Labour’s cuts

In 2010-11 the government is planning £35 billion of cuts as part of a value for money programme. After years of telling us all public spending was sacrosanct and there is no waste, in more recent years the government has come round to the view that there is considerable scope for reductions in spending to improve efficiency. These Labour cuts have not received enough attention.

The Health department is to find £10.5 billion of them. Ideas include shorter stays in hospitals for patients, lower prices for pharmaceuticals, more efficient back offices and sharper buying of other supplies.

At Education there will be £5.14 billion of cuts. Each school is to find a 1% efficiency cut, whilst the quangos have to find 3%.

Local government has to find £5.5 billion.

The MOD has a disproportionate requirement to cut £3.15 billion, a far higher percentage of its spending. The government proposes a mixture of manpower and purchasing savings.

Transport is to cut £1.96 billion. Ideas include less grant for Network Rail and more efficient procurement.

A hefty £1.94 billion is to be saved by FE and HE, through a mixture of less administrative cost, better buying and delay in offering grants. The FE capital programme is an early casualty and presages general cuts in capital spending elsewhere.

The Home Office has to find £1.69 billion. The police are to use more technology to save police time, whilst the Borders Agency is to use iris and facial recognition to cut costs.

The Ministry of Justice weighs in at £1.08 billion, and the Revenue departments at £788 million through general efficiencies.

Work and Pensions can only manage £1.4 billion despite being the big spender. This is to be delivered through better staff efficiency.

I welcome the government’s conversion to the view that efficiency, quality and productivity can and should be raised throughout government. The dangers are twofold. One, the government will not deliver as promised. Two, the base figures for spending are so inflated that the targets are in some cases too low.

The gap between the best of the private sector and the worst of the public sector is collossal. The gap between the private and public sectors’ average performance is big. We need more demanding targets for improvement, and more Ministerial involvement in delivery.

Over the next few days I will be looking at the main departmental budgets. There needs to be a proper review of all departmental spending, to find more economies more quickly, before the debt mountain crushes us.


  1. Kevin Lohse
    July 24, 2009

    Dear John. I notice that neither over-manning in administration, the end of theGov’t funded pension scheme or the removal of the tick-test target culture, all of which would cut costs dramatically, are mentioned. Another case of the dead wood holding the axe?

    1. jean baker
      July 25, 2009

      No mention either of the costs of IT surveillance causing increasing loss of privacy; Britain’s reported to be the most ‘spied on’ country in the world; it hasn’t reduced crime.

      Likewise, only time will tell whether a system of inoculation and ID database is implemented by government on the basis of a flu virus.
      Cost to taxpayers ???

      Taxpayers are routinely misled by this government.

  2. Brian Tomkinson
    July 24, 2009

    Are these so-called efficiency cuts itemised and who independently audits that they have been achieved? Or is it just more government spin? After all Brown is still saying that Labour will spend more. I look forward to reading your departmental reviews. That is a constructive way of using some of your time during the parliamentary holiday. I just hope you are not a one-man band in the Conservative party. I looked in vain to see your name amongst those that are being tipped for a return to the front bench. With apparently little new talent available it would be an even worse omission to leave you out again.

  3. Lola
    July 24, 2009

    There is absolutely no way they can cut 3.19Bn from defence and leave us with any international credibility. Admittedly the farce over the special forces Chinnooks that seems to have cost us over 300M might by symptomatic of a culture of fiscal irresponsibility, but I seriously doubt it.

  4. Lola
    July 24, 2009

    Sorry, mucked up previous post. Here is corrected version:

    There is absolutely no way they can cut 3.19Bn from defence and leave us with any international credibility. Admittedly the farce over the special forces Chinnooks that seems to have cost us over 300M is symptomatic of a culture of fiscal irresponsibility, but I seriously doubt that we can make savings from defence and contend that we have credible armed forces able to discharge the primary responsibilty of the state, national security.

    1. jean baker
      July 25, 2009

      The question is has the invasion of Iraq & Afghanistan improved or lessened our national security ?

