Try debating public spending intelligently for a change

I am heartily sick of all these hand wringing interviews about how difficult it is to cut public spending. They usually ask people if they want to cut schools or hospitals, the nonsensical Labour spin. The “better” ones do go on to offer the interviewee chance to cut defence or some other public service.

Businesses regularly have to cut their spending. They do not agonise over whether to cut production or the service they give to customers, as they know they need to sustain both if they are to stay in business. They debate whether they can buy their raw materials cheaper, how many people they really need to produce what they are producing, whether there is a smarter way to make it. They look at cutting what they spend the money on – staff, raw materials,semi manufactures, adverts, transport etc, not at cutting the final output or service.

If we are to have a sensible debate on the public sector that’s what we need to look at. The only small hope in the whole debate is the way some are now asking questions about MPs’ expenses. Did the MP need the patio heater to do the job? Does an MP who lives 9 miles from Westminster need a second home?

These are sensible questions, opening up a needed review of the rules on spending. We need to do the same type of questioning for all public spending. Does the highly paid CEO need the assistant? Does the CEO need to be paid so much more than a Cabinet Minister? Does a government department need 100 spin doctors? Does the quango need to exist? Do we need the extra 300,000 civil servants Labour has added? Did they need to send out all those glossy brochures?

We are not going to get anywhere all the time lazy people in the media conduct interviews about how difficult it is to cut spending because it means cutting schools or hospitals. We need to cut through Labour’s lie that their opponents came into politics to sack teachers and make nurses weep. I know of no MP who has ever wanted to do that. You can have all the nurses, doctors, teachers, military personnel, fire staff, police and other front line public servants we already have for under one quarter of public spending. So let’s start asking soem questions about the other three quarters. Let’s apply some of the efficiency driving logic from the private sector to the public sector.

And let’s start with some popular cuts, like scrapping ID cards, centralised computer schemes and unelected regional government. Cutting public spending can be both easy and popular, because the public sector is so bloated and does so many things we do not need it to do.

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30 Comments

  1. Frustrated taxpayer
    Posted April 20, 2009 at 7:15 am | Permalink

    You could also:
    – abolish Landfill tax – the cause of many of the stupid and increasingly expensive waste collection arrangements,
    – remove a swathe of regulation (much of it a hidden tax on business),
    – disband the “Quango”-style organisations that have been spawned around the current Administration (e.g. WRAP and ACPO – both examples of unaccountable publicly funded organisations pretending to be private sector organisations)
    – make all public sector pensions money purchase rather than fixed benefit
    – ban first class travel for all public servants (civil servants, local government employees, etc)
    – disband the BSF programme – a classic Brownian white elephant which is simply not going to deliver its objectives by 2015

    None of the above will jeopardise our economic recovery or undermine the performance of UK plc, but the combined effect would be to save billions in wasted public expenditure.

    Oh and the starting point – so we can see that there is leadership from Wesminster:
    – disband the ACA for all MPs with consituencies within reasonable travelling distance of London – the definition of reasonableness being the same as used by HMRC when assessing taxpayer’s liabilities
    – make all MPs expenses taxable and subject to a level of scrutiny and approval/audit consistent with the best practice
    – make MPs second homes taxable in the same way as second homes for non-MPs
    – make benefits from all-Party committees/associations taxable
    – make all hospitality received by MPs over a nominal value (of say £50) taxable as a perk – after all the hospitality is only being received as a consequence of the person being an MP
    – make the subsidies enjoyed by MPs on their catering and refreshments taxable as an employment benefit
    – make MPs pensions money contribution only for all sitting MPs after the next election – best achieved by closing the current pension scheme and opening a new one for the 2010 ‘house’
    – ensure all appointments by MPs of staff/assistants conform to employment law standards, with posts publicly advertised and the best candidates appointed – rather than allowing cronyism and appointment of family members without competition

    None of the above fundamentally aftect the ability of an MP to perform on behalf of their constituents, but they would show leadership and responsibilitiy in these difficult economic times and would be a step towards winning back some public trust.

