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Efficiency swipes

Stephanie Flanders | 22:06 UK time, Thursday, 8 April 2010

This is what happens in election campaigns. Within days, the debate between the parties is said to "hinge" on a complex statistical argument which no-one had heard of a few weeks ago - and few people understand.

The mind-bending skirmish this week is over efficiency savings: specifically, the £12bn of them which the Conservatives have said they will deliver in 2010-11.

You'll remember they've said they'll reinvest half of those in the NHS, overseas aid and defence. The remaining £6bn they'll put toward avoiding most of next year's planned rise in national insurance.

Labour now says that the Tory plans "have the strength of a house of cards". Their argument boils down to this: we are already making the savings that the Tories are talking about; their own adviser doesn't think it's possible to do a lot more this year; therefore, George Osborne will be forced to cut front-line services to make his plans add up.

What is the truth? The short answer is that no-one knows: hand on heart, no-one on either side of the debate can predict exactly what a Tory government might be able to deliver. But I've now done you the favour of reading the Final Report of the Government's Operational Efficiency Programme (OEP) from April 2009, which Dr Martin Read - now a Tory advisor - helped to write. (Trust me, that's a big ask.) That's led me to some interesting conclusions.

For those that suspect a contradiction in terms in that last statement ("interesting? A year-old government report on operational efficiencies!?"), I'll give a sneak preview.

I don't think there's much doubt the Conservatives could find net cuts of £6bn in 2010-12. That's about half a percent of GDP. I've just come back from Ireland, where they cut spending by more than 4% of GDP in 2009 alone. In my next post I'll tell you more about the Irish case, and the lessons for the UK.

I'm also confident that many of those savings might be classified as "efficiency savings".

But here's the rub: unlike Labour's efficiencies, that £6bn will be coming directly out of budgets that departments had expected to spend this year. Whether "efficient" or not, they will be cuts. They might or might not represent a better way to cut borrowing than raising national insurance, but like that tax rise, they are unlikely to be pain-free.

Now, for the lovers of detail, some facts.

First, it is true that the government is already planning to save money, this year, in many of the areas that the Tories highlighted in their plan: for example, by cutting back office operations and IT projects, negotiating better deals on contracts, and better managing government property. These were the focus of the OEP, and roughly £6bn of the £15bn in savings planned for 2010-11 are lifted straight from there.

Interestingly, for the Tories, the report suggested there were more savings to be found - about £9bn of them. Many of those are included in the £11bn of efficiency savings for 2011-12 which the chancellor announced in the Budget.

The Conservatives have pilloried the government for wilfully allowing this waste to continue another year. Labour says it's not feasible to do more right away, and they say the independent advisers who wrote the report agreed. One, Gerry Grimstone, publicly supported the government on this point, in the pages of today's FT. The report itself was less strident, but it did say that further savings "will take time to deliver", suggesting a target of 2013-14 for the full amount.

So, yes, only one year ago, Dr Read, one of the main standard-bearers for the Tory plan, seems to have put his name to a report suggesting that savings of the order of £12bn would not be possible in 2010-11. But he, and the Tories, have a few get-outs.

First, even in that report, it's striking that the chapter Dr Read was closely involved with - on back office and IT - points out, more than once, that the three-year time-scale for achieving total saving in those areas of about £7bn "is at the upper end of private sector experience".

Dr Read might well argue that a new government, less beholden to civil servants, would be able to ram the changes through more quickly. In fact, Sir Peter Gershon has said a new government should up the ante, by promising to outsource back-office functions to the private sector if officials don't come on side.

There are other areas where the Tories might find some wiggle-room: for example, the report suggests that an extra £5.7bn could be gained from more collaborative procurement as soon as 2011-12 (basically getting different parts of government to club together to negotiate with the private sector). It doesn't seem beyond the realm of possibility that some of those gains could be achieved a few months earlier.

So, the report suggests that a determined Conservative administration might find another few billion in savings in 2010-11 from the measures outlined in the OEP.

It's worth noting, too, that there are items on their list that aren't explicitly included in the government's programme: notably, controlling recruitment, and cuts in "discretionary spending".

It's true, as Labour says, a large share of of the new hires in the public sector in the past two years have been in the NHS, which the Conservatives would protect. But Dr Read says the turnover rate in the public sector is typically 8%. There are about 3 million people working for central government, of which about half a million are in the civil service. If he's right about the turnover (I'd welcome some independent verification), that would mean more than 40,000 people civil servants leaving their jobs every year.

There's no doubt that cutting those jobs would save quite a lot of money. What we don't know is whether the colleagues left behind could easily fill the gap.

The same goes for cuts in "discretionary spending". (Apologies for those who are now losing the will to live. But come election time, I become the "boring but important detail" correspondent.)

Labour says that these kinds of savings are, in fact, embedded in the £15bn efficiency savings they planned to achieve in 2010-11, because those were to include a 5% cut in administrative budgets.

But there's nothing to stop the Conservatives making it 10%. Again, the point is not whether they could do it. It's whether we - or the economy - would feel the difference.

I return to the point I made when the Tories first announced their plans last week: back-office staff spend money too. When they lose their jobs, they spend less. When IT companies lose public-sector work, that hits their bottom line as well.

As we've seen, Labour's efficiency savings would have had many of the same effects. The difference is that under the Conservatives there would be £6bn more, which departments won't get to spend.

Where does all this leave us? Well, Labour is right that there's substantial overlap between the Conservatives' £12bn and the government's £15bn in savings for 2010-11. But the Conservatives are probably right that you could save more within this financial year - quite a lot more. And you might say they don't need to find an extra £12bn in efficiencies - only the £6bn they are actually planning to take off unprotected budgets. (Of course, to keep their promise they need to find the full £12bn, but they only need £6bn to be able to fund the national insurance cut.)

So, it's possible. But, to return to where I began, that £6bn will be a real cut: a cut in the amount of public-sector demand in the economy, and a cut in in the number of people employed directly or indirectly by the government. For the departments affected, it will represent a real-terms cut in their budgets of 2.8%, on top of the 2.4% cut they were already expecting under Labour.

There is no way to know whether or how that cut will affect the way the government does its job - not to mention that vaunted "front-line" of public services.

However, it's interesting to note that Labour announced a similar £5bn cut in spending on public services for 2010-11, back in the 2008 pre-Budget report.

Looking back at his speech, I see that Alistair Darling didn't suggest those cuts would be painless: he said they were the result of "tough choices, but necessary choices." I wonder if Labour would change its tune, if Mr Osborne used the same phrase today.

Comments

  • Comment number 1.

    Great blog Stephanic. In addition, I get to be the first poster.

    The big surprise for me, quite frankly, is that after 13 years of Labour government, why - if they are so great at managing the government - are there any substantial efficiencies at all? The probable answer is that a government that is spending (which helps its popularity) wont worry about it since the extra public sector jobs create a natural ' constituency' for them.

    that is why I think it is time for a change of government - maybe to one with a different philosophy.


    Oh by the way WOTW -

    there will be revolutions (especially in excitable mediterranean countries) but not in Britain - too long a history of docility.

    There will also be some sovereign defaulters on their debt but nothing huge - the reason? The sums are too huge - all the lenders need to manage a steady unwinding (ie the Chinese) - their economies rely on healthy other economies to export to. It's the old adage - if you owe a bank £1 million you are in their power but if you owe them £10 (100, 1000?) billion then they are in yours.

  • Comment number 2.

    An American approach (from the Republicans) is known as 'Starving the Beast', i.e. simply give departments less money to spend and let the local managers (who have the expertise) find the savings.

    A good recent example is Network Rail's 2009-14 spending determination. It was given £4billion less than it said it needed to deliver certain outputs. It has forced the company to make difficult decisions (witness the strike action narrowly avoided this week), and make efficiencies, such as cutting jobs and holding down pay. The crucial thing is that it is down to the company to determine where the efficiencies are, not the government.

    This seems to me to suggest a future model of keeping expenditure down.

    Why can't this be replicated in other areas of government delivery, such as schools, hospitals and the police?

  • Comment number 3.

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

  • Comment number 4.

    As the government directly employs about 3 million people I guess that some of the saving that the Tories will make will come from not having to pay the employers' increased National Insurance charges. My best estimate is that this will save them about £1 billion a year. I wonder if the promises made by the Labour party with regard to ring-fencing front-line services include a provision for the increased tax cost of providing them or are they simply going to give with one hand and take away with the other? Is the NI increase a sleight of hand and simply a way of taxing public spending? Surely Gordon would not be so underhand? But, just out of interest, I would like to know how much the tax increase is going to cost central and local government employers and how they are supposed to fund it.

  • Comment number 5.

    @EmKay

    I can understand your frustration about continuing inefficiency in the public sector, but I think it's actually a bit harsh to blame the government entirely. The public sector machine is a bit like an oil tanker and just as difficult to turn. The labyrinthine structure means it has a massive momentum and even will good will at all levels changing things is a collosal job of work. Those in the private sector will, of course, say that the complexity is part of the problem, but NONE of those bosses who have been signing letters run business anywhere near as complex as for example health or the schools system - it's a level of complexity an order of magnitude greater than anything in the private sector. So it is always going to take time which is why Cameron is being less than honest about how quickly efficiency savings can be made.

    As several commentators have already pointed out, the dread Thatch couldn't make much in the way of savings in the public sector she loathed like poison, so she had no other option but to raise taxes.

    One last point about these efficiency savings especially procurement. This involves renegotiating contracts with private sector companies supplying tech and services. So where are these efficiency savings going to bite and where will the job losses come? The private and public sectors are intimately linked in a mixed economy and cuts in one will necessarily affect the other (after all we need to cut the public sector now because of private sector misbehaviour).

  • Comment number 6.

    @ltfcunited

    Your faith in managers is touching. Most of the problems in the public and private sectors (remember Fred the Shred) stem from managers rather than the front line workers. Remember that many people who are in managerial posts have risen to the level of their own incompetence - they get promoted as a result of doing a job well and then stop getting promoted the minute they reach a job they can't do (I believe it's called the Peter Principle and everyone in the public sector will recognise the phenomenon). Witness the only response to the fairly small cuts (so far) in FE/HE funding. The only thing managers can think of doing is to cut jobs - this has resulted in the loss of c10,000 jobs already. Cutting jobs is the first, last and only idea these guys come up with and this is why we can look forward to a truly collosal rise in the level of unemployment - 100,000 has been estimated as a possible fallout from the additional £6bn efficiency savings announcd by Cameron to offset the NI rise - but given the FE/HE experience this is likely to be a big underestimate.