  5. Waramess
    July 24, 2009

    Margaret Thatcher could not do it, Gordon Brown can not do it and David Cameron can not do it. They all said they could but the Civil Servants ultimately will not let them.

    The only way to save money in the Civil Service is to cut headcount, and that is dfficult enough when heads of department try to re-hire the redundant by re-employing their number as consultants.

    The Conservative administration will have to accept not that they are the masters but that they are no more than temporary workers up against a group of long termers who have everything to lose. They will not budge one inch or conspire to save one penny unless forced to do so.

    1. jean baker
      July 25, 2009

      Nulabor inherited 12.5% economic growth from the Conservatives and free enterprise flourished. Under this government, – 30% growth and worsening, along with the biggest deficits this country has encountered.

      Cutting and abolishing quangos is one of many obvious solutions.

  6. Demetrius
    July 24, 2009

    How much would be saved by economising on the thirty thousand political advisers who got us into this mess?

  7. TCD
    July 24, 2009

    As usual GB shows that he does not believe in defending the country. This is one of the few domains where the state really does have a responsibility. Defense is not a luxury and is more important now than it has been in many years: Al Qaida, Iran, North Korea, and a resurgent Russia, ignored at our peril, are all greater threats now. Defense instead of Health should be the only area protected from cuts in Cameron’s buget.

    1. Stuart Fairney
      July 25, 2009

      Do you honestly believe that either Iran or North Korea are a credible threat to the UK?

      If so please describe how they could attack us and why they would do so.

  8. a-tracy
    July 24, 2009

    “The police are to use more technology to save police time”.

    I watched the bbc program with Nick Ross a couple of nights ago that went in some way to explain what took up so much police time in Oxford over boozy weekends. It wasn’t the lack of technology it was people wasting police time by calling them to domestic arguments then when two offers turned up not wanting to press charges or take further action. I wondered if a log was kept of these incidents so that if two happened in a period of time further action could be taken out of the hands of the frightened caller.

    There seems to be a lack of custody rooms for violent and drunken people, who, after a certain time in the evening, couldn’t be locked up because it would take up too much police time to transport them out of area. More programs like this should be made, it certainly opened my eyes and made me think.

    1. jean baker
      July 25, 2009

      Indeed, left wing biased BBC programmes are all designed to make ‘people think’, i.e. social engineering.

      Crimewatch, a constructive aid to the police has been abolished.

    2. ManicBeancounter
      July 25, 2009

      I believe that calling the police may be the way to diffuse the situation. People do not always get it right, especially in the heat of the moment. The role of the police is to stamp their authourity on the situation and restore the peace.
      More important is the time the police spend in filling out reports of arrests. This can serve as a deterrent to the police against arresting, but more importantly in using up valuable time in non-productive tasks. Social workers in the case of Baby P were shown to spend too much time in meetings and on paperwork, and too little time with clients.

  9. alan jutson
    July 24, 2009

    Thank you for the figures John.

    Doubtless the Government will argue that these are not correct and its all a Tory plot.

    Clearly cuts or more efficient working is needed, but I agree that we only seem to be scatching at the surface given the huge scale of debt we are in.

    The one area that surprised me in your figures, was that the MOD seemed to be getting a larger cut in percentage terms than all of the others. All this whilst we are still fighting a War.

    The cost of Running this War must be causing a real problem for the MOD, not only now, but in the future.

    Clearly if you have armed forces then they need to be paid, so the cost of this is no different, other than perhaps increased payments for a combat zone.

    The cost of Ammunition, bombs, rockets, mortars, etc etc is an added cost over and above the peacetime cost.

    Movements of equipment. Whilst you may have training excercises in peacetime, will also be more expensive in war time.

    Equipment that does not get destroyed, will wear out more quickly when you are in combat, more spares will be used, equipment will need to be replaced more often. Stockpiles built up. Again at an added cost.

    With no (published) idea of how long we are to remain at War, it would seem that we are either going to end up with armed forces with equipment in either a worn out, or terrible state within a few years (some would say already). In short we will have armed forces with knackered equipment.