    • roger
      Posted April 20, 2009 at 9:38 am | Permalink

      My company is a supplier to industry. It is tasked to reduce prices every year whilst at least maintaining the same quality of product and service. This is achieved by continually reducing waste and increasing productivity. It has to be done in order to keep our customers. This principle should apply to national and local goverment. Any successful bussinesman, with hands on experience, would have a field day in cutting waste, and redirecting resouces, (monetary and labour) to front line ‘core’ activities ie. nurses, doctors, teachers, firefighters, police officers etc. whilst reducing taxes at the same time. Apart from yourself are there no other politicians who accept this argument and have the necessary courage to call for a halt to this ever increasing non productive client state we are all paying for? The potential Tory voters are now ready for this issue to be debated in detail. The Conservative party should be making specific costed commitments.

  2. alan jutson
    Posted April 20, 2009 at 7:17 am | Permalink

    They do not want to discuss it, because they fed it, to make it grow !!
    It would be an admission of failure, and this Government does not like to admit failure of anything, even if it is as plain as the nose on their faces.
    “Its all within the rules”
    Cutting Public Spending is cutting jobs, full stop, that is the Labour argument.
    The fact that those jobs should never have existed in the first place does not enter their heads.
    It was a method of reducing the unemployment total for headline figures.
    The sad fact is that many people in these jobs were also gaining tax credits as well, and whilst this is not a problem if that is the chosen system, it once again hides Government subsidy and expenditure.
    Clearly working at any job is better than being on the dole, even if its for your own self respect, but the problem is, if you create public funded jobs, the the real creative jobs with wealth producing Companies shrink, as the tax burden on them grows.

    • Frustrated taxpayer
      Posted April 20, 2009 at 7:34 pm | Permalink

      “The sad fact is that many people in these jobs were also gaining tax credits as well, and whilst this is not a problem if that is the chosen system, it once again hides Government subsidy and expenditure.” – its not just a sad fact it is part of the socialist scheme for creating the dependency culture – you have a state funded job but it does not pay a reasonable living wage so the Government top it up through tax credits. Bingo you have a dedicated set of client voters convinced that the only way to survive is to vote Labour.

      The next administration must start to dismantled the dependency culture that has steadily increased over the last 12 years. Yes we should have a safety net but one aimed at turning people round, back into useful roles in society – depending on circumstances some may be paid and some may be ‘voluntary’ – but no one should simply be paid to site at home. Self respect comes from having something to do every day not vegitating in front of the TV with a packet of cigarettes and the latest special offer from the off licence.

      • alan jutson
        Posted April 21, 2009 at 5:00 pm | Permalink

        I agree with your comments, and have blogged similar before
        “turkeys do not vote for Xmas”.
        its Gordons plot to make over half of the population dependent upon the government, so that they will continue to vote for them as they cannot afford not to..

  3. Brian Tomkinson
    Posted April 20, 2009 at 7:55 am | Permalink

    Perhaps if your party utilised your talents more this clear message could be articulated to a wider audience.

  4. Jim Pearson
    Posted April 20, 2009 at 8:13 am | Permalink

    I know it’s asking a bit, but what about a rise in spending for the MOD. It’s been very neglected by the current government over it’s tenure. The state of it’s housing/Equipment shortages are well documented. I’m sure some extra funds could be channeled here? What do you think?

  5. David Cooper
    Posted April 20, 2009 at 8:17 am | Permalink

    The “which schools/hospitals will you close” argument can of course be categorised another way. It comprises “bleeding stump” tactics – in other words, rather than agree to trim off the fat, our opponents will threaten to hack off a limb and leave a bleeding stump, or accuse us of wishing to do so. Perhaps we ought to be more alert to turn this around by reacting “we only want to trim off the fat – do you really want the state sector to stay obese?”

  6. mikestallard
    Posted April 20, 2009 at 8:45 am | Permalink

    There is no use in making a list of things that could happen because they are not going to before the next election.
    However, I do hope that there will be some sort of management along the lines our host suggests after that.
    On Labour List, there seems to be no idea at all of the magnitude of the debt we face, all they seem able to do is to bleat about JM Keynes – and I’ll bet (like me) they have never read him.
    The real danger is, actually Matthew d”Ancona in the Telegraph yesterday. He sees the arrest and sacking of his home by the police in front of his wife and 15 year old daughter as funny. If that continues we will soon be on the level of France or Weimar where the politicians look so ridiculous that the only hope is for “Ein Sterke Mensch” – a strong man – to sort it all out.

