector contractors to replace those lost workers.
    ...because the private sector now needs a profit from this endeavour - it ultimately pushes the costs beyond what it was costing previously (because people need to be retrained etc.) in addition to the cost of redundancy (and guess who the private comapny is stocked with? - that's right, ex-LA workers on lower salaries - subsidised by the taxpayer redundancy)

    You cannot hide your failings in the public sector - unlike the private one where it's relatively easy.

    I don't have to call my counciol on a regular basis to complain about the lack of bin collection - but I do have to call my utility company on a regular basis to stop them ripping me off - and I'm not the only one!

    http://news.sky.com/skynews/Home/Business/Gas-Giant-Npower-Is-To-Refund-70m-To-Customers-It-Overcharged/Article/201010115749276?lpos=Business_First_Home_Article_Teaser_Region_3&lid=ARTICLE_15749276_Gas_Giant_Npower_Is_To_Refund_%3F70m_To_Customers_It_Overcharged

    ...oh and didn't I have to pay the wages of that regulator in order to resolve this? - I bet the fine doesn't cover the cost of the investigation in full - if it did then these regulators would be earning money and not costing us!

  • Comment number 35.

    #16 Having worked in many private sector companies over 25 years and in public sector ones for 6 (not just in that order) , I find your belief in the private sector's drive for efficiency touchingly naive. Nearly all of the time it wasn't anything like that. Robert Peston's examples are the 'real world' and I would a 3rd - when you get mergers.

    It must also be borne in mind that the private sector are in business to make money and nothing else, whereas the public sector has to provide a service. One can pick and choose its customers (weeding out the time consuming, unprofitable ones) the other cannot.

  • Comment number 36.

    25. At 1:09pm on 04 Oct 2010, EmKay wrote:
    Why dont you read it properly before you jump at someone.


    Because it wasn't clear - not to me!

  • Comment number 37.

    17. At 12:46pm on 04 Oct 2010, AnotherEngineer wrote:

    GDP = C + G + I + (X-M)

    "could you please explain to to non-gorgeous me and, I suspect, many others"


    Allow me....

    GDP = Consumption (of which there is little) + G (Government spending - which the Tories are about to cut right down) + I (Private sector investment - of which there is very little) + (X (exports) - M (Imports)) - which is currently running a deficit (negative)

    The point is that if you take

    Low consumption
    ...and add
    Lower Government spending
    ...and add
    Little or no private sector investment
    ...and add
    A trade deficit.

    ...what is your GDP going to look like? - and without a rampant GDP (your income) you are not going to pay off this debt for sometime.

    It's called aggregate demand - and GO thinks it's not relevant because in his fantasy world, when the Government cuts spending - the private sector move in and replace it.

    ...except it's not happening is it?

    The Tory argument is full of holes - I mean if public spending really is going on frivolous activities (as the Tories claim) - then when it's removed people will simply not use it - they won't turn to a private sector supplier instead!

    ...that's why the Tories are eyeing the NHS and other critical services - because where there is a need, there will always be one, no matter who is providing the service.
    This will become a private sector monopoloy - where your level of treatment is decided by how much you earn. Great for oligarths - not so good for your grandad.

  • Comment number 38.

    Which ever way you cut it , the facts are these;
    1.The present situation is a direct cause of Labour's mismanagement.
    2.The present public expenditure is unsustainable and we either cut it back voluntarily or the markets will do it for us via increasing our borrowing costs via the bond market.
    3.A sppedy cut back of expenditure to affordable levels will in the medium to long term be the best for the country as a whole.

    The left's view that we can pay "Interest only" for the next 20 years is as flawed as Gordon Browns personality.

  • Comment number 39.

    "Even so, they say that the 15% cuts are at the limit of what they can achieve without impairing the quality of service they provide."

    Private Sector firms can get rid of staff. The UK can't "get rid" of its surplus population. There are no more colonies to transport people to, and death camps are generally frowned upon these days.

    We need an industrial strategy to plan how to provide for our future needs. And we need a population strategy too, otherwise nature and the nasty side of human nature will provide a Malthusian solution.

    http://en.wikipedia.org/wiki/Malthusian_catastrophe

  • Comment number 40.

    21. At 1:00pm on 04 Oct 2010, ken wrote:

    "But like all the other left-leaning siren voices saying that we can't cut or pointing out the damage cuts will do, you miss the main point."

    ..and like all right leaning bloggers you'll only look at the last 13 years - and neve beyond that.

    "The public finances have been destroyed by Labour, who have left this country in the worst financial mess in our lifetimes."

    Let me quote you this fact:
    "During the 1980s public spending was cut as a percent of GDP from about 45 percent down to 35 percent in 1989. But then, with the ERM sterling crisis and associated recession, it rose back to 40 percent of GDP before declining to 36 percent in 2000. "

    ..and what was Gordon Browns golden rule? (before the bank bailout left it in tatters) - to keep publis spending to 40% of GDP - less spending than when the last Tory Governement was in power

    "The only reason it doesn't appear so bad now is because the markets believe that the Coalition is serious about cuts and so the Governement remains able to borrow. "Without cuts, the markets will lose confidence and we'll find ourselves in as deep trouble as Ireland and Greece."

    ..but both Greece and Ireland made cuts!!!

    "What is your alternative?"

    Tax the wealthy - I mean they have already extracted the wealth that is now owed - so why can't they foot the bill?
    If they threaten to leave the country then we strip them of their assets before they go and renounce their citizenship.

    The dinner party is over - the bankers have fled with the wealthy to the toilet - leaving the Government and the taxpayer to settle the bill.
    Now the bill has arrived and the taxpayer isn't too happy considering the bankers bought Lobster and Caviar and the taxpayer moderately had fish and chips.