    The result, massive amounts of money will be needed to replace all equipment to a reasonable standard, or we have a force which will not be able to interceed in any other conflict, in any real way, which may next time be closer to home or threaten real British interests.

    The alternative, we shrink our forces to suit a lower budget.

    Aware that all Government Departments have to take the strain, but Defence, or is this the pre-curser for the argument for a joint European force, because we will no longer be able to manage anything on our own.

    Clearly we cannot do much now on our own, but would appreciate your thoughts.

  10. jean baker
    July 24, 2009


    The proposals sound as misleading as the ‘money making Bank transactions’ which you say resulted in £77,000,000 debt to taxpayers.

    “Shorter hospital stays” as opposed to reducing six figure salary ‘managers’ – is this a joke ? Targets and bed shortages have made patients the ‘losers’ for sometime – premature discharge resulting in readmission is common place. Good for ‘box tickers’ on 6 figure salaries, life threatening, especially for our elderly.

    Technology for the police will be further borrowings against taxpayers. No taxpayer funded measure to date has decreased crime, including ‘technological surveillance’, it has escalated. How much money will be borrowed against taxpayers for new ‘technology’ ?

    Last, but not least, what is the cost of taxpayer borrowing for arming the government affiliated Border Agency with ‘iris and facial recognition’ hi-technology.

    The cumulative costs of additional borrowings for the ‘proposals’ will be staggeringly high, but are undisclosed, unsurprisingly !

    Shorter hospital stays = reduced service, box ticking and technology has reduced police presence and public protection.

    Are the multi billion pound taxpayer borrowings for ‘iris and facial’ databanks proposed to be used alongside ‘open door’ immigration – or is it proposed that innocent British citizens going about their daily business will be subjected to ‘iris and facial’ recognition, as and when diktat requires ? Will ‘iris and facial recognition’ be a legal requirement for all indigenous people living in Britain? I ask because the word ‘Border’ does not apply to the free movement of people in a democracy which the EU claims, to taxpayers, to be.

    The proposals are sinister in the extreme – Orwellian and, as usual, ‘wrapped up’ and delivered as “savings” by Nulabor spinners and manipulators.

    “Know the enemy within ………. “

    1. jean baker
      July 25, 2009

      Coincidentally, OpenEurope today reports strong opposition (70%) of Germans to EU proposals to weaken a country’s Parliament – part of the Lisbon Treaty. A very firm stand is being taken in Germany and their Ambassador urges ‘British MP’s to ‘wake up’.

      Nulabor ALWAYS achieves it’s aims by ‘stealth’ – media spin and manipulation.

  11. Mark Williams
    July 24, 2009

    “Each school is to find a 1% efficiency cut, whilst the quangos have to find 3%.”

    The obvious implication is that if each school can find a 1% cut without grinding to a halt, many schools would be able to find more. This in turn suggests sloppy management and loose purse strings.

    1. ManicBeancounter
      July 25, 2009

      The problem with schools is that perhaps 80% of the costs are salary costs. These have not only risen in real terms, but the number of staff has increased. In primary schools, most classes have not only a teacher, but also a teaching assistant. Then there are various support workers, for special needs, reading, language needs etc. Compared with when I was at primary school in late 60s / early 70s, the staffing has almost doubled per child. Also, the teachers have to spend much longer hours preparing for class. If there had been a massive increase in standards then it could be argued as money well spent, but there has not.

      To save the real money we need a change in thinking about teaching, which includes productivity. As a result we could spend less and achieve higher standards.

      1. Mark Williams
        July 26, 2009

        You may well be right, I couldn’t possible comment, but the implication of an across the board cut without looking at specific needs is either that it won’t work and is a futile gesture, or that the capacity for cuts will be much greater in some cases.