  7. Colin D.
    Posted April 20, 2009 at 8:46 am | Permalink

    We also need to go for that ‘sacred cow’ – the NHS. Despite all the money pumped in, the official figures show that NHS efficiency has deteriorated. Even it were made a mandatory requirement that efficiency had to rise just 1% a year, the public would understand that this was not not ‘political’ and not attacking the numbers of doctors and nurses but going after the top heavy administration, rotten planning and sheer waste.

  8. Nick
    Posted April 20, 2009 at 9:05 am | Permalink

    It’s very simple. 175 billion is 25% of gov spending.

    That’s the size of the cuts needed just to stand still.

    The alternative is very simple. It’s larger cuts in the future because of interest on the borrowing.

    Nick

  9. Denis Cooper
    Posted April 20, 2009 at 9:08 am | Permalink

    I’m happy to try debating public spending intelligently, and here is my first contribution:

    Although in some ways the country is like a business, in other ways it is very different from a business.

    The first crucial difference being that a business has employees, but the country has citizens; and while a business can dismiss employees, washing its hands of them, the country cannot dismiss its citizens.

    Not unless the surplus or unwanted citizens can be either killed off, or packed off to colonies.

    The managers of a company are expected to manage it for the benefit of its owners, regardless of the wider social consequences of their business decisions; in contrast, the government of the country is expected to govern it for the benefit of its citizens, giving full regard to such social consequences.

    • alan jutson
      Posted April 20, 2009 at 2:54 pm | Permalink

      Hi Dennis
      Like your idea of a debate of ideas etc

      So here goes

      Both Business and The Country have costs which have to be met.
      Business use raw materials which is a necessary cost.
      We could say the raw materials of the Country are its Citizens another neccessary cost.
      Business has overheads which are a variable cost
      Citizens Benefits/Pensions are a variable cost to the Country.
      Business has income from sales.
      The Country has Taxpayers and Business Tax for income.
      Business aims to work efficiently to make a profit to reinvest.
      The Country should aim to balance the books and use a surplus to enhance their citizens way of life (better police, Nhs, eductation etc) or to reduce/balance the costs to those who contribute.
      Business try to run as lean a management team as possible to reduce overheads.
      The Country should do the same, and not have over complicated systems which are more expensive to run than neccessary.

      On occassion you do get a reduction in the number of citizens with either war or illness, perhaps even the odd government toxic leak from a research laboratory, but this usually effects those who are productive, and so it does not help.

      We could also get out of balance by having too many citizens arriving (perhaps uncontrolled) increasing the population at large (raw material cost), especially if they do not work (produce tax) as well.

      Clearly this is very simplistic and I would agree that the solution is rather more complicated than above, but think the basis is not far away.

  10. Lola
    Posted April 20, 2009 at 10:04 am | Permalink

    Business does more for less every day. That’s what happens when you are in a competitive market with demanding customers. Governments – of any flavour – and especially the permanent civil service can never do this. Which is why countries with small governments prosper and those with big government don’t.

  11. Mark M
    Posted April 20, 2009 at 11:36 am | Permalink

    How about ‘leave the EU’?

    A simple cost-cutting measure that will save both the government money (£9bn a year at last estimates) and the public money (for starters, the CAP adds around £400 a year to the average families food bill).

    We don’t want to be in the EU anymore (55% of Britains want to leave it – BBC Poll) and I’m fairly sure the EU would be much happier without our eurosceptic MEPs ruining the Brussels consensus.

    And the best bit, we get to make 100% of our own laws, rather than the 15% we currently do.

    • Breaker
      Posted April 21, 2009 at 1:30 am | Permalink

      Mark,
      Do you have a substantiated link to that quote of “15%” please?