    You may not see this as a problem, these are after all non-productive public sector workers, but if you create a climate of fear in the public sector then you end up with 6 million families too afraid to spend and that will have a BIG effect in the private sector.

  • Comment number 7.

    Small, then Smaller then Smallest
    Large, then Larger, then Largest
    …Actually turn up for work, then do something, then do something useful, then do useful efficiently.
    Don’t ask government workers to “do something useful efficiently” – and certainly don’t make an election issue of it – they are stuck on stage 1 : Government workers break all ‘sicky’ records.
    When they finally turn up, is what they do of any use anyway ?
    – Do we miss their products and services when they are on their sick leave ?
    A friend of mine had private treatment for scoliosis using Theraflex and now dances salsa, another with the same problem and level of severity had NHS – Government - treatment and now hobbles round town with an iron bar in her back and can't bend over to tie her shoe laces.
    The archetype of the level of ‘government produced’ product and service quality is the classic NHS specs – it’s so close to zero and frequently negative it's possible we'd be better off if they were on sick leave all the time.
    No, the whole point of government workers in the first place is this : The increase in Government borrowing to pay them - if they do anything actually useful, that's a side issue bonus:
    Increase in Government Debt = more or less extra money in consumers pockets not paid by companies to workers and not appearing in costs and hence available to fund profits (Profits = getting more back than you paid out).
    Increase in Government Debt :
    2004 £56.1 Billion
    2005 £60.5 Billion
    2006 £28.4 Billion
    2007 £38.8 Billion
    During these years, commercial companies had retained profits each year of £200 Billion- ish - i.e. they took pack in prices £200 Billion more than they paid out in wages and dividends (Blue Book).
    The £50 odd billion of increase in Government debt per year at tthis time was a significant part of the extra money that needed to be created to provide this £200 Billion per year shortfall. What does it mean anyway for a government worker to be more efficient ? - Can they go on yet another more efficient racial awareness course ?, can they fill their sick leave forms out online ?
    - Government prosecutors being more efficient means they only prosecute 'open and shut' cases - No, what this 'efficiency' means is that the government will make cut backs and will pay less money out to government workers and so reduce the amount of the increase in government debt - but this will mean that commercial companies will have less 'extra money' in the country to fund profits and so will close down. NEFS - Net Export Financial Simulation is a far better way to provide this need.

  • Comment number 8.

    My apologies - Gershon suggested 40,000 jobs not 100,000 - still I reckon a massive underestimate if the attrition rate in FE/HE is anything to go by (about 25,000 jobs per £1 bn - even this is a conservative estimate of £40K per job - at my own HEI the rate is closer to £34K per job).

    Incidentally re. Willett's assertion that the extra savings don't equate to job losses, this sounds like Lammy and Mandy telling us at the end of last year that the HE cuts should all be found from efficiency savings. The outcome, P45s all round. Huzzah!!!

  • Comment number 9.

    We are going to get cuts in the public sector regardless of who wins the next general election. The real question is how those cuts are achieved. I suspect we will see a proliferation of more targets to drive "efficiency". It would be good for more politicians to read John Seddon’s book on Systems Thinking in the Public Sector. Sadly the education and experience background of most politicians means they really do not understand systems thinking.

  • Comment number 10.

    In any organisation there are always efficiencies that can be made. I know how some of our well respected high street and international companies are awash with inefficiencies even though we think of these companies as slick. As usual, however, the Tories think that you only improve efficiency by using less people. That is not the case and quite often it can increase inefficiency. The most successful way of improving efficiency is by improving the way things are done and doing more for the same number of staff. The unit costs then come down. If a hospital does more with the same number of staff, then waiting lists go down and patients get back to work sooner. Everyone wins.

    A regards the 20 times rule for salaries in the public sector,I just don't see people on the highest salaries anywhere working twenty times as hard as the person on the lowest salary.

    If we need to repay some of the money borrowed, surely that should come from the ones who have benefitted most from the economy over the last decade ie the the richest who have been earning twenty times as much. Not only have they got most out of the economy but it would have less effect on them and they have their existing thick layers of wealth to protect them. Surely a wealth tax is the fairest way forward rather than making the lower paid suffer.

  • Comment number 11.

    I think it is fairly well known that in the education sector about 40% of the budget doesn't reach the school gate - it gets hoovered up within the DCSF and local authorities. How about reducing the central part of this to about 50 people, and the local part to about 10 (to handle admissions) - and by the way nothing bad would happen if you did this. The should reduce the overhead to less than 5%. You could then give Heads a 25% uplift in money to spend improving the education of our children (which might get close to the low end of of the independent sector in money spent per child), reserve between 5% and 10% for additional targetted spending in areas of extra need and still save money.

    The question is, whether you regard jobs which are there to 'monitor targets' and advise on diversity and equal opportunity etc. as frontline services. In a big government model, you do, in a self-actualised society, you don't. It's the difference between 'doing as you are told and following the formal model of society as defined in the ever burgeoning statute book' and building a society that mixes formal rules with informal societal norms. The trouble with this government's interpretation of the former (because they believe 'they know best') is that the rule book is written based on the assumption that individuals in society do not know how to function in a community (and I'll agree, some don't, but most do). The 'smaller government' model emphasises local action, wisdom of local leadership, community spirit etc. as exemplified by people's responses to charitable causes and such like.

    That's why good schools are always led by outstanding heads and leadership teams. Interestingly the 'big government' response to this is to set targets and measures to make all schools the same - and in some corners of the education establishment they have actually talked about 'levelling down' where high performing schools are an embarrassment (because they show what excellent local leadership can do in spite of the 'big government approach' - this smacks of a twisted soviet-style thinking i.e. everyone is equal, and if the performance figures don't show that, we'll adjust the measures and selection rules so that they are equal. The thing is, while everyone should have equal opportunity, we're not all 'equal' - society isn't homogeneous. The 'small government model' therefore says - let's find the absolute best heads and leaders and let them get on with the job that they are best suited to. Sure, we'll have a strong inspection system, but let's get rid of all this daft reporting that Ed Balls comes up with every week - that in itself would give school leaders more time focus on 'improving frontline services'

    Written by someone who believes in a socially responsible society, but can't stand paying for someone's idea of 'big government

  • Comment number 12.

    What I find increasingly depressing the amount of 'over simplified' (a euphemism) information that we are expected to digest. It comes from all parties, but I will use the one that came from the Tories last night and is the most recent one I can think of this morning (but this is not meant to be Tory bashing)

    'With the high turnover in the public sector we should be able to make savings by not recruiting, there won't be compulsory redundancies.' This sounds very appealing - saving money and no one gets hurt. People have said that this is in fact a cut - well so what? We all know cuts have to be made and with no compulsory redundancies no one gets hurt and we still save money. My first reaction is that the real efficiency saving is to cut down on turnover and stop people leaving their public sector jobs. That way you save by having to spend less on recruitment and training and by having more experienced staff you will probably need need fewer staff and fewer supervisors. The non-recruitment policy is obviously barmy. If a child protection officer leaves do we not replace them even if there is no one with the required skills to replace them in the department? Some of the largest turnover is in the low paid frontline - do we stop recruiting hospital cleaners?

    My point is not to specifically attack this utterance, but to say that the whole campaign is littered with such examples. Are they serious about such policies which have so many holes in them - I can only think of John McEnroe? Or do they think that we are so gullible that we believe what they are saying? Or are they being very cynical and believe that while lots of people won't believe them, there remains a few hundred thousand who can be duped and influencing these using 'over-simplification' will have a major effect on the outcome of the election?

    Depressing.

  • Comment number 13.

    By the way, before anyone complains about the 'cutting jobs' implication in my last posting, people in jobs no longer needed can apply to become teachers (i.e. an increase in frontline service effectiveness).

  • Comment number 14.

    If there is one reason not to vote in this election it is the silly comments written above.

    As with all of the political parties you are being drawn into concentrating upon the symptoms and not at the disease. The comments by Gelnis are just rabid and don't even deserve further comment.

    Now, Fairsfair in #10 is on the right track, "The most successful way of improving efficiency is by improving the way things are done and doing more for the same number of staff. The unit costs then come down.". We need to re-look at a whole range of public sector activities and see how they can be delivered more efficiently. This is a far harder exercise and will take a lot longer than the mere bloody cull that is likely to be inflicted.

  • Comment number 15.

    Steph,
    Please tell me you are aware that we are in deep trouble? Tories efficiency cuts will not do the job. A full austerity package the size of the Irish is required. Why are you telling us about what the politicians are talking about rather than working out what really needs to be done. Our recent gilt issue was badly received because we are not debating the true figures.
    I am also amazed you have only just read the Final Report. You are a journalist, this should have happened the moment it was announced.

    We will not reduce debt without heavy public sector job losses and wage cuts.

  • Comment number 16.

    I don't think the Tories are presenting this National Insurance argument very well in respect of the scare that Labour are able to generate about public sector cuts.

    Try presenting it this way Dave :
    Labour have forecast overspending by £163 billion in 2010-11.
    We think it's reasonable to only overspend by £150 billion.

    It's quite scary that this seems to be scaring the British people so much.

  • Comment number 17.

    Surely if there are 12 billion pounds worth of 'efficiency' savings to be made (really?), they should be made anyway? Would it not be better to channel the savings into reducing the deficit?

  • Comment number 18.

    Today in my Smolensk butcher’s shop, where Yuri is make horse hoof pie, we are puzzles at this story. Implications of debate between parties is that cut of public spend is increase unemployments. Yet in Yeltsin era in Russia, public sector wages is slash, wages is often not pay, yet few is lose jobs.

    And in Vlad Putin glorious manage democracy, we are use troops from time to time make public sector workers accept lower pay and higher productivity. So recommend to Sir Gershon and Doc Martin Reed that route to reduce deficit is real pay freeze. No pay for public sectors workers for six months. And if Sir Humpty is not happy, place heavily armed marine at desk. He plenty productive then.

  • Comment number 19.