    These people aren't paying - I mean we're all agreed (apparently) there should be cuts - but not when it's cutting something I need!.

    Two can play at the selfish game - and considering all 3 parties 'promised cuts' at the election - I don't really see the people had much of a choice - even though they did their best to show they weren't happy by not voting in a majority Government.

  • Comment number 41.

    Here are our children teaching us a lesson....

    http://www.bbc.co.uk/news/uk-england-kent-11468635

    Sending the police in? - Is this how we tackle peaceful protest?

    Good thing nobody believes there is a revolution - because otherwise stories like this might make people think....

    ...still they said this was just a recession - but 2 years on and things like this keep happening don't they?

    http://www.bbc.co.uk/news/business-11466272

    You really must read JK Galbraiths book on the great depression - you'll think you're reading the latest novel on the crisis - Government and media in denial, businesses still failing (for a decade) and slow collapsing of asset prices as each new bubble pops and deflates...

    No revolution then - unless of course you count WWII!

  • Comment number 42.

    32. At 1:21pm on 04 Oct 2010, jeffa4444 wrote:
    Very few global economists see any other way of bringing down our overall dept as a country.
    ..........
    That would be those that are of the keynsian variety. The fact is there are various solutions that dont need cutbacks, specifically monetary reform and removal of our debt based monetary system, through abandoning fractional reserve banking. However, you can guarantee George and his banking chums will not be supporting that.

  • Comment number 43.

    "Which carries an unavoidable implication, which few private sector bosses dispute when I discuss it with them: if you're cutting up to 40% from a budget, either you have to stop providing certain services or the quality of services provided will suffer (or both)"

    Exactly: the key point is cutting certain services. We need to have a grown up debate (unlikely given politicians are involved) as to what should govt be doing and more inportantly what it should not be doing. I have no doubt that plenty of "services" can be find that no one really needs govt to do.

    While we are at it, would anyone outside of Westminster notice if we just sacked half of Whitehall. At least in the MOD it would probably improve the service

  • Comment number 44.

    > If implementation ushers in the kind of industrial action that
    > has brought the capital to a standstill, the transition to
    > a leaner, meaner, state may not be without trauma.

    If "industrial action" by greedy bankers brings the world to a standstill for years, surely a day or two of rail disruption shouldn't be too hard for you to bear?

    Focus on what's important - the world doesn't care if a few grubby little bankers have a hard time getting to the office.

  • Comment number 45.

    It seems to me pretty obvious that on the whole you get what you pay for - if you want to have lower taxes then you get less services. Simples. The issue is that Gordon Brown didn't want to conform to the usual Labour tactic of tax and spend so he went for New Tactic which was borrow and spend.
    Once we cut the services down to the correct amount for the taxes we pay, we can start repaying some of that debt. Of course we will have fewer and lower quality services and of course we'll all have to pay more tax. In that change, people will be made redundant, lose their houses and find things hard. Life is hard. So maybe next time the electorate won't trust someone who tells them they can have everything and pay nothing.

  • Comment number 46.

    I think that the boys in charge (well for the moment, I'll come back to this) think that the private sector will set up companies to take up the slack and do the same job cheaper so saving cash.
    Who in their right mind would set up running social services and try to make a profit? And why? Think of all the back room staff just to make sure that all is running well and up to the standards needed.
    This is only one example but with all the cuts they imply are coming why would I set up a firm, then at the next election find the market I am in taken away? There would be staff with knowledge and skills and a desire to work in many fields but a job for less than 4 years at the most???

    With the potential to make not a lot to no profit who are the boys at the top kidding?

    And back to my comment, maybe like football managers they should be judged on results only. Now that would put the jitters up a few cabinet members spines.

    Oh and 4 years to go???? Don't bank on it

  • Comment number 47.

    Here is an interesting moral dilemma. If someone emigrates, are they not defaulting upon their own share of the National Debt?

    I'm not criticising, just asking a question. Next, if a country like Kosovo secedes, they obviously can't be expected, retrospectively, to assume their share of the costs of their own repression.

    Under what circumstances might it be morally justified for a country's citizens to secede from their own state rather than enslave themselves for debt? It has happened before.

    http://en.wikipedia.org/wiki/Secessio_plebis

    How could we organise it in the modern world?



  • Comment number 48.

    Robert, interesting points. The one of more concern perhaps is that in the private sector there is more scope other organisations to mop up staff cut by a competitor.

    The real risk for the public sector is the laerge swaths of unemployed public sector workers, let us hope it is the older higher paid who go (they will have bigger pension pots and greater salary differences between JSA) leaving lower paid staff in place. The issue is that there are few other organisation who need social workers or dinner ladies so the real risk is structural unemployment for an extended period.

  • Comment number 49.

    5. - S Thomas.

    Disagree with you enitrely.

    Why do people continue to hammer the banks? They are too easy a target by far.

    It's true that board members within banks are overpaid and receive ridiculous remuneration, however, what the public fail to recognise is that banks which have received state support (be the British, Irish, whatever) have had to stop pay increases and bonus payments (under state aid rules)to normal, hardworking staff, indeed this has been in effect for the last 2 years.

    It annoys the hell out of me when you see public sector workers moaning about a 'below inflation' pay rises & unfair cuts. Below inflation?! At least you've still been receiving pay rises.

    Time for people to wake up & get with the real world.

  • Comment number 50.

    35. At 1:31pm on 04 Oct 2010, inacasino wrote:
    One can pick and choose its customers (weeding out the time consuming, unprofitable ones) the other cannot.


    I think that is the point of all this neo-liberal guff.