      I have argued with others over the origin of this; I would love to find a definitive source (Hansard / EU minutes etc) that actually goes through the facts rather than just repeating this “statistic”.

      • Mark M
        Posted April 21, 2009 at 7:36 am | Permalink

        The only source I have is Dan Hannan (http://blogs.telegraph.co.uk/daniel_hannan/blog/2009/04/15/eightyfive_per_cent_of_our_laws_come_from_brussels)

        The statistic comes from Germany, where they did a comprehensive survey of all laws passed since 1998. He assumes that it will be roughly similar for Britain, but challenges ministers to produce their own figures if they disagree.

        • Breaker
          Posted June 17, 2009 at 9:01 pm | Permalink

          Apologies for the late reply.

          That was as far as I got with it, too. There’s a reference in Hansard as well that claims a ridiculously low figure (guess the party affiliation of the speaker), but that’s it as far as UK law is concerned.

          I wonder why no one is really doing any digging on this?

  12. Philip Parkin
    Posted April 20, 2009 at 12:32 pm | Permalink

    You’re absolutely right John. I do despair, though, at how timid our party is at expressing these views and I’m not convinced that we’ll really tackle the problem when we get into power. The government and the media have managed to virtually close down political debate on this issue.

  13. Hysteria
    Posted April 20, 2009 at 1:05 pm | Permalink

    agreed – I think the main thing about bringing MPs onto the same basis as everyone else is it keeps them “grounded” in what impact the laws they pass have. Given that so few MPs now have experience outside the House – other than in the public sector – one of the few ways they can get any realisation of how “ordinary” folk live is to have to get by under the same rules as the general populace.

    I think term limits, open primaries and more independents would help too but that’s the subject of a separate rant….

  14. Steve Cox
    Posted April 20, 2009 at 1:39 pm | Permalink

    Here’s my idea. All the pain is being borne by the private sector. Let’s share it around a little. Follow Ireland with a substantial hike in the pensions contributions of all public sector employees on, say, more than £20K/year. Something like 7% to 10% should do.

    But let’s not stop there, that’s far too timid. Let’s TRULY peg all existing public sector pensions to RPI. In other words, use the RPI average over the year, and if it is negative (“deflation”) then CUT pensions by that amount.

    The current public sector fantasy world of index-linked, unfunded pensions must be completely overhauled. Savers are hurting. Pensioners are hurting. Private sector employees are hurting. It’s time for civil servants to accept their fair share of the pain.

  15. RayD
    Posted April 20, 2009 at 2:50 pm | Permalink

    The problem is though, public spending is largely jobs. To cut spending you have to sack people. This is difficult when unemployment is rising, and why the most likely thing to happen is a freeze and let it inflate away.

  16. FatBigot
    Posted April 20, 2009 at 4:29 pm | Permalink

    I believe two separate points are being conflated here.

    “Efficiency” is all about doing what you do now but doing it at lower cost; there is obviously scope for this in the public sector.

    On the other hand such measures as scrapping the ID card fiasco and scrapping regional government are not efficiency savings, they are about reducing the functions of the State.

    Substantial inroads into government debt can only be made by reducing the number of things government does, not by tinkering with the way it does them.

  17. Chris H
    Posted April 20, 2009 at 4:32 pm | Permalink

    I get pretty angry when I see people once again bashing the civil service pension. If any of you had any idea at all just how low-paid many of them are, you’d be a little less ferocious in your attitude. I gave up my science job many years ago for family responsibilities. For numerous reasons I was never able to go back. My pay at the time of leaving was just £9500 a year, after 17 years work. I dont expect to get a “gold-plated” pension from that sort of salary, irrespective of whether its index-linked, inflation-proof, fool-proof or what. Please try and remember that the term “civil servants” encompasses a very wide range of people on an enormous range of salaries…..from the obscene to the pitiful.
    By all means brow-beat the top-end if you must, but dont tar us all with the same brush. Its not my fault that my pension is unfunded…..I can’t do anything about it now, I’m too old. In essence, by the time this government has finished messing with the country’s finances, my pension wont be worth anything anyway.