        1. ManicBeancounter
          July 26, 2009

          I quite agree that across the board cuts do not work. But the current philosophy of teaching has resulted in huge increases in costs (and workload for teachers), with little marginal benefit. Indeed, in some respects we are failing the needs of the better students by having GCSE and A levels that are insufficiently demanding.
          This is why we need a more basic level of teaching (less items are are labour-intensive for the staff) and then concentrate the extra resources on the specific needs. You therefore can both save on costs AND improve standards. It is looking to get better returns from the resources available. That is using the talents of the teaching staff to best effect, to produce the well-educated and socially literate young people.
          This is not to say that we have all the answers, and the same approach will not be the best for everyone. That is why we need a plurality of approaches, with the state stepping back, to the regulation of minimum standards and providing the funds through a voucher based system. It will be difficult to achieve, as it is more humble (the latest fashion is not necessarily the best), but when mistakes are made they will a) have lower cost implications b) will not affect a generation when an experiment goes wrong. We can also learn through best practice and exchange of experiances, and not be subject to the whims of spin doctors.

  12. oldrightie
    July 24, 2009

    I’m just listening to Liam Byrne telling us everything is fantastic, as we shrink a further 0.8%. We have a recovery plan that has solved all our ills. Unbelievable, it really is depressing how their spin is worsipped by The BBC.

    1. jean baker
      July 25, 2009

      Campbell reportedly works at BBC.

  13. John Moss
    July 24, 2009

    And we probably need more involvement of the private sector in the delivery of services in a competitive environment, created by transferring funding from spending departments and state-run monopoly providers, to customers through vouchers and tax breaks.

  14. JC
    July 24, 2009

    Erm there is as much waste in public sector companies often as much there is in private sector companies.

    But cuts are possible without slashing frontline services and the savings are palpable.

    For the reality of the improvement debate between new thinking and the Audit Commission see here:

  15. backofanenvelope
    July 24, 2009

    The only way to stop the debt mountain crushing us is to STOP the government doing things. Overwise the Civil Service will ensure that their empires survive intact.

  16. figurewizard
    July 24, 2009

    When exactly did these figures emerge and is this yet another example of ‘a good time to release bad news’ – in this case just as Parliament is breaking up for the summer hols?

  17. Acorn
    July 24, 2009

    Are we talking another Gershon type thing here? Gershon was a joke, I have never found an Auditor, who could conclusively prove a Gershon “efficiency” saving in local government.

    The only way to reduce government spending is for government to stop doing things. That means removing legislation that allows them to spend CASH in the first place. A lot of that legislation allows government to transfer wealth from one citizen to another. This transfer does not create any future income generating assets and never passes the four Es test. It will be a very brave politician who tries to tackle this one.

    £35 billion ain’t gonna do it. Christ … that won’t even pay the interest on government debt!

    BTW. Cynicus has a good explanation of Merv’s strategy for getting us out of the QE swamp.

    You should read his “five minutes to midnight” (left col., menu)

    If you are a Gold fan, Berlusconi is trying to get his hands on the Italian gold pile. Remember when we used to have a gold pile? Notice the Eurozone ECB rule he is trying to get round. “Absolutely no monetization of government debt. Repeat, zero purchases of government bonds direct from the government”.

  18. Mike Stallard
    July 24, 2009

    It seems to me, after reading the story of the Olympics and the Leader in the Telegraph this morning, that running a huge Government Department is a very skilled job indeed. It really is not good enough to put a postman in charge, or a schoolteacher who has no experience of running anything much. Professional politicians, too, seem to be good at nothing very much at all.
    It is very obvious that the people Mr Brown invited in from industry and Outside have nearly all either left or been sidelined.
    I just hope that, with their wealth of outside knowledge, the Conservatives will do better if they are elected. Judging by the events at Norwich North, however, I am not encouraged at all.

    1. jean baker
      July 25, 2009

      Laborites seldom find Conservative success in elections ‘encouraging’.

  19. Martin
    July 24, 2009

    Groan – the transport budget is being cut. The one budget that oils the wheels of industry and commerce. It sums it up when we realise that the 1955 Conservative Government’s ideas on rail electrification are not yet nearly complete. NHS and Education have enjoyed a spending boom. Doubtless the people that work in the Schools and Hospitals are important. So however is the person who stacks the shelf at the Supermarket. If I don’t eat I die. Sacred cows from Mr Brown as usual.