    Weed out anyone who relies on the public sector for one thing or another - if you need the state to provide a school, tough, if you need the state to provide your job, tough!

  • Comment number 51.

    30. At 1:17pm on 04 Oct 2010, writingsonthewall wrote:
    ‘I'm not advocating inflationary policy to evaporate the debt - but past history tells us this is the only solution to debts of such magnitude’

    Shame on you writingsonthewall.

    Do you wish to see people’s wages and fixed income pensioner’s pensions evaporate away with inflation.

    Do you wish to have our younger generation as debt slaves to pay back that which they have not even borrowed.

    ‘The only solution’………… the only solution indeed, may you and your ‘capitalist’ ilk be swept away on a tide of default.

    How about ‘Default’ as opposed to more ‘Debt’.
    Because until such time as ‘default’ is brought home to the creators of debt, nationally we are servicing their wants before our own needs.

    So there we have it, WOTW isn’t a Marxist after all, he’s a capitalist.
    Which presumably means that Lindsay from the place that can’t be mentioned is a socialist.

    Anyway stuff your capitalist and your socialists, what this country needs, is some damn realists.

    And will we get them, unlikely, we’ll probably get another dose of ‘quantitative sleazing’ to ease the pain of the slow extraction of the interest on our ‘debt’. More laudanum Mr King.

  • Comment number 52.

    @ 38. At 1:39pm on 04 Oct 2010, hughesz wrote:

    > Which ever way you cut it , the facts are these;
    > 1.The present situation is a direct cause of Labour's mismanagement.

    I was under the distinct impression that there had been a banking collapse caused by grotesque levels of greed in "The City". Did you not hear about it?

    > 2.The present public expenditure is unsustainable and we either cut
    > it back voluntarily or the markets will do it for us via
    > increasing our borrowing costs via the bond market.

    True, but the public must see the bankers themselves crushed down before
    they are exposed to hardship.

    > 3.A sppedy cut back of expenditure to affordable levels will in
    > the medium to long term be the best for the country as a whole.

    To get there certain facts must be faced. Many of the idiots who caused this mess are still holding tight. Others have grasped large wads of cash before departing. All that has to be set right, before we can move on.

    > The left's view that we can pay "Interest only" for the next 20
    > years is as flawed as Gordon Browns personality.

    The right must suffer deeply first, to reach a national consensus. We can't have toffs going about boasting, while modest people have to go on strike to get their fair share.

    That's the way of the world, I'm afraid.

  • Comment number 53.

    #40:
    "..and what was Gordon Browns golden rule? (before the bank bailout left it in tatters) - to keep publis spending to 40% of GDP - less spending than when the last Tory Governement was in power"

    Except for one minor detail - the Tories never resorted to off-balance sheet actives that PPI and PFI are. So GB's "golden rule" was more like pig-iron painted yellow

  • Comment number 54.

    #35 inacasino doesn't seem to realise that the act of making a profit is what drives up efficiency. If people are unhappy with the service they receive from a private company then they shop elsewhere and the private company either goes bankrupt or adapts and improves. It's basic economics.

    I have worked in both the private and public sectors, and my experience is the total opposite of yours.

  • Comment number 55.

    43. At 2:04pm on 04 Oct 2010, Justin150 wrote:

    "Exactly: the key point is cutting certain services. We need to have a grown up debate (unlikely given politicians are involved) as to what should govt be doing and more inportantly what it should not be doing. I have no doubt that plenty of "services" can be find that no one really needs govt to do."

    That's a double edged sword - I thought I didn't want the Government to run the railways (after British rail)....until I saw how the private train companies run them!

    You can find lots of people who will sign up to the removal of a public services - but when the private sector delivers a worse service, for twice the price, ignores and stalls on complaints and actively breaks or bends the law - for which we then have to provide a regulator to reprimend them - then those people diminish rapidly.

    It's a 'grass is greener' con - the private sector show they can operate a nice service in a small section of the service - but when it comes to delivering really big services - they fail dismally.

    I don't care much (anymore) if the trains are late and underinvested in - they were under BR and they are now - however I will be concerned when I'm being treated by "Dr Nick" for an operation - simply because "Dr Nick" has demonstrated his 'worth' by knocking out 5% more patients than the next Doctor - with a 'financially viable' increase in the death / accident rate!

  • Comment number 56.

    Yes, but surely we should remember that the private companies are cutting/spending with *their* money.

    The State is cutting & spending with *MY* money.

    I am at ease with the understanding that different rates of change occur - especially if the speed of achievement of State saving on expenditure and of State unpicking of the spaghetti of public sector systems exceeds the rate of change in the private companies.

  • Comment number 57.

    35. At 1:31pm on 04 Oct 2010, inacasino

    Excellent post - I wish there were more people like you who had experience in both the public and private sector.

    The private sector lives in a dream world where the appearance of profit on the balance sheet seems to indicate 'efficiency' - whereas the very nature of there being a profit means you were not efficient as you have created a surplus. Also the dumping of customers is another good example of why one appears to be more costly than the other.

    The real problem is that the private sector is now infecting the public sector - the reason for high pub. sec. wages at the top is due to market forces driving up salary levels - a market which is boosted by the excess profits (inefficiencies) the private sector produces itself.

  • Comment number 58.

    45. At 2:11pm on 04 Oct 2010, Peter White wrote:

    "It seems to me pretty obvious that on the whole you get what you pay for - if you want to have lower taxes then you get less services. Simples. The issue is that Gordon Brown didn't want to conform to the usual Labour tactic of tax and spend so he went for New Tactic which was borrow and spend."


    ...and yet kept public spending below 40% of GDP - which was only 5% more than the Thatcher years - and less than the spending levels when John Major handed it over - how could that be?...unless of course you are misinformed and banging a party line...

