The Government’s waste line and the BBC

This morning I heard the BBC asking the new Labour question, Where would you make the cuts, to some brave representative of the business community.

He explained in general terms how businesses go about cutting waste and improving efficiency. He said those techniques should be adopted by people running the public sector. That was not good enough for the BBC. They always act like Labour Ministers, regarding only a painful cut in frontline services as a cut that counts.

The businessman got more specific. He said the public sector should try a pay freeze, as many companies are doing. That would be big money, given the large payroll. He said the public sector should change its pensions schemes in the way most businesses have. Again that would be mega bucks.

The BBC interviewer left the the impression that once again a “cutter” had failed to name a single thing that would reduce public spending.

It’s a dialogue of the deaf. Labour Ministers and most BBC people clearly have never run anything efficient in their lives, so they have no understanding of what you need to do to run a cost conscious high quality service.

Meanwhile they lavished praise on President Obama for sending US taxpayers the biggest bill in their history. Apparently because most of the excess spending will be financed from borrowing in the first instance, that is a triumph.

They still have not grasped that if a government “spends what it takes” to “pump up” demand, it means the private sector has to spend less to be able to lend them the money and then to pay the public sector bills.

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33 Comments

  1. IanVisits
    Posted April 29, 2009 at 7:51 am | Permalink

    It’s good old politics.

    When doing something, it has to be a BIG something.

    When cutting, make it a big dramatic (and measurable) cut – because that is what the media and public expect.

    Shaving half a percentage point here, there and everywhere is vastly more effective and leads to more widespread efficiency gains.

    It just isn’t very good for the media headlines and leads to allegations of “doing nothing” simply because there are no press releases being sent out each week (which is a cost saving in itself).

  2. Johnny Norfolk
    Posted April 29, 2009 at 7:52 am | Permalink

    They just do not understand the very basics of economics.
    It is quite frightening and shocking when you think about it

    Its shows you how little impact people like Alan Sugar have had with Labour. They must just use him as window dressing.

  3. Acorn
    Posted April 29, 2009 at 7:59 am | Permalink

    How are you with Private Member Bills JR? Over on BOM today, Tyler has a great blog, “Cam, Cuts And Culture”. See my post in the comments. Are you up for it?

    http://burningourmoney.blogspot.com/

  4. Robin
    Posted April 29, 2009 at 8:00 am | Permalink

    Perhaps he should have suggested cutting the number of BBC news teams, to those of similar private sector organisations like Sky?

  5. Simon D
    Posted April 29, 2009 at 8:07 am | Permalink

    John. What do you expect? The BBC itself provides a master class in how to create an out-of-control overmanned, overpaid organisation doing too many things.

    In 1980 I was working for a nationalised industry, subsequently privatised. It was effectively bankrupt and, had it then been in the private sector, it would either have been taken over or put into liquidation. A visionary CEO decided to get rid of 20,000 people. Of course, the unions refused to play ball. Surplus managers could be sacked but blue collar workers were untouchable. Many, however, accepted voluntary redundancy packages despite union protests. Once the 20,000 had disappeared nobody on the front line noticed any difference and, if anything, the company became marginally more operationally efficient. The saving on salaries was enormous and the company went forward to a barnstorming privatisation. Many employees made money by buying shares.

    The Government has to say to the public sector (1) the country is bust and living above its means and (2) we love you all dearly but we can’t afford to keep everyone on the payroll. In addition, a well designed and tempting severance package has to be offered.

    The current public debate about “cuts” is puerile and uniformed. It is typical of the BBC to lead the way with misinformation. BBC insiders tell you that the whole place is grossly over-manned and that thousands of jobs could go without any significant effect on broadcasting output.

    The other thing you do if you are bankrupt is to stop doing things which are non-essential or of marginal effect. This is another way of chopping the payroll bill. My local council sends me a magazine several times a year. I never read it. My neighbours never read it and few would miss it if it was stopped. There must be plenty of areas where the Government could say “Sorry, we are bust, we can’t do that any more.”