    • ManicBeancounter
      Posted April 20, 2009 at 8:21 pm | Permalink

      Chris,
      I can sympathise with you. Having started my beancounting career in the NHS I understand that there are many hardworking people inthe public sector on quite low rates of pay. One of the reasons that I left the public sector was being in a job that I could have done in two days a week, whilst colleagues were staying late to keep up. Further, many of the over-worked were doing roles that had little effect on the overall effectiveness of the organisation.
      I know some teachers who are up late at night marking and filling out forms. The same goes for police officers and social workers. The spend much of their time on non-productive tasks. Teachers teaching, the police in upholding the law and the social workers in helping the vulnerable.
      The problem with this government is that much of the extra expenditure has gone on reducing productivity. It is sole destroying for those who wish to make a difference. It encourages those who enjoy meetings, composing long reports and thinking up new ways to make life difficult for others. This are the highly paid jobs that should done away with.

  18. roger
    Posted April 20, 2009 at 7:52 pm | Permalink

    RayD. You dont have to take people out of work, you have to produce a culture (just as in private industry) of retraining people into the ‘ core activities’. eg. reduce the non productive workers in the office at the back, and move them or employ more productive ones onto the front line (the police force is a good example). It’s not rocket science it is happening in succesful busines’s all the time now.

  19. ManicBeancounter
    Posted April 20, 2009 at 7:59 pm | Permalink

    Mr Redwood, You are right to say “Let’s apply some of the efficiency driving logic from the private sector to the public sector.” But this requires two things
    – A change in language. From spending “whatever it takes”, to spending to best serve the interests of society. From constantly changing the rules, to changing from one static structure to another, to enabling diverse and dynamic structures.
    – Changing the emphasis of government, from being an employer with monolithic structures, to a funder & enabler of diverse organizations, who exist to provide services to the public.
    The private sector learnt in the 1980s that conglomerates generally destroyed value through becoming too bureaucratic, and having a lack of focus. The modern state has this issue, multiplied a hundred fold, along with conflicts of interest (self-regulation; political spin v. serving the best interests of the country; union pressure (& other interest groups) v. public interest; winning elections v. the long-term financial health of the nation etc.)

    Therefore to change the culture
    – Start with MPs expenses. The general principle is that MPs are elected representatives, there to serve the public. It is legitimate for the taxpayer to meet those costs to enable an MP to carry out these duties, but not to enrich that individual whilst in public office.
    – With Education – create a voucher system and make all schools autonomous. Allow for diversified examinations and syllabuses.
    – With Health Care. Introduce vouchers to encourage various types of healthcare provider. Etc.
    – All activities (and regulations) to be assessed for costs as well as benefits.

  20. rik
    Posted April 20, 2009 at 10:40 pm | Permalink

    Could not agree more. The conservative party need to take this argument to the people by putting together solid examples of where the cuts can be made and how much money would be saved. As you say the labour lie has to be broken. And the only way to do this is using exactly the argument you have put forward!

  21. noizeboy
    Posted April 21, 2009 at 1:32 am | Permalink

    Let’s start with a 20% cut in MP’s wages and allowances, all special advisors paid by the party not the taxpayer, 15% cut in public sector pay (supervisors and above).

  22. Adrian Peirson
    Posted April 21, 2009 at 2:47 am | Permalink

    Quangos cost us £100 Billion per year.
    The EU costs us £10 Billion per year
    The Two illegal wars cost us arounf $5 Billion Per Year.

    Coin and Print our own money FREE instead of Borrowing it, no Govt Debt (currently over £1Trillion, what’s the Interest on that I wonder )

    All the complexity in taxation costs us Billions more, Eliminate Taxation on anything but Purchases, that way, only vendors need keep records, tax receipts and fill in Tax forms.

  • About John Redwood


    John Redwood won a free place at Kent College, Canterbury, and graduated from Magdalen College Oxford. He is a Distinguished fellow of All Souls, Oxford. A businessman by background, he has set up an investment management business, was both executive and non executive chairman of a quoted industrial PLC, and chaired a manufacturing company with factories in Birmingham, Chicago, India and China. He is the MP for Wokingham, first elected in 1987.

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