  • Comment number 59.

    45. At 2:11pm on 04 Oct 2010, Peter White wrote:

    "Once we cut the services down to the correct amount for the taxes we pay, we can start repaying some of that debt."

    I'll tell you what Peter - why don't you get on with paying down the bankers debts and I'll turn that one down thanks.

    You may do your best to blame the public spending for this crisis but we all know that 40% spend of GDP is nothing unusual for a developed nation - however it was the banks who increased that debt and reduced that income simultaneously.

    ...don't they teach you anything at private school these days??? Coem on Peter - you've got to be able to out debate an uneducated prole like me...

  • Comment number 60.

    Once again GO shows his complete incompentance or deceipt. Maximum benefits to be limited to 26000 - in-line with average earnings.

    What about the tax that these earnings are subjected to. In essence he is saying that benefits will be limited to the equivalent of £35000 of taxable earnings.

    Benefits should be limited to the equivalent of NMW. Which would equate to around £12400 and not a penny more.

  • Comment number 61.

    49. At 2:25pm on 04 Oct 2010, BytheCringe wrote:

    "It annoys the hell out of me when you see public sector workers moaning about a 'below inflation' pay rises & unfair cuts. Below inflation?! At least you've still been receiving pay rises.

    Time for people to wake up & get with the real world."

    ...isn't thet the choice you made when you decided to work in the private sector?

    Seems you want to have your cake and eat it. I always understood that in return for the higher rewards in the private sector - you understood you were more likely to lose your job in a recession.

    ....or do you expect higher wages in the private sector and the job security of the public sector - what are you - A BANK?

  • Comment number 62.

    #45 Peter White "Life is hard. So maybe next time the electorate won't trust someone who tells them they can have everything and pay nothing."

    Unless you're a superich banker of course. Then you get both parties grovelling before you and whatever ludicrous incompetent risks you take on partial information breaking every level of trust to the point when even your similar mates won't lend to you - the government bails you out and sticks the bill to the public at gunpoint. And then apologists come on here and deny that it was dishonest reckless and incompetent bankers - very few on here will defend Nu Labour to the hilt but the public debt was low before the banks tanked

    Worth repeating - these cuts are being made on a dubious mandate to pay off a debt that was incurred by lunatic plutocrats. The cuts are probably going to be savage and are being made at the demand of people who have recently demonstrated they have absolutely no idea what they are talking about.

    Thousands will lose their jobs. The treatment will probably fail disastrously because its as economically illiterate as the policies that got us here in the first place. But a few very rich corporations and people will do very well out of the collapse of the state - so they are doubtless comfortable with the risk.

    People like you would rather blame Labour - because otherwise you will have to wake up to the utter naked contempt and greed that is staring you in the face

  • Comment number 63.

    51. At 2:28pm on 04 Oct 2010, Dempster wrote:

    "30. At 1:17pm on 04 Oct 2010, writingsonthewall wrote:
    ‘I'm not advocating inflationary policy to evaporate the debt - but past history tells us this is the only solution to debts of such magnitude’"

    Dempster - do you know what "I'm not advocating" means?

    I didn't say I liked it - but history shows it the only way you will pay off debts of this magnitude (without defaulting - although it is defaulting in a 'friendly' manner)

    The answer of course is not how do we get out of this one (because all ways will caused suffering) - but rather "how do we stop this happening again" - for which we need to drop Capitalism as a system of Economic organisation.

    Capitalist - I am not.

    This is like that movie 'SAW' - we're in this room, there is a hacksaw, but not enough time to cut off the chain around my leg.

    ...so there will be pain - it's that - or death (I can't remember the details, but they're not nice)

    The situation we cannot make better - however we can make sure we don't end up here again.

  • Comment number 64.

    Deficit, Debt and Cuts.
    Why not pre-packaged insolvency for banks that fail.
    Protect retail and business deposits and let the bond holders take a hit.

    Won’t be popular with banks, but let us not forget that glorious little phrase when we view the performance of our private pensions, our endowment policies and all those other wonderful financial products we’ve been sold over the years:
    ‘Investments can go down as well as up’

    Nations are too big to fail, banks are not.

  • Comment number 65.

    *Hieronymous* Bosch, surely?

  • Comment number 66.

    38. At 1:39pm on 04 Oct 2010, hughesz wrote:

    "3.A sppedy cut back of expenditure to affordable levels will in the medium to long term be the best for the country as a whole."

    You mean like Ireland?

    http://uk.reuters.com/article/idUKTRE6932EO20101004
    ...or Greece?
    http://www.reuters.com/article/idUSATH00571620101004

    ...or maybe the bond markets will be lenient on us - like they were with Spain (markets driving credit ratings as you well know)
    http://www.bloomberg.com/news/2010-09-30/spain-s-credit-rating-lowered-to-aa1-by-moody-s-on-weak-economic-outlook.html


    Way to go hughesz - not only a false dawn - but one we can already see failing elsewhere!
    I've got to hand it to you - what will you suggest next - building a great Iron ship which is impervious to icebergs and then racing it across the atlantic at breakneck speeds commandingly announcing how your ship is the new god of the ocean?

    I am not surprised the country is in the mess it's in - when people accept Tory propoganda over actual examples - we seem to be in a country where they would rather play fantasy than face the reality of their plans.
    WHEN the Tory cuts fail and WHEN there is a return to recession WHAT options will be left for us?

    Personally I back the Tory cuts all the way - I mean it's better we put the country out of it's misery and get on with the inevitable bloody revolution than drag it out in some sort of pretence that we can 'fix Capitalism'.

  • Comment number 67.