    I'm always a bit baffled by the way the "private sector" is lauded as an example of how to do it, whatever it is. Comparing like with like, (and I emphasise that) the private sector must cost more, because it has to make a profit. We all know that none of the privatised utilities, for example, are better than when they were in the public sector - if you've ever tried to work out the best deal for your electricity, you will know that, while being baffled by the sums paid to Chief Executives. Similarly, how can you have a more efficient/better railway system that doesn't function without the bedrock of public subsidy? Or should that be called a bribe? And don't forget the PFI fiasco, of course. A private gravy train if ever there was one, and they can't even make that work - witness Tube refurbishment, Crossrail. As a rule, the private sector milks the public sector for all it's worth, and that's where savings can be made. And I haven't even mentioned aircraft carriers yet......

  • Comment number 20.

    Good blog.

    Surely the really interesting bit though is that if all of these "efficiency savings" exist, then that means that the previous government was "inefficient"?!

    In such a case it doesn't matter if the Tories are covering the same plan as Labour in gaining these efficiencies - they are still proposing more than was delivered by Labour.

  • Comment number 21.

    Jaundiced_Eye

    "You may not see this as a problem, these are after all non-productive public sector workers, but if you create a climate of fear in the public sector then you end up with 6 million families too afraid to spend and that will have a BIG effect in the private sector."

    The problem that I see is that this country is spending money (£167bn this year at the last count) that it doesn't have. This has to be sorted sooner or later.

    Most of the public sector spending goes on either jobs or benefits. Jobs will have to go and benefits will have to be cut

  • Comment number 22.

    Another Tory-bashing blog? This is the BBC after all.

    The government could find the efficiency savings it needs without any doubt - good for them. Where have they been for the past 13 years? Where is the BBC focus on the past decade-and-a-bit of government waste? Nowhere. Where are the tough economic questions for Darling, brown and co? Nowhere.

    This is the lamest election coverage in years and the most blatant labour propaganda yet.

    As soon as any party says it can do better than the government then the Beeb leap all over it.

    Balance. That's all I'm asking for.

  • Comment number 23.

    The current debate is like talking to someone who piles on weight over Xmas; then complains that a diet will be painful and difficult so will put it off for a bit longer, as many unnecessary things need to be cut out.
    Who piled on the excess, some in the form of jobs in the public sector anyway? More than 300,000 under Labour and are the services better?
    Of course cuts are necessary, all the parties should stop treating us like fools and get on with it.
    Start by reducing quango’s and getting MP’s to earn their crust, stop creating so many parliamentary reviews and take some action instead of talking about it.
    There’s a few millions saved with a few moments thought without affecting front line services.

  • Comment number 24.

    It is true that if civil servants are made redundant they won't spend as much but it is not true to say that it is money taken out of the economy. The argument (a long one over the decades) is about who is best placed to spend the money and the effect of government spending on real wages and purchasing power within the economy. It's too simplistic to trot out the Labour line that Tory policy would take out money from the economy without stating the reasons why the Tories believe that savings and cuts would lead to a much more efficient distribution of spending within the economy, to the benefit of all not just civil servants.

  • Comment number 25.

    Stephanie - if you carry on like this, your deserve an award. Absolutely excellent blog.

    One further point: The Tories are simply promising to accelerate cuts that Labour would make anyway a year later; Labour's delay is just typical smoke and mirrors to win the election. Labour's hysteria around is therefore absurd.

    So the next time Labour scream about Tory cuts, please point out that they'll be making the same cuts, just 12 months later. Bit of a weak argument really.

  • Comment number 26.

    Well Steph here is the verification I come to get thing perspective:
    Let’s assume the average public sector worker costs £30k per annum, pays 20% paye, 11% NI, their VAT, fuel, alcohol, cigarettes duties etc come to another 19% then the net cost of the worker is £15k per annum. Let’s assume benefits and early pensions would cost £5k per annum per person
    To save 12bn this would actually equate to 1.2 million jobs
    Savings by 2013-14?
    You would need to identify the jobs redundant, carry out the process of who is to go including asking for voluntary redundancies and pay redundancy which could be up to 2-3 years’ salary much of which is tax free. I doubt you would start to even get back to the expenditure where at by 2014 let alone savings
    I know talking of billions can be mind boggling, but Osborne and co are completely bluffing to the people
    Saying that the Tories savings are based on a house of paper cards is actually very generous to them

  • Comment number 27.

    Savings are possible.

    Take for example Scotland's colleges. Of the 21,000 total staff barely half are teaching staff (12,400). This implies a support-to-front-line ratio of almost 1. Savings far beyond 4% seem possible if this is representative for the whole public sector. Don't forget that you can perhaps also differently organise the teaching.

    https://www.sfc.ac.uk/statistics/facts_figures/0809/staffing0809.aspx


    A few other figures:

    27 billion that the conservatives seek to save represents less than 4% of what the government spends every year. Now, can't you yourself safe 1 out of every 25 pounds you spend? Unless you are a single parent who has ran into misfortune, the answer must be "yes".

    750 billion annually is what Brown is spending every year on your behalf, which equals 34,000 pounds per full-time job in the private sector, which in turn is more than the 24,000 pounds average wage (this seems hard to sustain I would suggest).

    170 billion deficit for the current fiscal year and 170 billion deficit for the one that has ended a few days ago equal twice 7,700 pounds per full time job in the private sector.

    1.5 trillion government debt by 2015 equals 68,000 pounds per job in the private sector.


    Think about it: every year the government spends more money than all the private sector wages combined. Of course, you have coporation tax, stamp duties, VAT and tax on smoking and drinking and driving, but this surely seems unsustainable. Otherwise, soon government spending will represent 100% of GDP, but that GDP might be shrinking pretty fast.


  • Comment number 28.

    Labour always scream when the Tories announce cuts; yet Labour also have a history of announcing very similar looking 'tough choices' fairly shortly afterwards. I'm getting a bit tired of their cry of 'wolf.'

    Labour's tax rise is also money taken out of the economy; so when Labour scream about risks to growth, they need to recognise that they making all of us poorer through their tax rises, which means we will have to spend less, which means growth will take a hit.

    Labour can't be allowed to claim that the Tories' plan to reduce spending would cause pain without also admitting that their plans to raise taxes would also cause pain. The question is which pain is greater? Personally, I'd like to think the Government could make 3% savings after 13 years of uninterrupted largesse. It won't be difficult, despite the Labour hysteria.

  • Comment number 29.

    Like two bald men fighting over a comb!

    £6 Billion here, £12 Billion there. People need to wise up about where we are heading.

    20% cuts across the board will be needed if we are to avoid being a zombie economy for decades. And even then, who knows.

    Raise interest rates, slash spending, mark to market, accept deflation.

    Take the medecine now, and our children can rebuild this great country.

  • Comment number 30.

    #16 Spot on. That is extactly how it should be described.

    Too many don't realise that approx 1 in 5 public sector jobs are currently being paid for from BORROWING money.

    I also don't understand why Gordon Brown believes he can suddenly be trusted on the economy. He hasn't balanced the books since he abandoned Ken Clarke's spending plans. Now he is trying to convince us he is the man to turn it around, but if he couldn't balance the books in the good times what makes him think he can do it now?

    Labour inherited a budget surplus in 1997 and 12 years later were printing money.

    We are looking more like Greece and Ireland every day. Watch them if you want to see what is coming.

    Now you can blame the banks, the regulators, Brown or all of them, but I am not sure you can pin it on Clegg or Cable, Cameron or Osbourne.

    And please don't blame it on Thatcher - she inherited a mess as well!

  • Comment number 31.

    writingsonthewall wrote:

    a) Where does profit come from?

    Profit comes from demand outstripping supply, with market efficiency this will ensure efficient allocation of limited resources. Obviously this is not a perfect process.

    b) What is the success rate of FIAT currency systems?

    High. If measures are taken to curb excesses then inflation and debt shouldn't be a problem.

    c) What real difference is there between Tory and Labour economic policy?

    The political leaders have different names.

    d) Why is there not going to be a mass soveriegn debt failure considering most countries are 'maxed out' and interest rates are about to rise due to market jitters?

    Sovereign debt failure is a possibility but it won't be the end of capitalism. The end of capitalism comes if we don't allow failure to happen- or banks to fail.

  • Comment number 32.

    Dont envy you Steph, havign to read that report, but you are so far in the trees you might lose sight of the Wood.

    Here are a few things we can all instinctively acknowledge without seeing the detailed numbers
    1. The explosion in public spending in the past decade was more or less a necessity after too long a period of Tory thrift.
    2. No Organisation, Public or Private, could deploy such a sudden growth in investment as accurately or efficently as we would like.
    3. Huge savings beyond what is being horsetraded in the political debate must be possible if the will exists to make them.

    Hence the whole election debate boils down to a collective unwillingness to admit that we all need to take a bit of pain for the long term good. Are the Politicians underestimating us? Or ar we really so weak and pathetic that we will only vote for the promise of jam today?

  • Comment number 33.

    It's still the case that the public sector is a monopoly supplier of services, with little real incentive to reduce it's inefficiencies, and it's costs, except by reducing services.

    The activities of this sector act as a drag on real world, whether it's running a business or a village hall.

    We have had little success in attempts to introduce the competitive market place drive into the public sector- we just end up with the costs of both public and private business. We need a ruthless drive to reduce the scale and inefficiency of all the the govt's activities.

    Reducing the public sector take from the economy and supporting the growth of the wealth producing private sector is the only way forward.

    Add value, not cost.

  • Comment number 34.

    The scandals at Westminster, the banking crisis and its result in terms of the public sector's deficit mask a more fundamental and long-term problem in the UK economy.

    The UK has had a large and steadily growing current account deficit on its balance of payments since 1984. For over a quarter of a century, the country has been living increasingly beyond its means, despite the temporary benefits of North Sea oil and the city's invisible earnings.

    On a weekly basis we learn of UK productive activity being re-located abroad making our current standards of living less and less sustainable. We are becoming merely a nation of shoppers. The UK economy appears to be sinking rather rapidly and irresistably while none of our potential governors appears to be aware of the problem. The current squabble about national insurance contributions in this context causes one to reflect upon re-arranging the deck-chairs on the Titanic.