  6. Mark M
    Posted April 29, 2009 at 8:22 am | Permalink

    Is the problem not that Lefties just don’t listen? They ask a question and they already have an expected answer formed in their heads. When you don’t give the answer they expect, they accuse you of not answering the question.

  7. mikestallard
    Posted April 29, 2009 at 8:44 am | Permalink

    One of the most encouraging things about the coming Conservative Government is that so many of the MPs have come in from the business world. Ken Clarke for one. You for another. Mr Cameron for another. Our own prospective MP for Wisbech, even, has come in from banking with Territorial Army experience.
    Do you know what? I give the present shambles another three months before the Labour back benchers get so fed up that that ditch it – along with their own futures.

  8. Demetrius
    Posted April 29, 2009 at 9:02 am | Permalink

    What private sector? The tourist trade? Olympics 2012? Social entrepreneurship in Labour councils? The Private Financial Initiative? The government is engaged in Old Mother Riley economics, that is taking in your own washing.

  9. Acorn
    Posted April 29, 2009 at 9:08 am | Permalink

    BTW JR, I hope you have got people working on an update for the following “How Labour Buys Its Votes”.

    You will get the old song about Labour constituencies needing more taxpayer handouts. It will not cross the minds of the voters in these Labour constituencies that if they voted Tory, their constituency might start to look more like those other posh Tory constituencies. Education is a wonderful thing, ain’t it

    • Acorn
      Posted April 29, 2009 at 9:10 am | Permalink
      • alan jutson
        Posted April 29, 2009 at 4:38 pm | Permalink

        Why am I not surprised.
        JR knows well that Wokingham has been deemed a very healthy area, and so gets one of the lowest amounts of funding in the UK for its area health service.
        It apparently is also a wealthy area, and so gets one of the lowest percentage Government funding in nthe UK to help mitigate Council Tax costs.

  10. Adam Collyer
    Posted April 29, 2009 at 9:50 am | Permalink

    Examples of public sector waste abound. Unfortunately, as you say, often they aren’t big headline items. We just received a survey from the local hospital to find out our opinions of their appointment booking system. It included a pre-paid envelope – FIRST class! For a survey! In the private sector company where I work you practically need CEO signoff to use first class post for anything at all. But obviously eliminating these little wastes takes a change of culture. In my opinion the only way to achieve that is by mandating cuts in expenditure – but simply telling the civil servants they aren’t allowed to cut any services. After all, that’s the same pressure private sector companies face every day.

  11. Ruth
    Posted April 29, 2009 at 9:53 am | Permalink

    I heard this too and thought the interviewer was fishing for a nice easy soundbite involving front line service cuts. What the man actually said was to cut the administrative functions, quangos etc.

    In the private sector, you don’t ask the question “who is going to do this?” you ask “do we need to do this?” If the answer is yes, you then decide what the minimum and maximum commitments are, different ways of achieving it and only then do you think about staffing. Can you add it to someone’s existing work? Can you spread the load among a number of people? Companies don’t like creating new jobs because it takes profit out of the business, so unless that post is going to bring in extra income, it often doesn’t get done.

    Contrast that with the public sector, where the first answer to any half-posed question is to create a new job.

    Unfortunately, if the incoming Tory government is serious about cutting costs it is going to have to repeal a shedload of legislation, statutory instruments and regulations as it is these that have created the jobs boom in the public sector.

    In the company I worked for the creation of the FSA resulted in one new post in my department and extra work for existing staff in others, plus additional contract costs, training for all staff and mountains of paperwork. All of this came out of our profits – removing regulation could not only cut public sector costs but also help the private sector too.

  12. John Wilkie
    Posted April 29, 2009 at 10:07 am | Permalink

    Saw an analysis in one of the papers (unfortunately I can’t remember which one) that if spending had been allowed to increase only at the rate of inflation since 2002, total spending would be 219 billion less than it is now – this is less than the total deficit (at least in terms of ADs budget).
    If we had done that, there would be no need for cuts at all.