    As ever don’t get me started on the pension apartheid between private and public sector workers. Loads a Money!

  20. Adam Collyer
    July 24, 2009

    Totally agree in general, John.

    In general, these government suggestions have two common threads running through them.

    One is that most of the departments seem to be suggesting procurement savings. In other words, they won’t become more efficient. They’ll just buy stuff cheaper.

    The other is that they all talk about “efficiency”. I think they’ve missed the point. The problem from my perspective is not so much iinefficiences in doing what they do, but in the fact they they do so much that is unrelated to what they are really supposed to achieve. The transport department, for example, spends lots on “integrated transport strategies”. Of course they could produce those strategies more efficiently. But the point is that most of the strategies are pointless anyway. You can do pointless work highly efficiently. Private business is often highly inefficient – but it doesn’t often do things that are unrelated to what it is trying to achieve. Basically, the public sector does not understand the concept of “efficiency” in terms of minimising use of resources to deliver what is really required.

    So they won’t meet the £35 billion target. And even if they did – that’s about ONE FIFTH of the needed reductions!!!

  21. c wolstenholme
    July 24, 2009

    I agree that there must be some form of savings or even cuts, and if you ask sensible people throughout the Civil Service or Local Government, they can identify where these can be made.
    As a simple starting point, why not introduce a total recruitment ban in ALL public services for say the first two years of the next Government. One only has to see the Guardian jobs section to see how much this will save.

  22. Matthew Cain
    July 24, 2009

    There’s an interesting comment here from the Howard League saying that a cut in funding for criminal justice would be a good thing:

  23. chris southern
    July 24, 2009

    I notice that their idea of cuts is to push their database/ID scheme. When people say no they mean it!

    A lot of the waste is literaly how they spend the money and tender contracts and 3% from quangos is nothing.
    I see they won’t cut political schemes that are masked as charities, that would save a fortune.

    1. jean baker
      July 25, 2009

      According to reports, contracts have already been signed for the highly contentious ID database at monumental cost to taxpayers.

  24. Robert George
    July 24, 2009

    My initial comment is that the first cuts must address the function of entities and whether that function is required. Their are countless Quangos for example which have no necessary function and which can be cut totally.

    Pensions should be a major not a minor area of cuts. I would like to see your thoughts on this vast issue separately. In particular we need to deal with the one million or so people on permanent invalidity pensions who are capable of work. Some form of independent medical review may be necessary.

    I live half my time in Australia and half in UK. The Minister of Finance in OZ controls expenditure in OZ but this I understand is dealt with by treasury secretary in UK. The Australian role has much higher political status and power over spending departments, something the UK might adopt to its benefit.

    I look forward to this deebate.

  25. Robert K, Oxford
    July 24, 2009

    If I mess my finances up and find I can’t pay my taxes, the government will throw me in prison. When the government messes up its finances and finds it can’t pay the bills it simply soaks me for some more tax: if I can’t pay then I end up in prison.
    This lot couldn’t care less about cutting back spending – much easier to raid the coping classes – so it will be fascinating to see your analysis.

    By the way, John, out of curiosity who moderates the comments on this blog?

  26. Kenneth Morton
    July 24, 2009

    Here is the News from the BBC.

    Labour discovers the world is round but there are many in the party who still fear that they will shortly fall into the abyss if public spending does not continue to rise.

    The Party is now discussing whether the Sun still revolves around the Earth. A white paper will issued by the Prime Minister outlining his plans for investment in the new trajectory for the Sun in time for approval by Conference in October 2010.

    Gordon Brown’s approved version of the Book of Revelations will be required reading for all Parliamentary Candidates at the next election.

    Chloe Smith has won the Norwich North election and becomes Labour’s [sic] youngest Member of Parliament.

  27. Steve Swales
    July 24, 2009

    “The Home Office has to find £1.69 billion. The police are to use more technology to save police time, whilst the Borders Agency is to use iris and facial recognition to cut costs.”

    I flew into Manchester from Cork on the scheduled 14.10 Aer Lingus flight last Sunday and was bussed straight through to the baggage reclaim. No standing in a long queue, no pretence at a passport check, absolute bliss for the weary traveller!