    We must, at least, recognise the problem of competing against not only very low real wages, but also perhaps, work-place standards which would be intolerable in the UK. The way we are going, there won't be any lights to switch off when the last person finally leaves this country.

  • Comment number 35.

    Lets take a moment to remind ourselves why these efficiency savings need to be made...
    Labour have been running the country inefficiently for the last 13 years. They could be implementing these savings now or 6 months ago or a year ago but they are not. Why is this?
    How dare they turn round and tell us that we all need to be paying more tax to compensate for their inefficiencies!? Does the average working man not pay enough tax on everything he does already?

  • Comment number 36.

    It is rather sad and ironic that at the point when I will soon have the opportunity to vote, that is to state my opinion in writing and theoretically make a difference, I have lost all interest in this blog, the comments and the puerile bickering of the people who will be entrusted to run this country.

    Therefore I am taking a blog holiday until after the election.

    I would urge everyone who cares about this country to vote but not to vote for either of the two main parties as this is the only way they will get the message that they need to change.

    Enjoy your political posturing.

    Grim.

  • Comment number 37.

    Re 2 and 21 from ltfcunited, the problem with your solution at 2 is that much public sector output is governed by legislation, either directly as for social security benefits, or indirectly, via legislation on, for example, human rights, which means that scope for change is very limited. Managers simply could not, for example, decide to stop paying unemployment benefits, because it was not "cost-effective" - the courts would uphold the law that these are payable if conditions are met.

    At comment 21 you make the common assertion that most public spending is on jobs or benefits. In fact, in 2009-10, of the expected spending of £680bn, around £160bn was expected to be on jobs and £180bn on benefits (of which half due to go to pensioners). Half of public spending goes on other things, particularly buying from the private sector, everything from warplanes to sophisticated machinery used in the NHS to hospital cleaning. And very profitable to the private sector it is, too.

    I understand from an item on the Today programme this morning that the Tories have made clear that £3bn of their £12bn savings come from renegotiating contracts, which must translate into lower income for the private sector. That either means lower profits or a further wave of cost-cutting, ie job losses and/or short-time working, in the private sector. The idea that cutting spending in these areas is some pain-free method of dealing with the very real problem of the deficit is not true; there are no pain-free solutions.

    The item also mentioned savings of £2bn from simply not filling vacancies. This policy as a way of saving is, of course, for those of us old enough to remember the early 1980s, merely a repetition of the tactics of the Thatcher government. What this meant in practice was that people working in areas where there was a high turnover of staff, such as the junior staff in social security and tax offices, were not replaced, so the service broke down. And if you are tempted to say, ggod thing, remember this means lack of staff here means no investigators for benefit cheating or tax evaders.

  • Comment number 38.

    Oh by the way WOTW -

    "there will be revolutions (especially in excitable mediterranean countries) but not in Britain - too long a history of docility."

    ...although if you look back through British history it's littered with revolutions and revolts. It may not appear to be revolutionary in middle England - but they don't actually matter - they will be torn apart by the extreme forces on left and right.

    "There will also be some sovereign defaulters on their debt but nothing huge - the reason? The sums are too huge - all the lenders need to manage a steady unwinding (ie the Chinese) - their economies rely on healthy other economies to export to. It's the old adage - if you owe a bank £1 million you are in their power but if you owe them £10 (100, 1000?) billion then they are in yours."

    ....but history told us that a nuclear power would never default - and then it did. It's true what you say - the creditor is in a bind with the debtor - but sometimes the creditor has no choice but to call in the debt - for their own survival prospects.
    Of course it's possible we get a couple of defaults and then it blows over - but 'blowing over' simply means 'another bubble created' - which will be bigger and badder than the last one.

    The only solution they have to decline is bubblenomics - and as Marx said (paraphrasing) "The crisis of boom and bust will become more regular and more extreme as Capitalism fights it's contradictions"

    Of course he didn't know the levels the Governments would go to in order to prevent this. A lot of the 'tools' didn't exist then, they were on a Gold standard and there weren't speculative derivatives to 'smooth over' the fundamental cracks in the system.

  • Comment number 39.

    Good article.

    I'd like to see an assessment of the impact on the economy as a whole of the 6 billion under discussion being spent by taxpayers at their discretion versus the 6 billion being spent by government on the behalf of taxpayers.

    I think this would be informative as to which party's economic policies would be most likely to benefit the economy of the country as a whole. Without this analysis, one must assume that the overall economic impact is neutral, and its then a purely philosophical choice of whether you wish to pay for services from your own pocket or if you want the government to tax you and then pay on your behalf.

  • Comment number 40.

    31. At 09:49am on 09 Apr 2010, Treading Water wrote:

    "Profit comes from demand outstripping supply, with market efficiency this will ensure efficient allocation of limited resources. Obviously this is not a perfect process."

    Not perfect? - so how is the resource allocation of the markets going? don't we have parking lots with built but not demanded cars? Don't we have shops and offices - newly built but remaining empty through lack of demand? How is the market handling the allocation of resources with regard to oil? - is it running out, or not? one day the market prices as if it is, a year later it's priced as if it isn't?
    Also lack of demand does not produce 'profit' - If I ensure I am the only man in the desert with water and I can charge what I like - is this profit, or is it exploitation?
    Capitalists accumulate capital (it's the aim of the game) - trying to ensure they are the only ones with water (capital) in the desert.

    "High. If measures are taken to curb excesses then inflation and debt shouldn't be a problem."

    I was looking for examples - of which there are none. You cannot control inflation and debt when the only solution available to depression is printing money (inflationary) and debt is expanded to sustain demand from the consumer / workforce in the face of declining wages (Adam Smith, diminishing profit eventually means reduced costs of input - i.e. Labour)

    "c) What real difference is there between Tory and Labour economic policy?

    The political leaders have different names."

    We're agreed on this then.

    "Sovereign debt failure is a possibility but it won't be the end of capitalism. The end of capitalism comes if we don't allow failure to happen- or banks to fail."

    ...and here we have the climax - how are countries going to manage their populations when they are unhappy at being allowed to fail whilst the banks were bailed out? The only option is marshall law - and are you going to sit back and be told when and where you can go in a 'free society'?

    I won't disrespect my forefathers who fought and died for freedom so easily.

    There is very little difference in the 'credit worthyness' of Greece, Portugal, Ireland, Spain, most of Eastern Europe, the UK and the US - plus all the 'regulars' like south american countries.

    ....so if the market is efficent and fair - it will default them all - and the US alone is a large part of worldwide GDP - and i's debts to china will decrease their ability to grow as they will find a large hole in their balance sheet.

    Let''s hope markets aren't that efficient eh?

  • Comment number 41.

    #37 Philof1949

    excellent post (imo) but i'm still at a loss as to how £2bn can be saved from only 40,000 people losing their jobs. This would equate to an average of £50,000 per annum. Surely it does not take into account approx 50% of income from these people are paid back in taxes or benefits that need to be paid out. You are also right, if the savings is from people not being replaced, effectively it will be the people whoes choice it is that what they do for their money is not worth it. The overpaid pen pushers and political animals will be quite happy to stay

  • Comment number 42.

    27. At 09:40am on 09 Apr 2010, Econoce wrote:
    Savings are possible.
    A few other figures:

    27 billion that the conservatives seek to save represents less than 4% of what the government spends every year. Now, can't you yourself safe 1 out of every 25 pounds you spend? Unless you are a single parent who has ran into misfortune, the answer must be "yes".

    ==================================

    Absolutely these savings are possible.
    I can save 1 out of every 25 pounds I spend easily.

    I could go to the restaurant less often.
    I could not go out to the cinema or theatre thus saving entrance fees and travel costs.
    I could trade down to lower margin lower cost products from my preferred ones.
    I could do my own decorating instead of employing some one else to do it.
    I can make do with my PC for another year instead of replacing it.
    I could put off repairing the shed roof to save the materials.
    I could forgo the gym and instead run round the park instead.
    I could buy cheaper imported goods instead of searching out British made things even if more expensive.

    Very easy to manage all that and much more it, will save a lot of money.

    Also in every single case what I will do is reduce the amount spent in the private sector by making such savings thus making their lives harder.
    This is just simple fact - the government is not a self contained little bubble - apart from the money paid out in wages it also buys in goods and services (from renting properties, paperclips, computers etc etc.)

    As a household budget that is absolutely the right thing to be doing on an individual basis if I need to belt tighten. However it will damage the economy and income of others if I do it.

    Now we are spending more than we earn - stripping more and more money out of the private sector in taxes is not sustainable either as it also has the same effect of damping demand.

    So I beleive savings are required, these can be managed and in many cases may not result in noticeable difference to the "services" recieved from Government. However they will very much have real effects in the private sector and economy as a whole, what the scale of these effects are is a real question.

    The notion of the "free-lunch" savings is just as fatuous as the apocryhal "free-lunch". Neither exists.

    The question is what the effect of the neccesary savings will be if implemented at the scale and timing proposed. Honesty is required.

    None of them is being honest - they still peddle the 'free lunch' scenario as if they are isolated responses. They are not.

    If people believe cuts are needed (and I do) then rather than deluding themselves and being deluded by politicians that these have no ill effects for anyone I prefer some honesty.
    The gleeful tone of some of the blue donkey voting tendency is tantamount to revelling in someone else's suffering - it is not a very edifying spectacle.

  • Comment number 43.

    Something like 40% of GDP spent by Central and Local Government in 1997 now about 52%, an increase of £150+bn at today's GDP.

    800,000 plus new employees hired by Central, Local and pseudo Government over the same period (apart from voting for The Scottish Prime Minister, what are they all doing, counting each other? Whatever it is, only a minority have arrived at the front line).

    Of course there are huge efficiency savings to be made. No business would consider living with that amount of expansion when revenue has fallen.

  • Comment number 44.

    Interesting blog

    I believe that there are too many red herrings kicking about in this debate

    As a generalism, the private sector has accepted the medicine of lower pay v job cuts

    Clearly this has not happened everywhere, although probably it is happening more frequently than anyone would like

    So, in the public sector, at the very least, there should be a pay freeze for 1 or 2 years with a no compulsory redundancy guarantee for the same period

    The 6 million employed in the public sector need to wake up (those that haven't already) and realise that we need to stop overspending, and crucially we need to stop borrowing to fund the pointless jobs within the public sector (the minority)

    Projected spending in 2011 is £744bn...projected income is £576bn...hence we will be borrowing £168bn MORE just to pay the bills..a staggering 29% of our income

    £6bn is just over 1% of our income....it is peanuts.....