  13. oldrightie
    Posted April 29, 2009 at 10:08 am | Permalink

    The BBC is a mess and a joke. Bit like the Government.

  14. Simon Denis
    Posted April 29, 2009 at 10:22 am | Permalink

    The really worrying thing is that the BBC’s bias should be so deeply ingrained. Our national broadcasters rarely if ever ask a question predicated on other than left wing assumptions. Thus it is that Conservative spokesmen are grilled – even when out of office – and Labour’s representatives are invited to set out their stall. On those rare occasions when Labour feel the BBC’s wrath, it is because of some supposedly “right wing” deviation – such as the Iraq war (to name the most spectacular). Let us suppose a supporter of grammar schools is put up on the Today programme. He will have to face the usual barrage of fake statistics about social mobility; will be accused of heartlessness; will be asked questions involving the words “sheep and goats” and “scrap heap” and will probably face some hard left academic who will use the authority of “research” or even “science” with which to dismiss him. Would a supporter of comprehensives be asked about bullying? Grade inflation? The fall in standards? The absence of proof for the contention that mixing abilities raises achievement? The gathering proof that this is in fact the reverse of the truth? Recently, some approved vaguely left wing person was discussing with the Today personnel the matter of honesty in politics. Education raised its now ugly head. Freely, the panjandrum admitted that comprehensive schooling brought about a “sub-optimal outcome” for “middle class pupils” but that this was a price worth paying if it gave the poor a chance. Therefore, it was held, some degree of euphemism was permissible in presenting this issue to the public. The raft of assumptions, the unctuous, conspiratorial tone of the interviewer, the appalling acceptance of political obfuscation still amazes me. These people have been slanting, skewing and misinforming the national debate for far too long. The BBC must be abolished and dispersed as swiftly as possible for the sake of democracy.

  15. figurewizard
    Posted April 29, 2009 at 10:43 am | Permalink

    Spending ‘whatever it takes’ in our case is an illusion of course because our national cashflow has already been exhausted by this government’s profligacy in past years. They don’t have the money to do any such thing, which is why they have resorted to quantative easing in order to create the impression that they are still in control of events. The price for this will be the debasement of our currency and a ‘tsunami of inflation’ as George Soros has predicted for the UK. It’s high time the Conservative party started to get this message across loud and clear.

  16. John Coles
    Posted April 29, 2009 at 10:48 am | Permalink

    It’s all very well, Mr Redwood, to make these fully-justified observations about the BBC’s endless bias BUT what are you going to do about it?
    The BBC is a malign influence at the heart of our political system and it skews the political debate in this country. We should not be prepared to continue accommodating its poison. We do not need a state-funded broadcaster.
    BUT, what is the Conservative party prepared to do?

  17. jeff todd
    Posted April 29, 2009 at 10:54 am | Permalink

    Head in the sand stuff from the Beeb.

    Even they must realise that the forthcoming tax rises will have to be offset somehow.

    Better to scrap the Beeb and give every family £140 to help meet the rising tax bills.

    It will help independent TV as all the newly available “talent” will have to take a pay cut to get a new job – just like everywhere else.

    And if you believe in the CO2 thing, scrapping a major power user can only be a good thing – even those AGW/MMCC fanatics at the Beeb would have to agree with that spin.

    Labour could not bring it back – another Tax?

    Tell Dave to get on with it – its a vote winner.

  18. Neil Craig
    Posted April 29, 2009 at 11:40 am | Permalink

    The BBC are a part of the civil service having the same ethos, padding & contempt for their customers.

    I suppose they have to praise Obama as he is the only part of the “international community” that favours the government’s borrow & spemd policy. It is fair that the US leader should get more coverage than the Polish one but even so they didn’t give much coverage of the fressing down the latter gave Brown on this policy.