    I’ve commented on civil and public service inefficiency a few times in the past and I didn’t want to repeat myself, but the topic is here again.
    Before I start: I’m certainly not advocating privatisation of public services or reduction in the service delivered. In fact, I’d advocate increases in spending on people who actually do things, notably in medicine and education.

    Chapman wrote two books (‘Your Disobedient Servant’ (1978) and ‘Waste Away’ (1982) both published by Chatto) about his own experience in public and civil service. I apologise for referring to them yet again, but they make ‘Yes Minister’ and ‘The Men from the Ministry’ seem the peak of efficient organisation. Those books demonstrate the potential for spending less while improving service is huge.

    The books are from a few years ago, but Chapman found that something like a 30 % cost reduction to be possible in many areas of civil and public service without impacting what is delivered to the public. The basic problem is that in much of the public sector (and a lot of the private sector), inefficiency is rewarded. Personal prestige increases with how big your department is and how much you spend. And it’s at its worst in civil and public service. Huge administrative departments grow and never go away, spend money and contribute nothing.

    It’s often the case, in private industry as well – I’ve seen it, that the main cost is people on seats. If those people are GPs, what is the point of employing an army of administrators to add up their salaries every day? It doesn’t change. But, you may say they spend by sending people to hospital for treatment. Well, the hospital and the doctors who work in it are still paid and cost the same even if the GPs send all their patients straight to the undertakers. (And as for what they spend on treatments, there’s already NICE - the National Institute for Clinical Economy, sorry Freudian slip, I meant, Excellence).

    An example I recall from Chapman: keeping a fleet of limos for transporting the management of London Transport!

    Intelligently targeted monetary efficiency can facilitate social functions. I'll go further and say a government that prefers to spend on waste rather than maintaining the health and education of our people is criminally incompetent.
    I’ll throw in some other of my hobby horses for saving money: decriminalise drugs, cancel the Joint Strike Fighter and abandon stupid foreign adventures (I’m trying to be polite) that we are incapable of carrying through.

  • Comment number 68.

    David Cameron's comparison of a countries budget to a companies budget is misleading and wrong. I'm sure he knows that but it goes down well with the electorate.

    Government spending leads to demand in the economy.

    When a company sheds jobs they can forget about the people and they won't be a cost to them. But when the government sheds the jobs these unemployed people will be a cost to the gov't with benefits and worse health etc, etc. This is just one example as to how they are different.

    You can't slash your way out of a recession. Ireland are trying to do it as we speak and not doing so well!

    If taxes are rising and govt spending is falling why will private companies suddenly become confident and want to invest and create new jobs!?

    They think the private sector will create jobs? - what a joke!!! The private sector are paying off their massive debts - even bigger than the public sector in fact.

    Martin Wolf in the FT makes the points much better than I can...

    http://www.ft.com/cms/s/0/07e8d3f4-ccc1-11df-a1eb-00144feab49a.html

  • Comment number 69.

    52. At 2:36pm on 04 Oct 2010, Jacques Cartier wrote:

    Bravo!

  • Comment number 70.

    #53 yam yzf stated:

    Except for one minor detail - the Tories never resorted to off-balance sheet actives that PPI and PFI are. So GB's "golden rule" was more like pig-iron painted yellow
    ---------------------------------------------------------
    Except for one minor detail PFI was introduced by John Majors TORY goverment. I thinked they nicked it off the Aussie Gov't in the 1970's

  • Comment number 71.

    60. At 3:17pm on 04 Oct 2010, mcmullank wrote:

    eh?

    Not brought up a family then?

    PS I don't.

    But if I did there is no way I'd be able to pay for a roof over their heads, food, and the electicity needed to cook it, and then go out and buy a pair of properly fitting shoes for the 5-year old.

    Back to the days of bare-footed children is it? Well the bankers demands must be met at any price I suppose.

  • Comment number 72.

    53. At 2:57pm on 04 Oct 2010, yam yzf wrote:

    "Except for one minor detail - the Tories never resorted to off-balance sheet actives that PPI and PFI are. So GB's "golden rule" was more like pig-iron painted yellow"

    ...no - what the Tories did is sell off the national assets in order to give the impression of a reduction in the deficit brought on by public spending cuts - what they actually did was spend more and sold off things we could really do with selling off now - and made the cost of running public services more expensive by insisting on private sector provision for local councils.

    So we're agreed then - no party has actually run the economy / treasury / Government competently for as long as we have both been alive?

    I'm not trying to defend Gordon Brown - but it's hard not to when the current Tory policy seems to be 'blame the last guy' - which does nothing to address the ongoing failure of all Neo-liberal Governemnts.

    Now is that our fault for continuously voting idiots and short term dullards into power?

    Where do you draw the line with "I gave you a job to do - you failed dismally and now I have to clear up the mess"?

  • Comment number 73.

    59. At 3:14pm on 04 Oct 2010, writingsonthewall wrote:

    I know!

    I'm trying to figure out a profitable business model for the cemetery - can I ditch the morals, empathy and concerns about disease...?

    If the rent ain't paid that will cut into the profits so out you go....

  • Comment number 74.

    56. At 3:06pm on 04 Oct 2010, GeoffWard wrote:

    "I am at ease with the understanding that different rates of change occur - especially if the speed of achievement of State saving on expenditure and of State unpicking of the spaghetti of public sector systems exceeds the rate of change in the private companies."


    ...which is why so many private companies waste huge amounts on redundancy (only to re-recruit at a later stage) - and why they're often in court defending their actions of 'rapid cuts'

  • Comment number 75.