    For a person on average earnings, taking home say, £18Knet pa, it is the equivalent of £3.46 per week

    That's right, £6bn in the context of Government Income is £3.41 per week for someone taking home 18k pa net

    Half a gallon of petrol......a pint.....10 cigarettes

    Please can those that become hysterical over £6bn bear this in mind

    The only people on £18K net who could not find £3.41 are those who are overspending, or up to their eyes in debt...like the government

    Those of us that feel Gordon Brown is the worst Chancellor in history, only to become the worst Prime Minister...feel he is largely responsible for continuing to overspend and borrow, thereby putting the country in such a vulnerable position

    When you consider the estimated £9bn PFI costs pa do not appear on the figures, then the borrowing position worsens

    We will also be paying a lot more in interest costs in the not too distant future, firstly because we are borrowing £168bn more...even at 4% this is a further £6.72 bn PER YEAR interst costs, in addition to those already being incurred

    If I was Cameron or Osborne, I would be equating the NI increase to this alone, and stealing the idea from a fellow poster, labelling it the Brown Tax

    When you take into account the fact that we will probably need to be paying more than 4% interest on future borrowings, it is entirely possible that within the next parliament we will be paying £100bn EACH YEAR in interest payments, very nearly as much as the cost os the NHS (est £105bn) pensions (est £120bn)

    So to those that are in the land of cuckoo and think there is no economic crisis awaiting us just over the horizon, then please don't allow yourself to believe anyone that says we are emerging from the recession, we are not

    If a friend down the pub told you that they had sorted out their bank loan, by borrowing even more on credit cards, would you call them sensible and trust them with your finances?

    Exactly....

    I have no doubt that this situation will be extremely difficult to resolve, although unlike some foolish people I do not see the answer as being a revolution

    The answer is

    1)Change the government..the man responsible for this lunacy needs to go
    2)Expect the new government to be straight about the real issues from day one..if we do not get the truthful position, we need to be lobbying, writing to Cameron and our MP and ensuring that we do not allow the spin to continue. I genuinely believe that Osborne will be capable of achieving this

    3)We need to accept that just because we no longer have the British Empire and the biggest economy in the world, it doesn't mean we are in decline to become nothing...we just need to adapt

    4)Those supporters of Labour, need to understand there is no such thing as public money, and there is no such thing as government money...it is ALL taxpayers money, and those that don't pay tax are a drain on the system, and we need to start to separate the welfare state (for those in genuine need) from the toxic dependency culture, which has grown out of all proportion over the last 15 years or so.

    5)Public Sector pensions...need to be reformed and reduced.No easy way of doing this

    6)There are 6 million in the public sector...too many....this needs to be reduced by around 50,000 a year over the next 10 years..this can be done by initially not replacing leavers, and later on by overhauling the role of state provision. The state should be providing essential support, not having it's expensive grubby fingers in various areas that don't concern it

    7)You need to speak English to start school in the UK...why is that not the law? Then we need no interpreters..If I moved to another country, would I be expected to speak that language? Would my children be given an interpreter? I thought not...so why here?

    8)State Pension age raised to 70

    9)Compulsory retirement age of 65...out the window

    10)NI comments from business leaders...those that say they are only out for themselves are being a little shallow....they run big, successful companies, and whilst that doesn't mean they will always be right, they are , I believe, speaking from a belief position, not out of self interest. To be blunt, they don't want the government in power for 5 more years, and they are trying to get this point across as subtly as they can

    We are not in an irrecoverable position, although before we can repair the damaged economy, we need to set out to the general public precisely where we are

    Explain the deficit, the structural deficit, the debt

    I have altered my view on fixed parliaments, I am now against them. I am for, instead, fixed public spending reviews





  • Comment number 45.

    Welcome WOTW, I was beginning to think you'd overslept. I will anticipate your outburst of 'The sky is falling on our heads'.

  • Comment number 46.

    23. At 09:30am on 09 Apr 2010, Mike Ross OBE wrote:

    "Start by reducing quango’s and getting MP’s to earn their crust, stop creating so many parliamentary reviews and take some action instead of talking about it.
    There’s a few millions saved with a few moments thought without affecting front line services."

    Is that how you got your obe? - services to the nonsense?

    What are all these quango's? can you name some? or are these now like unicorns (we're all told they exist but nobody has actually seen one) but apparently they are sucking up half our economy.

    It never ceases to amaze me how easy it is to fool people - want to know what many of these quangos are set up for? - to investigate how to cut costs without affecting services. Half the NHS is staffed with people who's job it is to 'find savings' - an industry in itself!

    Anyone who has ever run a business knows that if you run round randomly with a hatchet you will end up cutting vital parts, or you will damage others that they deteriorate in efficiency - and Governments are no different.

    ...which is why both Governments (tory and lab) have increased the number of these so-called quango's in an atempt to make the 'imagined easy cuts' you crave.

  • Comment number 47.

    fourdeckdave said "We need to re-look at a whole range of public sector activities and see how they can be delivered more efficiently. "

    I agree but would go further and ask whether there are activities that the public sector does which it should not.

    There is a wonderful episode of Yes Prime Minister in which Jim Hacker suggests abolishing the department for education and letting schools handle their own budgets. Come to think of it, that episode looks more sensible and serious than the proposals coming from our two pantomine dames (David and Gordon).

    In the private sector they look for savings of 5-10% of cost, anything less than that is an accounting error not a saving. What are our politicians arguing about -£6bn NI out of a public sector budget of £700 bn.

  • Comment number 48.

    Foredeckdave - if you don't vote in the election it will be natural justice. I believe that people should demonstrate at least a basic understanding before they are allowed to vote.

    Glenis is quite right - the public sector is a joke in terms of productivity and we could lose them in droves and not notice. As Michael Portillo said a couple of weeks ago, the point is that the state has been massively expanded under Labour and yet we got by perfectlt well before that happened. It doesn't take a rocket scientist to realise that if we roll back the increase we will be do just fine as we did before at thast level of "service".

    fairsfair and yourself are completely losing the plot if you think that queues will be reduced in the NHS by retaining the same workers and somehow, magically, making them more efficient. Waiting times in the NHS are for doctors, not for support staff. Yo need only exactly as many support staff as it takes to manage the process of having patients see doctors - everything else is superfluous.

    Look at it this way - if you and a colleague are managing quite well funnelling people in to see doctors and then... someone adds a third member to your team, what happens?

    Well, you may wonder why and come to the conclusion that your boss has won some political war and is "empire building" his department sucessfully. Or you may see it as a threat in that probably one of you has to go at some stage if there is not enough work. Or you may just accept it and all do less work.

    In the public sector the latter is what happens and it is very difficult to roll it back once created. However, the fact is that it may take 3 public sector employees at public sector productivity levels and that is what we need to change.

    If you simply remove the third person then in the private sector you will find that the work will get done somehow - in the public sector the remaining workers will simply fail to meet targets. Partly this is a failure of management and partly of the workers, but the bottom line is that there are o commercial pressures pushing these people to meet targets, therefore they won't do so - to achieve what we need to achieve we need to have public sector people have incentives which means performance-related pay in some form.

  • Comment number 49.

    7. At 01:45am on 09 Apr 2010, Glenis wrote:

    Small, then Smaller then Smallest
    Large, then Larger, then Largest
    …Actually turn up for work, then do something, then do something useful, then do useful efficiently.

    >>>>>>>>>>>>>>>>>>>>>>>>>

    Good stuff Glenis - tell 'em what it’s all about!

    The larger government gets, the more it spends and the more its wastes!

    An interesting post by Stephanie Flanders have we all had our eye taken off the ball here by the political party electioneering antics?

    The government say that they are proposing to halve the CURRENT DEFICIT? in four years? - but with accrued interest payments this means that if any new government succeeds in doing this - the UK national debt now forecast to increase to around £1.5 Trillion by 2014/15 will then only be at current levels.

    This 'rosy forecast' assumes:-

    - GDP minimum 3% pa growth on the Chancellors' figures
    - Low interest rates not killing off any future recovery
    - Britain maintains a triple A credit rating and is not penalised on higher interest charges on the debt
    - Current level of inflation (or higher?)
    -etc

    Can anyone else see how ridiculous this forecast actually is?

    If the world economy recovers and drags Britain along then Britain as a net importer of virtually anything and everything will be competing for sky high fuel supplies etc and this will cause rampant inflation and the government will then have to choose between high inflation and higher interest rates.

    This is all on the cards and is much more of an issue than 2010 efficiency savings - this is a red herring put into the pre-election debate by recalcitrant politicians - hiding the facts from the electorate.

    This isn't a debate about cuts - v saving public sector jobs - it’s a question of the UK avoiding bankruptcy and the fall out that would mean for millions of ordinary British people as the economy would grind to a halt with an even greater depression.

    No political party is giving a fair indication of how it will cut the deficit and if the next government do succeed in halving the deficit in four years, as proposed by Labour, on a very optimistic forecast - that at best would likely put us back roughly where we are now wouldn't it?

    £6 bn is peanuts to what is required.

    Another website here: https://www.debtbombshell.com/ - different figures here on the debt/deficit?

    Another way of saying this is that with all of the proposed ring-fencing the next government will not decide what is to cut - much of this will be decided behind closed doors by Civil Service mandarins briefing government ministers. Their will likely be little if any room for 'political choice' and plans to make cuts probably already exist and the likes of Dodo Brown will already have an idea of what is proposed - but is hiding it from us all.

    This is the reality - this is how UK government works - the required cuts are so great as to remove most political choice - if we are to e.g. keep law and order and avoid riots on the streets.

    I'm not trying to be pessimistic here - this is what we are probably facing.

    The true economic consequences of our national debt are still not being discussed relative to public finances?

    If the cuts are not made and deficit got under control very quickly - the UK will be bankcrupt (and I suspect few understand what this means either as regards the ordinary person on the street).

    The question is who does each voter think can be trusted in government to avoid the UK going into sovereign bankruptcy as this is now more than a real possibility - if the next government does not get this under control very quickly.