  19. james barr
    Posted April 29, 2009 at 11:52 am | Permalink

    This government has not got a clue. A decent economy has been wrecked. I hope all those who swallowed the “land of milk and honey” bullshit promised by Blair and Brown in 1997 feel thoroughly ashamed of voting this lot in 3 times. Labour are economically illiterate and quite incapable of dealing with the public in an honest matter. Why are we waiting until May 2010 to kick this wretched government and their ridiculous politics into touch?

  20. Daedalus
    Posted April 29, 2009 at 11:55 am | Permalink

    I heard this on the radio this morning; it was on 5 live I think at 05:30 (still half asleep making breakfast) and then I got it again in another form at 06:15 listening to the business section of the today program while coming into work in the car. I thought our man made some very valid comments that could have been pursued further, especially in the Today interview. My company is laying people off and we have cut right back on many things that we used to do, I am also loosing 3 people in my department via natural wastage over the next couple of months. We are still investing in new plant and equipment; because we have saved money in the good times and have no borrowings but we will be running it with less people in the long run.

    Daedalus

  21. JHill
    Posted April 29, 2009 at 12:48 pm | Permalink

    I strongly agree with mikestallard’s comments and hope the
    party will emphasise the wealth of business experience
    available to get us through the coming austerity. The party must
    look to instill confidence in the battered private sector which,
    unlike too many in the public sector, including the BBC, knows
    that money doesn’t grow on trees. I feel the party can’t fight shy on this and has to withstand the inevitable Labour blather. I have worked in both the public and private sectors, including my own companies. In the public sector the fact that money has be generated to power the organisation seems to be a difficult concept to grasp – income is too often viewed as a God given right with the consequent lax view of its wise expenditure.

  22. David Burch
    Posted April 29, 2009 at 1:00 pm | Permalink

    Your comment hits the nail on the head. There are considerable savings to be made by controlling the payroll costs and trimming the unaffordable public sector pension schemes.

    However there is another reason why the deaf do not listen. They live in some fantasy land where the money appears never to run out. They just do not even comprehend that “cash is king” and is a finite resource. The only option is to terminate the employment of enough of them that they get this message.

    We may then get most of the current front line services and a reduced tax bill (or a reduced debt mountain).

  23. Paul
    Posted April 29, 2009 at 2:22 pm | Permalink

    Mark M

    How right you are.

    I had a business dinner with the CEO of a local company ( she is also Chair of Local Labour Party)

    She said what did you think of the budget, I said frightening and the level of borrowing predicted is obscene. She said well what about the car scrappage scheme. I said it’s mostly a gimmick. She screamed ( and I mean very loudly so everyone in the restaurant looked around) You are a f*cking imbecile, why don’t you f*ck off and live in Switzerland if you want to keep all your grubby money at the expense of hard working nurses ( I hadn’t mentioned taxes or NHS in any context).

    I just turned to everyone else in the restaurant and said it’s ok she’s having a HOON attack.

    Needless to say I decided not to buy from her company. Yes I was the client!!!

    • andy dan
      Posted April 29, 2009 at 8:36 pm | Permalink

      I have a customer who’s a university lecturer in economics at the local university, and also active in the local Labour party. I often broach the subject of government policy with him. What I’ve noticed is that he never, ever criticises anything the Labour party says or does, be it economic policy or foreign policy. Being a humble sort of chap, I doff my cap and ask him to explain more about this or that. He’s a nice guy and I don’t want to offend him, but it seems strange to me. You get people on this blog who quite often find failings with Conservative party policy past and present. These Labour people though have a very narrow-minded attitude, and don’t seem to be able to question party policy.

      • Paul
        Posted April 30, 2009 at 9:09 am | Permalink

        Andy Dan,

        Without wishing to stereotype ( but doing so anyway !) I think this is indicative of the main differences in the supporters of the main political parties.

        On the whole those on the Libertarian, conservative, right of centre ( I dislike left/right as both are meaningless) side of things tend to be for freedom, individual responsibility, questioners of the percieved wisdom and innovators. Those on the Liberal, socialist, NuLabour Left of centre tend to be for centalised control, command and management sytems, orders and targets and social engineering.