    It was only after we collected our bags that we realised that there must have been a cock-up. It’s absolutely typical of the authorities to have sophisticated and expensive border control systems that can be by-passed so easily!

  28. ManicBeancounter
    July 24, 2009

    It is good news that the government is allowing for value for money as a consideration. But after twelve years of government, it is a bit late.

    A bit of quick beancounting might put this into perpective. If these are mostly savings they could have made earlier, and assuming they have always been a constant percentage of government spend, then labour’s delay has cost the taxpayer around £325bn. If it has only built up since the spending hikes in 2001, the figure reduces to £150bn. However, for the government to admit this lower figure would be to admit that a large part of the spending increase was money down the drain.

    Another way of looking at the £35bn is to divide by the number of Labour MPs. It is nearly £100m per MP. This level makes the financial amounts of MPs expenses seem trivial.

    But even this annual £35bn only scratches the surface between the best value that can be theoretically achieved and the current situation. There is a lack of dynamism in government in changing service provision to the changing requirements; a lack of expertise in matching real individual (or local) needs to the money available; and a total lack of thought in relating costs to benefits for new initiatives. Add to the mix the strong interest groups in protecting the status quo, and many statutory encumbrances that add little value but a lot of grief, and you have the opportunity to spend a lot less, whilst improving the welfare of society as a whole.

  29. […] July 24 by manicbeancounter According to John Redwood, the Labour Government has plans to save £35bn a year. I posted the following […]

  30. Javelin
    July 25, 2009

    Basically they have been forced to push through 35billion. The question is, what is forcing them?

    I think advice will have forced them. A bond aution hasn’t failed yet. I think the advice will have come from several sources in Government. I think those advisors will have spoken to traders on the sales desks in the primary bond houses and those traders will be giving them information on what foreign funds are saying and what the credit rating agencies are saying.

    I think the advice that will be given is that unless significant effort is made to cut spending that investors will not be prepared to pay AAA rating on UK Gilts before next May.

  31. Jon
    July 25, 2009

    John this gets me more worried. When the Inland Revenue spent billions on a new computer system to save money they doubled their staff and got the population filling in their own tax returns.

    Browns was of saving money is to borrow, PFI, loading debt into the future. I don’t want them to do anything other than call an election.

    1. alan jutson
      July 26, 2009


      If you notice we now have to pay postage as well.

      Ok if you only have to send forms once a year,

      But in the construction industry we have to fill in forms each month, even if they are a nil return, these go to two different offices, so two lots of postage each month.

      In addition because the forms cannot be folded, they have to go in a large envelope, and so you pay for a large envelope stamp.

      The new CIS tax system has far too much paperwork, we now have a minimum of 4 sides of A4 per month even for a nil return.

      Its got bonkers.

      Oh forgot, if they say you are one day late, they automatically fine you £100.00 and you have to prove you are innocent.

      4 times in the last two years they have they suggested I was late, and fined me £100.00 until I sent them the proof of postage.

      Then on appeal all fines were cancelled.

      Innocent until proven guilty !!!! Not any more !!!!!!

      1. Jon
        July 27, 2009

        It makes your blood boil, fining people for doing what the Reveue used to do on less money, without the multi billion pound computers and half the staff. I’m in finance, the FSA is another racket. If you want protection then forget it they aren’t interested in the public. They are interested in creating teh so called tick boxes and if those pointless tickboxes that don’t affect the public aren’t ticked on time there comes the big fines that get loaded onto charges or taken of dividends. Pointless layer of admin with no benefit but to earn fines.

  32. Adrian Peirson
    July 25, 2009

    I haven’t read your post Mr Redwood, just the Headline, but knowing how they operate now, these cuts will be implemented in a wat that further weakens our country, it’s independance, its civil order and our sovereignty.
    I suppose It’s a bit like being a criminal psychiatrist, I know what they are up to.

    Tell me I’m wrong.

    Tomorrow, just give me the headlines and I’ll tell you what they are doing.

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