    Failure to act properly in cutting government spending means the Chancellors optimistic scenario of halving the CURRENT DEFICIT? in four years will not be achieved - this will send the deficit soaring to £200 - £250 bn each year on debt of £2 - £3 trillion by e.g. 2015 (if not higher)?

    This is the danger now facing the UK? Most do not understand that the UK and every other person in the UK now stands on a cliff with their personal finances and standard of living, mortgage, pension, etc ... everything. Those that now feel secure can have their lives turned upside down within a year or so if the debt/defict is not tackled ... this year.

    The issue is now far too serious for discussions on peanuts and the economic prospects of Britain now depend on politics in the event that our next government does or does not tackle this issue and get on with it very quickly!

    All political parties will roughly have the same plan to tackle the deficit on the big numbers - the question is ... would one of them fail to deliver the cuts? - and not ... Who would cut what, where and by how much?

    This is now about belief, trust and track record! The UK needs firm and deep cuts or the UK is completely bust - utility supply failures, strikes, riots, food shortages, soaring unemployment much higher than current levels etc ... the great depression scenario - while other countries have good growth and prosperity?

    Does anyone else have any comments here - I know other contributors mention this but never really spell out what it's all about?

    The debt/deficit is there to see - why are some, if not most, so relaxed about it?

  • Comment number 50.

    45

    Wally of the week says he earns £500 a day, and spends most of that day adding his tripe on here

    If he is a communist or marxist, that would explain why he is trying to rip-off the evil employer

    To balance that equation, no doubt he gives the greater part of that £500 a day, to the homeless, as he does not need it

    As he also believes property is theft, I trust he doesn't own one

    Or is he like a vegetarian wearing leather clothes....a hypocrite

  • Comment number 51.

    I can understand why all the parties are playing the same game of trying to anaesthatise the electorate into thinking they can solve our debt problem without any real need to make sacrifices. All this squabbling over £6B here or there in the first year of enforced austerity is totally irrelevent to the certainty that we will have to continue to increase the year one sacrifices every successive year for many years to come. This is due to the undeniable fact that while we are nibbling away at the deficit which has to be halved in four years the national debt and associated servicing charges will be growing to at least £1500 B until at the earlist 2018. This means that each year we have to find more and more reductions than the previous year, so talk of tackling this problem with efficiency savings is balderdash, but also so is the Lib Dems' idea that you save money by deciding not to spend what was planned. They do not seem to know the difference between not spending in the future and reducing debt which requires spending less than last year.
    I heard GB recently complaining that the conservatives plans had been hatched up on the back of a fag packet. I have done an anlaysis of the problem, with budget forecasts for the next 20 years on a simple one page spreadsheet, which admittedly is slightly larger than a fag packet but it is infinitely better than his and Alistair Darling's approach of just making it up as you go along,on the hoof, while trying to pretend that this is a skill which we need to get us out of the mess they have driopped us in.

  • Comment number 52.

    45. At 10:46am on 09 Apr 2010, Treading Water wrote:

    "Welcome WOTW, I was beginning to think you'd overslept. I will anticipate your outburst of 'The sky is falling on our heads'."

    ...and I shall anticipate your "heads in the sand Mr Mannering - I'm sure someone will fix it - don't panic"

    The greek public have started drawing out their life savings - causing the banks to go back to the Government to fill the new liquidity crisis.

    It seems the sky is falling on someone's head at the moment.

  • Comment number 53.

    WOTW wrote: If I ensure I am the only man in the desert with water and I can charge what I like - is this profit, or is it exploitation?
    Capitalists accumulate capital (it's the aim of the game) - trying to ensure they are the only ones with water (capital) in the desert.


    What the hell are all these people doing in the desert without water?! The person that is intelligent enough to get some should make a profit. This should encourage all the others to seek water and develop new ways of getting access to it.

  • Comment number 54.

    Stephanie, top marks for an outstanding analysis.

    Of course, while they all navel gaze over this, the bigger picture of the economic disaster the UK has gone through and the ramifications of it can be ignored.

  • Comment number 55.

    While I admire your diligence in decrypting what both sides have said so far, it seems to me that neither has really come clean on the sheer scale of what will need to be done. The fact is the efficiency savings will have to be made; real cuts will also have to be made; and taxes will almost certainly have to go up. The British public are drifting like Alice through a kind of hallucinatory Wonderland.

    What will have be done? All of the above and more.

    A guarantee on front-line services seems crazy to me. Some front-line services are definitely more important than others - the public sector could simply do fewer things, cutting out a load of 'initiatives' that nobody would miss, saving money on paper, staff, accommodation, consultancy fees.

    There should be a five-year ban on rebranding any public-service organisation. Why did the Ministry of Agriculture have to become DEFRA? How much did that cost? What is that outfit Ed Balls runs - Ministry of Education? Oh no. How much did that bit of nonsense cost?

    Public sector budgeting should be done with a blank sheet of paper - what really needs to be done and how much would it cost, with NO reference to the previous year's figures. Otherwise everybody just protects their backsides, their status and their desk with a nice view, and spends up to last year's budget plus or minus a bit.

  • Comment number 56.

    Nobody seems to be concerned with the fact that it takes until a General Election is looming before the party in power decides that £Billions can be saved by 'efficiencies'

    Where is the justification from the Govenment as to why these 'inefficiencies' were allowed to go on for so long?

    My wife is a medically qualified 'junior' manager in the NHS (one of those in line for the chop, no doubt) and I can assure you that the amount of waste within the NHS is mind-boggling.

  • Comment number 57.

    #44
    That's about right!
    So why can't the politicians spell it out like that??
    Too likely to lose the election, that's why!
    We are blighted by career politicians of ALL colours who thirst only for POWER, rather than to SERVE the people of this country in an honest and open manner.

  • Comment number 58.

    Although the public sector does seem to have an appetite to grow because of a desire to control too many aspects of our lives, we have to face the fact that a lot of the growth is in response to the breakdown of basic aspects of our society, such as parenting and respect. So some emphasis on reversing these trends will make room for cost cuts too.

  • Comment number 59.

    The whole 'not filling vacancies' arguement as put forward by David Cameron is spurious and as wishy washy as the other nonsense he's been peddling so far in this campaign.

    If you have a team of 10 people, and 8 of them resign, are sacked, or die, does that mean that the same job that the ten do will henceforth be carried out by just 2 people?

    And logically, is Cameron as saying that if an MP resigns or dies there won't be a by election?

  • Comment number 60.

    If we start at what can't be argued is that the public sector has grown out of proportion with the public sector. This skew has caused our current imbalance between revenue and expenditure. This is something that has been prevalent over a number of years and particularly through the last five years. Thus we have our current deficit running at unsustainable levels which has caused our national debt top balloon.
    We can also say with confidence that to date NO public spending initiatives have delivered anywhere near what has been claimed. In fact it has often been the case that department spending has increased after such initiatives.

    So how do you deliver savings.

    The answer is not going to be palatable but here we GO......

    You have to reduce the budgets to each departments and make the politicans heading them up accountable. If there is overspend they should bare the consequences along with the senior Civil Servants. This to date has not been done. They should also be run in such a way that would allow us the public know what is going on at any time. This sadly is not the case currently with most departments woefully now ignorant of their current position with their spend and how to plan and stick to a budget. This is highlighted by the fact that we have to now have spending reviews every three years. I remember Blair / Brown saying they wanted Britain to be run on similar lines to a company. God help any company that has such a poor grip on their finances. The MD and FD would have had to go a long time ago. But the share holders in UK PLC are so apathetic they just allow this incompetence to go unpunished. The UK is just a stones throw away from calling in the administrators which would take the form of the IMF just as Greece are surely going to have to do. At this point I hate to say I told you so, but I told you so......

    So back to the question who will cut, they all will and if they don't the decision will be taken out of they hands by the IMF when our rating collapses and we need bail out.

  • Comment number 61.

    59

    Cameron has said that there should be fewer MPs and fewer Ministers..

  • Comment number 62.

    Well, interest rates held yesterday & no doubt for many months to come with the election and a new government or hung paliament to take the reigns, so how does this risk stack up:

    https://business.timesonline.co.uk/tol/business/economics/article7092867.ece

    For me I believe there will be inflation, and soon, as the pound is struggling against most currencies - hopefully British Tourism is in Aus, NZ, Canada, Asia and the US encouraging people to visit.

    The other worrying for me is that I think King & co will need to act quickly, either way I see defaults coming and with many people saving little or nothing I see demand for many goods drying up again - unless credit cards allow people to spend what they do not have. True JIT supply chains will react to this, non JIT compnaies will end up with loads of stock costing capital and going out of date (the flip side to WOTW's valid fear of strikes or breakdowns in a true JIT supply chain affecting stock on the shelves, the key to which is good problem solving and resolution - you should never minimise your stock below the ability of your supply chain, but in line with any improvements in it). Touch wood I'm wrong and Mr Onward Ho is right abot inflation but I fear the election is a few months too late.

  • Comment number 63.

    #44
    Your spot on

    I just wish the politicians would spell it out as easily as that, then the "man in the street" would have a real choice on who to vote for.

  • Comment number 64.

    Excellent blog - as ever the devil is in the detail and its great to read a piece of journalism that gets into the detail.

    Two possibly important details for the within-year savings claim are taht are not covered in your blog:
    1) the feasibility of releasing real cash resources within budgets - if it involves redundancies of any sort then these may well cost more money than they save with-in year. The savings are made in subsequent years. Similarly, negotiating out-sourcing contracts takes time and money and is unlikely to lead to within-year savings.
    2) If its jobs that are being cut, not only do the people affected spend less money, they are likely to claim unemployment benefit etc... thus pushing up the within year social security budget - leading to a double whammy of reduced economic activity without the expected reduction in public sector expenditure.

    Considering these two factors, it may be that the choice the Conservatives are recommending is definite job losses in the public sector this year as they cut government spending over possible job losses in the longer term in the private sector due to the increase in National Insurance.

    If the economy is likely to be healthier now than in the future then we should probably choose the definite public sector job cuts now. If however, we think the economy is on an upward trend then we should probably choose the risk of private sector job cuts later. When the impact of the increase in NI is likely to be less severe.

    Looked at that way and considering the OECD's report on the likely health of the UK economy in the future I think I will choose the National Insurance increase.

  • Comment number 65.