    67. At 3:40pm on 04 Oct 2010, WolfiePeters wrote:
    Well, the hospital and the doctors who work in it are still paid and cost the same even if the GPs send all their patients straight to the undertakers. (And as for what they spend on treatments, there’s already NICE - the National Institute for Clinical Economy, sorry Freudian slip, I meant, Excellence).


    Not the best examples really but let me make a point for readers.

    Nice was a brilliant idea and still is - other than the blip about
    Been in any hospitals recently where the surgeons are all sitting around, trimming their moustaches, polishing their finger nails or just reading the newspaper out of boredom? Strangely, the guy in the local shop was doing just that last night.

    Well, surgeons on piece work would be an idea - though would you trust them when they tell you their mate is really good as kidney transplants, a bit broke through lack of work, but the good news is you need a transplant?

    Surgeons go where they are needed. Would kind of defeat the point of training to be a surgeon if they didn't.

    I wish the bankers would find someowhere to go, somewhere where they are needed!

  • Comment number 76.

    63. At 3:26pm on 04 Oct 2010, writingsonthewall wrote:
    51. At 2:28pm on 04 Oct 2010, Dempster wrote:

    "Dempster - do you know what "I'm not advocating" means?

    Yes of course I do, I just couldn't resist it that's all.
    Anyway you awful 'capitalist', how dare you reply to my post.
    May a plague of locusts descend upon your crops, may your wine turn to water, and your private pension be eroded to nothing by the charges levied upon it.

  • Comment number 77.

    • 63. At 3:26pm on 04 Oct 2010, writingsonthewall wrote:
    51. At 2:28pm on 04 Oct 2010, Dempster wrote:

    Dempster, WOTW has always avoided commenting on the issue of monetary reform and removal of FRB. I suspect that’s because in itself it will not address the failings of capitalism and therefore is for him not the ultimate solution. Personally I see it as an interim step towards a more environmental sustainable future by reforming a system that currently requires perpetual and exponential expansion, in a world of finite resources. I’m sure he would agree with that.

  • Comment number 78.

    One prediction that the banks will be back for more:

    http://www.neweconomics.org/press-releases/banks-set-to-demand-fresh-bail-out-in-2011-warns-think-tank

    One way or another it will have to be default, then confiscation of the country estates of those who caused the mess.

    We need a "Proceeds of Financial Crime Act". Crime in this case should include "Criminal Financial Negligence". And also, an end to the much abused limited liability for company directors.

  • Comment number 79.

    70. At 3:52pm on 04 Oct 2010, creditunionhero wrote:

    "Except for one minor detail PFI was introduced by John Majors TORY goverment. I thinked they nicked it off the Aussie Gov't in the 1970's"

    ...now I also thought this - but I couldn't find a reference to back it up. If this is the case then it further strengthens the "they're all the same Neo-liberal idiots" argument - and makes the "boo-ya it's all Labours fault" argument rather baseless.

    Isn't it amazing how the truth can be hidden by a few clever politicans - I mean we have one set of Neo-liberals critcising the other set of Neo-liberals for implementing policies they themselves drew up!!!

    Meanwhile - the taxpayer needs to find some more money to pay for it all....does anyone else feel like this is a conspiracy?

  • Comment number 80.

    Wlecome to the new Fascist hypocriscy.

    The spokesman for the fascist business world (The CBI) today attacked striking workers for their withdrawl of labour...

    "Employers threatened with industrial action should be allowed to hire strikebreakers to avoid widespread disruption to services, the CBI has said"

    ...because of course it was striking workers who brought this country to the brink of bankruptcy wasn't it?
    ...it was the striking workers who oversold credit which was recalled at an alarming rate creating the credit void we now currently reside in
    ...it was the striking workers who earned multi-million pound bonuses during the boom by skimming productive activity

    Back to your homes, close the doors and window and do not come out after 9pm - This is the new fascist regime of Corporation and state combining to destroy the rights of free men and force them to work - or threaten them with replacements if they do not accept poorer conditions and pay.

    http://www.telegraph.co.uk/finance/jobs/8040385/Tighten-rules-on-strikes-says-CBI.html

    FOR GOD'S SAKE BRITAIN - WAKE UP WILL YOU!!!!

    Did you think fascism would have a little introductory pamphlet before it was unveiled as the new system?

    Why should unions gain 40% to strike when Governments don't require this much to take charge of the country?

  • Comment number 81.

    #67. At 3:40pm on 04 Oct 2010, WolfiePeters wrote:

    "Chapman wrote two books (‘Your Disobedient Servant’ (1978) and ‘Waste Away’ (1982) both published by Chatto) about his own experience in public and civil service."

    The civil service has changed beyond recognition since those two books were published, alas so has the world. Yes Minister was a comedy you know not a fly on the wall documentary.

    I've said before, there is room for "efficiency savings," there is in everything but you have to decide what service is required in the end product i.e. work out what is required then calculate around it not cut 40% and worry about what's left later. This all seems very indiscrminate from the inside.

    The problem is the term "efficiency savings" doesn't mean what is says on the tin to the current government and the unwitting accomplices drawn into their world. They mean cost cutting not efficiency savings, a genuine efficiency saving is where you factor reduced output costs to produce at a desired level, that is clearly not the intention with the level of efficiency savings being forced upon departments.

    Finally a personal note, I don't usually get impassioned about my own circumstances, but do you know how frightening it is to sit at a desk for six months not knowing if I've got a job, how you're going to pay you're mortgage and how you'll keep your family fed. More worrying is this insanity will be going on for four more years, I may survive this year but not the next and so on. And why, all because the banks, markets and the ratings agencies control the world through debt. Bitter and twisted I may be, but I'm big, fit and I'm prepared to fight.

  • Comment number 82.