        It’s one of the reasons that lefties are always slightly taken aback when I argue against privitisation of the public sector as moving from one centralised state beaurocracy to a large megacorporation central beaurocracy achieves nothing. Public or private it’s about local control and delivery to the customer/user

  24. TomTom
    Posted April 29, 2009 at 2:42 pm | Permalink

    Simply de-criminalise the TV Licence – make it a civil offence not to buy a licence and not a criminal one.

    Why should taxpayers pay to prosecute those who choose not to buy a licence ? Let the BBC use civil courts rather than criminal courts – be much cheaper for taxpayers and give the BBC a sense of market accountability.

    The Conservatives simply need an amendment to two Acts of Parliament

    • Downsized Pete
      Posted April 29, 2009 at 4:21 pm | Permalink

      Excellent idea, and at the same time put an end to those creepy Orwellian advertisements telling us to pay our licence fees …or else.

  25. Mark
    Posted April 29, 2009 at 3:00 pm | Permalink

    I heard it too. The interviewer was Adam Shaw (I went back just now to check). It is very depressing because he is supposed to be a specialist business reporter and so to have some idea about business.

    My impression is that Today is trying desperately to find good economic news. For example, last week or the week before they interviewed someone on the busines section and the interviewer tried to make somthing positive out of a couple of takeovers. The interviewee was having none of it: “if you have cash to hand, it’s a good time to buy”, he said, “but these deals don’t increase the amount of economic activity”. They also come up with lines like “Megabank’s shares rose 20%”, not mentioning that 20% up from 20 pence is not much and that they were £10 2 years ago.

    Maybe the answer on cuts is to work out how much of the increase in NHS spending over the last 12 years is not linked to increases in the cost of front line staff and patient care. The figure will be huge. That is then an identifable target for efficiency savings which would leave the actual services intact. The same could be done for other departments.

    As an example of a waste of money, the civil service is planning a 3 day jamboree at Olympia in June or July. Up to 3,000 civil servants can attend each day to listen to the likes of Alastair Campbell and various cabinet ministers. Goodness knows what it will cost, but it is just the sort of thing we could do without.

  26. alan jutson
    Posted April 29, 2009 at 4:56 pm | Permalink

    Perhaps those in the Public Services Organisations and Local Government should be asked the following questions.
    Who do you think pays your wages.??
    Who do you think pays for your pension??
    Who do you think pays for your office building ??
    Who do you think pays for the heat, light and power this building uses??
    How much money do you think you generate for our balance sheet.?
    How much do you think it costs to keep you in a job?

    If they cannot answer with the correct answers.
    Which are:
    Other taxpayers who are not in the Public sector.
    Other taxpayers who are not in the Public sector.
    Other taxpayers who are not in the Puiblic sector
    Other taxpayers who are not in the Public sector.
    Nil. I am a cost to the Tax payer in the Private Sector.
    Many thousands of pounds a year more than my salary.
    Then they should be educated to the above answers.
    It may, just may, help to get the Penny to drop.
    The cost burden of Public Services is at the Wealth creators expense, no one else.
    Yes of course we need some Public service jobs, but a lot less than we have.
    Get cutting as soon as possible, we simply cannot afford it any longer.

  27. RayD
    Posted April 29, 2009 at 7:38 pm | Permalink

    Pure pipe dream I know, but I’d consider a lot of public sector jobs as “political appointments” and thus it would be perfectly reasonable to “let them go” on a change of government.

  28. Dr Nick Ashley
    Posted April 30, 2009 at 4:14 pm | Permalink

    I’m a simple soul. I understand that certain areas where there should be political accountability have been hived off as Quangos and as such aren’t as easily scrutinised as they were when run by the civil service. Anyway, no-one likes Quangos and they are reputed to cost £180 billion a year. So, if we scrapped say 90%, that’s a good saving. As I said I’m a simple man. Would we miss the Commision for Racial Equality or whatever is is known as these days? Why can’t they all go, sinecures for old politicians to one side for a moment?

  • 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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