    Given that the public sector wage bill jumped 12% or 22Billion in the 2 years to Septemper 2009. there must be massive saving available.

  • Comment number 66.

    @ 59

    You're taking that argument to extremes.

    In at least certain areas, the NHS already has a 'no recruitment' policy in effect. In reality, are 80% of staff going to leave the NHS? No, but if 10% leave, the remaining 90% have to take up the slack. And from what I can see, there's plenty of slack to be taken up!

    As for Parliament, I think you'll find very few people would argue that we need 650 MPs. Germany has less than that for a population 30% higher than the UK. And America has only 435 members of the lower house for a population 5 times that of the UK!

    Waste? What waste???

  • Comment number 67.

    People need to stop equating ALL efficiency savings to 100% job cuts and then doign back of a cigarette packet sums on what it costs to lsoe them.

    If I need to trim 10% from my monthly spend, I dont pick ONE target spendign itema and say, i will cut that one item alone.

    I reign in spending across the board. I buy regular meat and veg instead of organic, I buy value size washing up powder and bog roll, I drink elss beer, I drive my car less, I eat out less, I use heating a bit less, etc.

    Spread the pain and it becomes bening, scaremonger that 6 billion savings = 6 billion worth of jobcuts is disingenuous and cynical electioneering.

    unions band together for their above inflation pay rises in times of plenty, do they think its not fair to have a 1% pay cut when times are hard? After all its not magic money that pays them, its every taxpayers hard earned wages. I took a 30% reduction in my rates during 2008 and 2009 to remain competitive and stay in a job, that rate is slowly recovering as things pick up, but I realized it was a necessary evil as70% income is betetr than 0% income.

    yet the best Labour can offer is a 1% rise and the best cons can offer is a 0% freeze.

    How about a 2% cut for everyone earning over £25000 in the public sector and a 15% cut for everyone earning over £75000. Considerign the vast majority of public spending goes on benefits and salaries, this would save a bleediong fortune.

    in addition you renegotiate ALL your outside supply contracts to achieve a discount and play hardball if necessary, even ig it saves 2-3% it all adds up.

    problem with politicians is they cannot EVER thnk like a proper business, they always think of th headliens and they take as all for illiterate idiots.

    WE UNDERSTAND WE NEED TO CUT PUBLIC SPENDING, just gives us your detailed plans and let us pick which plan we prefer. Stop the horse trading and get serious.

  • Comment number 68.

    Tax people more, they spend and save less, economy is less stimulated, banks (esp those bailed out) recoup losses slower, taxpayer gets their money back on bank bailout slower, pays more interest on debt over longer period, problem gets worse.

    Its a known fact that £1 of government spending is never going to be as efficient at stimulating the economy as £1 of private individual spending as that £1 gets diminished by all the haibrained administration and beuracracy on ist way down. It is insane to think the government can spend mroe efficiently, its supposed to collect taxes to redistribute wealth and provide CORE necessary services. let the private individuals stoke demand in the economy. if you tax me less I will pay down more debt, buy necessary goods and services with less hesitation and boost demand in the REAL economy.

    tax me more and I will do the opposite.

  • Comment number 69.

    Can we all just remember the many years of budgets where Gordon Brown announced, with smugness and pride, how many new billions of pounds he will be pumping into the NHS, Education, police etc?

    The announcements were made as if he was achieving something, spending his own hard earned cash. What achievement is there in taking peoples money and wasting it?

  • Comment number 70.

    Good blog. I enjoyed reading this.

    I find it hard to admit that I'm favoring the Conservatives approach but challenging the civil service to tackle increased workload with less resource is common practice in the private sector. This is much needed to ensure they ask themselves whether they are making best use of their resource. Under Labour, they have already accepted that how they operate is optimal which is a joke and their snail paced approach to change in general is all for the sake of safeguarding jobs. How does that really help this country recover from this mess?

  • Comment number 71.

    60

    CL

    I believe the downgrading from AAA is a clear and present danger, not yet inevitable

    Your last comments are muddled....are you saying you think it IS inevitable?

  • Comment number 72.

    42. At 10:40am on 09 Apr 2010, Whistling Neil wrote:

    "Absolutely these savings are possible.
    I can save 1 out of every 25 pounds I spend easily.

    I could go to the restaurant less often.
    I could not go out to the cinema or theatre thus saving entrance fees and travel costs.
    I could trade down to lower margin lower cost products from my preferred ones.
    I could do my own decorating instead of employing some one else to do it.
    I can make do with my PC for another year instead of replacing it.
    I could put off repairing the shed roof to save the materials.
    I could forgo the gym and instead run round the park instead.
    I could buy cheaper imported goods instead of searching out British made things even if more expensive.

    Very easy to manage all that and much more it, will save a lot of money. "

    Ah - but the problem is all of these things have a knock-on effect, affecting every single person down the line from you and putting their job at risk.

    You personally might save a 'lot of money' but if you, and lots of other people, did all of what you're suggesting the economy would very quickly grind to a complete halt - and you might very well find yourself out of a job as your employer's business dries up because all the people who used to buy your products have lost their jobs.

    Not so simple is it? Unless, of course, you work in the public sector where the basic rules of economics don't seem to apply because the government will just borrow more to keep you in a job....

  • Comment number 73.

    This whole debate seems futile.
    Can an extra £6 Billion be taken out of government spending of course it can. £6 Billion represents less than 1% of total government expenditure- Do the Tories need to explain how these cuts are to be made? No they do not have access to a detailed departmental spending plans. Their riposte should be that they will leave it to the departments to determine how they will best make the savings and still deliver their service outcomes - but that they will support what ever action is needed and that there will not be any sacred cows - all department should should share the pain including the Health and Education.
    This is not an issue of detail but of the will to act. The current government and particularly GB can not make the changes needed because they are the ones that sanctioned and allowed the costs to expand in an uncontrolled fashion in the first place.
    The Tories must not be suckered into playing GB's pointless game and point out that as often as possible that it is he that has wasted thirteen years and has sat by and allowed the structural weakness in the economy to grow and that he can not correct the problem without admitting his past mistakes - which he is unable to do because he is psychologically programmed to be unable to accept that he is wrong.

    All the new chancellor has to do is top slice the departmental budgets by say £8 Billion and direct the managers/ staff to find the savings and at the same time deliver their service outcome objectives- I accept that this is easy to say but difficult to do but in industry this is what managers are paid to do. The £2 billion contingency would be used to resolve any short term problems that arise.

    However, the current tack being taken by the Tories that they would instigate a recruitment freeze is in my experience a mistake as it allows lazy managers the excuse to create front line service problems. The most effective way to eliminate costs without affecting front line services is to take out layers of obfuscation (management) and to stop doing things that do not provide value and allow management total flexibility between capital and current account budget headings - stop all agency and management consultant staffing - delay replacing capital items that are still serviceable. Renegotiating existing supply contracts is unlikely to deliver great savings in the first 12 months The budget cuts should apply to all departments including health and education.There is more waste in the NHS than probably anywhere else. Has everyone forgotten Gerry Robinson's experience in one of our better hospitals - I'd like to see him investigate the effectiveness and value for money we get from our GP services
    The key issue that desperately needs to be debated is given the structural problems that exist in the economy Where is the vision from each of the parties, of how our economy should develop over the next 5 to 10 years and where are the proposed incentives / programmes that will rebalance our economy and encourage future sustainable business development and jobs?

  • Comment number 74.

    According to the Office of National Statistics, the national debt, as of the end of December 2009, was £950.4 billion, equivalent to 68.1 per cent of GDP. Further, the government is still borrowing over £12bn a month - £131.9bn in the current year alone, just to stand still.

    Even if we take at face value Cameron's claim that he can 'save' £12bn from efficiency drives, which as we have established is a mere drop in the ocean, he then says he will not use it to pay down the debt, but instead intends redistributing £6bn to the same departments that he got the savings from (!) with the other £6bn being used to stave off the proposed NI rise. So at best this will achieve a neutral result and certainly fail to make any indent on the ever-growing debt pile.

    What is needed is for UK PLC to drastically cut its spending to ensure that revenue is considerably more than expenditure. This will mean job loses and there is no way of avoiding it. However, it is abundantly clear that the result of this election is meaningless since no party will face up to this reality. The money markets will force all their hands, by downgrading Britain's credit rating, leading to a run on the already collapsing pound and the unravelling of this illusury recovery.

  • Comment number 75.

    I'm not sure why either party finds its so hard to make cuts of 10-20 billion...

    How about scrapping Trident, scrapping ID cards, and reducing public sector pay (across the board) by 2%? That's fair and sensible.

  • Comment number 76.

    Good post from Stephanie.

    Much common sense talked in entries (bar the usual suspects) which I'm grateful for.

    Something to watch is Greece at the moment - not because savers are choosing international banks rather than state banks to deposit their money but the increasing cost of debt servicing.

    Last year I forecast that UK would eventually be paying c. 6% interest on its £1.4 trillion debt.

    This may be at the low end. Greece is currently at 7.5% whilst interbank money is at 0.5%.

    So 10% may actually be quite feasible by 2014.

    Thus:

    1,400,000,000,000 x 10%

    EQUALS £140 BILLION INTEREST A YEAR ON THE NATIONAL DEBT IS QUITE SCARILY POSSIBLE.

    PLEASE SEND THE ANNUAL INVOICE TO GORDON BROWN PLUS LABOUR/LIB DEM SUPPORTERS.

    The NHS of the future will be c. £100 billion annual tops as a comparison. Want to know why the Tories want to start cutting now?

    You've got be the village idiot not to get this.

    Unfortunately 50% of voters seem to be village idiots............

  • Comment number 77.

    61. At 12:14pm on 09 Apr 2010, Kevinb wrote:

    "Cameron has said that there should be fewer MPs and fewer Ministers.."

    I also believe he has offered world peace, a free round of drinks for the country and a lollipop for all the children.

    He's a politican - he will say anything to get votes - are you going to hold him accountable when he doesn't deliver?

  • Comment number 78.