    If the private secter cuts a job that is a definite saving because they don't have to pay them any more but that cost goes onto the taxpayer in unemployment benefits etc.. If the public secter cut a job the saving to the government is not nearly so great because they have to pay those same benefits i think if the government made all public secter employees redundant they might just achieve 40% savings given all the costs in benefits they are going to create.This does not tally.
    As we have seen in Ireland the banks are highly likely to be in trouble again soon so what then more cuts? The figures are truly astounding to be honest i never really heard the figure a billion bandied about in this country at all until the late eighties. Lets face it this country has gone to the wall its gone past the point of no return as WOTW said earlier the time there has been a significant reduction in government debt has been in times of high inflation so that is all i expect. Bad news for Fred the shreds pension i'm sure he'll be up in arms.

  • Comment number 83.

    O dear oh dear oh dear!

    Is Boy George a bit confused? Is this true?

    http://duncanseconomicblog.wordpress.com/2010/10/04/lessons-in-budgeting-for-george-osborne/

  • Comment number 84.

    71. At 4:02pm on 04 Oct 2010, copperDolomite wrote:

    eh?

    I am bringing up a family and working and paying taxes for all those who are "less fortunate" to live on benefits that exceed my working income.

    Why should anyone on benefits be paid more than someone who works? If the National Minimum Wage is supposed to represent the minimum cost

  • Comment number 85.

    73. At 4:09pm on 04 Oct 2010, copperDolomite wrote:

    "If the rent ain't paid that will cut into the profits so out you go...."

    The best tennant is a dead tennant I always say - no noise issues, no payment problems and no 'human rights' to worry about.

    Have you considered contributing to the much flagging meat industry with your non-paying tennants? - I'm sure there's a supermarket just waiting to wrench your arm off with an offer of "CopperDolomite 75% beef sausages" (75% beef, 25% Kadaver) - all fully compliant with EU regulations of a 'beef sausage'.

  • Comment number 86.

    Whilst on the subject of PFI's - does it matter who instated it? Labour, Tory, LibDem they are all neo-liberals. Tories adopted the PFI structure and Labour upheld it.

    An excellent article on the private sector raid on the services like the NHS that the public sector provides.
    http://www.guardian.co.uk/commentisfree/2007/sep/04/comment.politics

    However a Chancellor or a PM won't be bothered much, seeing as they will never have to rely on the good old NHS. Cos they is important folks, you see.

    I'd love to see the day when a PM or a President receives a salary at the national average. I am sure the country would be run differently! Isn't a house, food, health, security enough? How about a PM on a voluntary basis? Anyone thinking of becoming a police officer will have to risk their health and safety for free for 18months, can't get tougher than that? Surely a PM's job can't be tougher than that? http://www.guardian.co.uk/uk/2010/sep/30/met-police-recruits-volunteer-force

  • Comment number 87.

    #47 Sasha Clarkson

    If you leave the USA having been a citizen or a permanent resident for more than 8 years there is an 'exit tax'.

    This was enacted in 2008.

    Wouldn't apply to every one since there is an exemption.

  • Comment number 88.

    From the conclusion of Bill Mitchell's latest blog:

    "I come back to the starting proposition that the solution to the current crisis was and remains expanding fiscal policy. It is so obvious. But a litany of lies and smokescreens have been erected to obfuscate that simple truth by the self-interested conservatives who are prepared to cause worse unemployment and rising poverty as a means to leverage their politicians of choice into office so they can garner preferred treatment in subsequent years.

    We need a riot in the streets of our towns urgently."

    If you have an attention span greater than 20 seconds, read it.

    http://bilbo.economicoutlook.net/blog/?p=11757

  • Comment number 89.

    Lessons from the Real World
    ===========================

    1. Humbly, ask the independent professionals for advice on changing any administrative system.

    2. Accept their advice as it comes from practical experience.

    3. Suspect all 'yes men' and computer system providers - they have an ulterior motive!

    4. ALWAYS TRIAL any change in parallel with the existing system - this is the critical mistake made by all amateurs (All politicians/ministers and their Administrative grade Civil Servants are amateurs - some have a long history of initiating disasters.). The amateurs want to take the saving before they have proved the new system works, and does not have unintended consequences. And yes this will cost more to run than the previous system while you are testing the new system.

    5. On no account pass any law that makes any existing administrative system more complex - particularly the Tax and Benefits system!

    6. Simple things work - complex things fail. (The KISS Doctrine!) (For example: If you want to save money cut the pay of all civil servants by the sum you want to reduce costs. This will work, is very easy to implement - and is fair.)

    That should do for a start.

  • Comment number 90.

    76. At 4:25pm on 04 Oct 2010, Dempster wrote:


    May a plague of locusts descend upon your crops - Check (Well slugs actually)

    may your wine turn to water - Check (well smelly yellow water after I drank it)

    ...and your private pension be eroded to nothing by the charges levied upon it - Check (well what little I had to begin with)

    I would respond properly - but I have assessed the possibilites and there is simply "no profit in it" for me - so I won't bother....

  • Comment number 91.

    "Explaining his thinking to the party faithful, Mr Osborne said there could be no delay in paying off Britain's deficit and warned that if he now adopted Labour policy there would be "market turmoil, the flight of investors... the return of crippling instability, Britain on the brink"

    Ah ha Georgey Porgey - I'll see your 'britain on the brink' and raise you "Tory cuts will kill growth as the private sector is now reliant on the public sector for it's income in many key areas - and those cuts will decimate both public and private sector whilst increasing the social security bill and take Britain into the Economic doldrums for decades"

    ..it's like a game of poker - where every hand is a losing one and Ace's are clearly not high.

  • Comment number 92.