    As a former Civil Servant of 20 years, I work with some other former Civil Servants, from all sides of the political spectrum (yes, they're not all Guardian readers even if they mostly are), and we all agree that it could be cut back and made more efficient quite easily if there was the will to do so.
    In my last job I worked as a Manager in the 'core business' of the particular department which would broadly correlate to a frontline service (although in my case it wasn't an essential service). i.e. the service you were there to actually to provide to the public. During my time there the workforce probably increased by about 50% but the staff in the core business by probably only a third or at most a half of that. Invariably the areas which were recruited for first were jobs to 'support the core business' and therefore provide a 'better service'. These tended be in things like Communnications and Strategy, Knowledge management, 'Outreach', Human Resources etc etc. Did they add value and improve the service for customers? Yes, definitely. Was the added value worth the cost of employing all those extra people? Almostly certainly no.
    That is not to say that those people did not do their jobs either well or adequately. By and large they did. It's just that if you did not have all those jobs the core business of the organisation would have not have been significantly worse.
    There was also the culture, which got worse over the years, of having various levels of checking and rechecking of work for fear of making mistakes and therefore damaging the organisation's reputation. Clearly that takes more time and requires more people - usually managers earning more money. No-one wants mistakes to be made, especially if you are on the receiving end, but barring places like the NHS, such mistakes are unlikely to involve life and death but are rectifiable. And if your recruitment policies are sound and you get the right people and TRUST them, they will normally do a pretty good job.
    I'm sure my experience would translate, at least to certain extent, to 'frontline' services. But you can't pretend that you can cut all the so-called waste and maintain the same service. You can't, so don't try to pretend that. But you can have a service which is not significantly worse, with the right employees properly managed.
    Therefore the wider debate need to be had about do you want a reasonable service or as seems to be the case now strive for a Rolls Royce service which costs a lot more and can rarely be delivered. Or with some services, like those provided by some Quangos, do we need them at all. But I guarantee that many of the people arguing that we should scrap the lot would be the first to complain if they couldn't access certain services. You can't have it all ways...
    And one final point, lets not pretend that the private sector is a paragon of efficiency - it isn't. Often 'improving efficiency' equates to maximising profit which usuaaly involves cutting jobs, (Willie Walsh at BA, Lord Browne at BP and Adam Crozier at the Post Office etc.)

  • Comment number 79.

    50. At 11:01am on 09 Apr 2010, Kevinb

    More insults? - that's because you have nothing to respond with. It's becoming embarrassing for you.

    Maybe you should continue writing paragraphs of diatribe about how you could cut public sector spedning without having a clue what the books read - havin had no experience in government - or the public sector for that matter.

    Best we stick with capitalism eh? let those bankers create the wealth we need. I mean it's going so well.

    At least you're proving one area where public spending is already cut to the bone - EDUCATION

    Fortnately most people haven't forgot that this wasn't a crisis cooked up in the public sector - but like all good frauds you would rathe point the finger there than admit it was the private sector that failed - and brought us down with it.

    I actually hope you get your wish and we see public sector cut to the bone - and I will return here to see you moaning about the 'decline of britain' - a decline which you have ulimately called for.

    I just wish you had some arguments - rather than that 'fag packet' nonsense you write about cutting waste.

  • Comment number 80.

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

  • Comment number 81.

    KevinB

    Oh really are a "this time it will be different" guy - how many times will you get suckered before you realise?

    Laugh? - I almost fell off my chair...

    "2)Expect the new government to be straight about the real issues from day one..if we do not get the truthful position, we need to be lobbying, writing to Cameron and our MP and ensuring that we do not allow the spin to continue. I genuinely believe that Osborne will be capable of achieving this"

    Lobby away - lets see how much effect that has. Do you think you live n a democracy or something?

  • Comment number 82.

    45. At 10:46am on 09 Apr 2010, Treading Water wrote:

    "Welcome WOTW, I was beginning to think you'd overslept. I will anticipate your outburst of 'The sky is falling on our heads'."

    No answer to my 40 though? - noted.

  • Comment number 83.

    Yes Stephanie great blog. But if the Tory £6 Bn cut did not involve cutting jobs then there is clearly more scope to cut (jobs). In private industry it's quite common for companies to impose 5 to 10% top down job cuts. That's why companies survive the hard times. Now it's the public sector's turn even if it includes re-defining what services the public sector should provide. And not before time.

  • Comment number 84.

    I think all the public sector 'cutters' should read up on 'aggregate demand'.

    With no demand from the pivate sector - is it a good idea to cut the only demand we have - even if it's being supported by borowing?

    It's massive debts or deflation I'm afraid - and you can speak o your local bank manager (if he still exists) about where the private sector demand has gone.

    Armchair economists - think it's all so easy...

  • Comment number 85.

    So the Tory efficiency adviser is Dr Read. Would that be the same Martin Read that institutional shareholders ousted as Logica's CEO in 2007 after years of failing to deliver on promised efficiency increases?
    https://www.telegraph.co.uk/finance/markets/2809612/Activist-investor-ousts-Logica-chief.html

    I'm not sure he's best placed to advise on delivering savings in the public sector.

  • Comment number 86.

    wally of the week

    Just go away, you do nothing but complain.......foolish 'man' you have nothing to offer

    I refuse to be drawn into your fantasy world any longer

    The moderator prevents me from really letting rip

  • Comment number 87.

    When David Milliband appeared on Question Time on Wednesday he kept referring to the public sector as "the economy", overlooking the fact that the private sector is also part of the economy. My point is that reducing National Insurance (or not increasing it as much the Government has planned to do) does not remove the money from the economy, it just retains it within companies and peoples' pockets. The money is still available to be spent, and, provided it is spent on UK goods and services, the reduction in NI does no harm to the economy as a whole.

  • Comment number 88.

    WOTW: "He's a politican - he will say anything to get votes - are you going to hold him accountable when he doesn't deliver?"

    This made me laugh. castigating a politician who has NOT been in power for 13 years for making a clear promise to cut the number of MP's by 10% and reduce their salaries.

    Then we have WOTW's dear leader, a certain Mr Brown and Bliar before him. Referendum on ther Lisbon Treaty, House of Lords reform, only borrowing to invest, abolioshing boom and bust, not raising taxes. And this shower got RELECTED on failed manifesto pledges twice over.

    the electorate really are fools!

  • Comment number 89.

    78

    Interesting post

    Your final paragraph overlooks one MASSIVE aspect of the private sector

    In the private sector, if you get it wrong, your business goes bust

    In the case of Northern Rock, and HBOS, rather than crowing about saving the banks, the foolish Brown should have let Northern Rock go out of Business and broken HBOS up

    The private sector is far from perfect, and Crozier and Walsh are two I would seek to distance myself from

    However, this fail-safe is not there in the public sector, especially with Mr Imprudent at the helm


  • Comment number 90.

    WOTW: "Armchair economists - think it's all so easy..."

    Sorry what was it you do in a professional capacity? I missed the memo describing your qualifications in discussing macroeconomic policy, please if you woudnt mind repeating them for us ley folk!

  • Comment number 91.

    82. At 1:47pm on 09 Apr 2010, writingsonthewall wrote:

    45. At 10:46am on 09 Apr 2010, Treading Water wrote:

    "Welcome WOTW, I was beginning to think you'd overslept. I will anticipate your outburst of 'The sky is falling on our heads'."

    No answer to my 40 though? - noted.

    There is no answer needed. Much of what you have said is correct. It is easy to point out the problems and the failure of the system- it is being reported everyday in many different manifestations.

    But still, I don't hear any solutions. It's easy to be 'fighting the system', you have your opinion and I have mine.

  • Comment number 92.

    71. At 12:49pm on 09 Apr 2010, Kevinb wrote:

    To answer your question.

    Unless we have a miracle it is now more probable that our rating will be down graded.

    I have worked within the public sector for more than ten years and have reviewed a number of so called efficiency programmes. None of which have delivered all that was promised and a very high percentage delivered nothing at all and in fact were seen by a number of senor Civil Servants as an opportunity for job creation.

    So if the money is not comming from savings then where and how will it be raised. The NI rise is just the tip of the tax iceberg and that will drive us back into recession if, we are really out of it. Hence we drop into the downward spiral.

    Then it will be hello IMF and goodbye AAA rating.......

  • Comment number 93.

    If any political party believes it can make significant efficiency savings in a year through reducing the numbers of public servants, they are fooling themselves - and, more important, trying to fool us. While you can have a recruitment ban - so those people who leave aren't replaced, the current jobs market will encourage few to leave and you cannot guarantee that thsoe that leave aren't "front line" service providers. Otherwise, redundancies cost money - quite often in the public sector signifiacant sums. You'll get savings in year 2, but in year one, the costs may well outweigh the savings....I've been there!

  • Comment number 94.

    A very stupid idea I know...

    [but since everyone talks about % of tax per band etc., what they lose sight of is how much tax is actually paid (like Harry Redknapp's argument that since he's paid millions in tax over the last couple of decadrs, why would he bother evading/avoiding the odd £10,000).]

    ...So, how about weighting everyone's vote according to the tax that they pay and electing a government based on that principle.

  • Comment number 95.

    It seems all well and good the Tories stating that they can save £12 billion in efficiency savings, however, if these savings meant that 50,000 jobs would be cut in the public sector i.e. through the loss of Teaching Assistants and workers employed in the Welfare State, then surely that would have both short and long term effects. E.g. the increased amount of people applying for Job Seekers Allowance would cost a substantial amount for the Government through benefit payments. I'd dread to think what would happen to areas like the North-East where almost 2/3s of the population work in the Public Sector.
    Mind saying that, if the tories were to get in they could probably sell off some more of the family silver in a couple of years time to make up for these payments.
    Oh and by the way WOTW its funny how George Osborne hasn't showed his face during the election campaign, do you think Cameron is scared he might make a hick-up when talking about his non-existant economic policies?
    One last thing WOTW, www.tutor2u.net should be a good website for you to read up on your Macroeconomic defitions.

  • Comment number 96.

    Dear Stephanomics Inc.

    I have a simple question that may or may not have a simple answer: why tax public sector workers?

    Given the recent spotlight on how public sector accounts for around 50% of the UK economy (more in some areas, less in others), that must represent quite a substantial burden of tax administration... so why is it necessary to take tax (and NI for that matter) from the people whose salaries are paid precisely by... tax (and NI, for that matter)?

    Could we not consider paying public sector workers a tax-free salary of their current take-home pay and save ourselves from running a huge hamster wheel of tax administration?

    Thanks to anyone who can cast any light here. I'm losing sleep about it...

 

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