    81. At 4:41pm on 04 Oct 2010, NorthSeaHalibut wrote:
    #67. At 3:40pm on 04 Oct 2010, WolfiePeters wrote:

    Finally a personal note, I don't usually get impassioned about my own circumstances, but do you know how frightening it is to sit at a desk for six months not knowing if I've got a job, how you're going to pay you're mortgage and how you'll keep your family fed. More worrying is this insanity will be going on for four more years, I may survive this year but not the next and so on. And why, all because the banks, markets and the ratings agencies control the world through debt. Bitter and twisted I may be, but I'm big, fit and I'm prepared to fight.


    And that's the problem.

    Anyone who doesn't feel like that is
    a) a banker spvi,
    b) a politician
    c) all ready been handed the T-shirt
    e) so loaded, who cares?
    d) not paying attention

  • Comment number 93.

    84. At 4:50pm on 04 Oct 2010, mcmullank wrote:

    "Why should anyone on benefits be paid more than someone who works? If the National Minimum Wage is supposed to represent the minimum cost "

    'IF'

    ..if the minimum wage also incorporated time lost - then this would be true. We might feel good about getting our first jobs - but most of us work through the pain of knowing that you could be at home on the dole for a little less.
    I guess it matters how much we value time - just because we're mugs who work for less than we should - does that mean everyone else should too?

  • Comment number 94.

    Nice article Robert - but of course government departments are not like private companies - they have room for a LOT more slack (dare I say, that is their primary internal agenda?). Perhaps we could rank some departments (e.g. social security) rather like charities - i.e. how much do they get in and how much do they hand out? Come to think of it - we could do the same for Defence. For example, what is the total budget compared to the true mark to market value of the men and materials we spend it on. I bet there is quite a difference...

  • Comment number 95.

    85. At 4:51pm on 04 Oct 2010, writingsonthewall wrote:
    73. At 4:09pm on 04 Oct 2010, copperDolomite wrote:

    I did. But skeletons don't have any muscle tissue.

    think I'm losing the plot.....

    (73 It was sarcasm 'cos skeletons don't pay so no profit, so no value to neo-libs!)

  • Comment number 96.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 97.

    86. At 4:52pm on 04 Oct 2010, RiskAnalyst wrote:

    I'm pretty sure health care was part of the WTO neoliberal agreements. So privatisation by the back door is how we've kept our promises.

    Don't think I saw parliaments on the list thought there is time to draw up a new list!

  • Comment number 98.

    86. At 4:52pm on 04 Oct 2010, RiskAnalyst wrote:
    http://www.guardian.co.uk/uk/2010/sep/30/met-police-recruits-volunteer-force


    So you need a bank loan to get a job these days!

    Now what was that word for the white folk in the US cotton fields? That's it 'indentured'.

    Indentured officers of the law! Genius!

  • Comment number 99.

    Aye, who needs a small state?

    'Tennessee County’s Subscription-Based Firefighters Watch As Family Home Burns Down'
    http://thinkprogress.org/2010/10/04/county-firefighters-subscription/

  • Comment number 100.

    WOTW

    It is possible to reduce the trade deficit and reduce consumption since so much of what is consumed is produced overseas.

    Unfortunately this would mean that the rent paid to the government of 20% on consumption (more on petrol, booze and cigarettes, less on fuel, nothing on food) would also reduce.

    This is why, in the good times, government should not spend money it hasn't got - it can't predict what we consumers might do in the bad times.

    Actually, it can't predict what we might do in the good times either. We might choose not to move or re-decorate or buy a new car or take holidays or buy more shoes or handbags or mobile phones. We might choose to turn the thermostat down or walk or we might never need another towel or saucepan before we die. We might be too old to care about consumer products or the latest drivel autobiography from some celebrity. More of us might have to pay less to travel and might get to watch free to air TV for free. We might choose to eat less in restaurants or buy fewer mocha blocha chocka coffees or cans of Stella. We might choose to give up work and stop paying taxes to look after aged relatives, loaf or open our legs to the next swinging dick that rounds the corner. We might choose to heed the climate change gurus and reduce our carbon footprints.

    Government can't predict what anyone of us might do, individually or on masse, that's why it should be modest.

    Unfortunately, sucessive government from 1948 have made more and more unsustainable promises to more and more people. Interestingly, its workers without children who have come off worst over this time.

    Even before the crisis, government spending had almost doubled in 10 years. Some reversal of this state of affairs is necessary because you and I and millions of others cannot spend or work our way out of it.

    Can this be done without harm to the weakest in society. I rather think it can. Just take for example the very recent position whereby councillors now get substantial allowances for doig something they used to do voluntarily. Quick back of envelope calculations indicate about half a billion savings per annum. That would pay for about 18,000 care workers.

    I previously did a similar calculation regarding the amount of printed drivel produced by public bodies - you'd get the same result. And what about the advertising. How about street lights - what would you prefer - lights blazing all night all over the country or some policement or social workers or dinner ladies or bin-men or street cleaners.

    So you couldn't be a graphic designer but you could have employment - doing something we need to have done not something dreamt up in a think tank discussing 'how we engage with tax payers' or some other such nonsense. Instead of paying bureacrats to assess the need for payments for social care, pay people to deliver it.

    Should those earning over the higher tax rate get any benefits at all.? Should wealthier old folk get a load of freebies? Should public sector workers get state pensions and employee pensions above a certain level?
    Should it be possible to survive from cradle to grave on handouts when people will come half way round the world to work in the UK leaving family and home behind?

    Its possible to go on and on but what is certain is that there are plenty of people with snouts in the public trough and I'd include the 9000 people earning more than the Prime Minister who work in the public sector and a bunch of hangers on.

    Costs can be cut or re-aligned. All over the place.

 

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