Even Labour’s efficiency savings mean fewer jobs

Why can’t Labour and Lib Dems spare us the false allegations and the crocodile tears. Today they claim to have discovered that Tory plans for a more efficient public sector mean fewer public sector jobs. So do Labour plans, if they knew how to implement them and if they were honest about them. The whole point of doing more with less is to employ fewer people to deliver the given service, and to buy fewer items from outside to provide the service.

This does not mean compulsory redunancies.In a 6 million strong public sector workfoce it is likely 300,000 a year will retire or resign for one reason or another. Some, like teachers, nurses and doctors, need replacing. Other posts can be abolished and more efficient weays of working introduced to start to control the costs. It’s scarcely rocket science, or worthy of “Shock, horror” headlines. The aim is a smaller public sector delivering a bigger service where needed, and doing less where it has been pursuing the wasteful, unpopular or needlessly interfering.

The Conservative plans to cut to pay in the public sector in the interests of greater equality should appeal to Lib dems and Labour. It is one of those strange ironies that a Labour government which talks the language of more equality should have presided over such an explosion of top pay in the public sector. Those would be both easy and popular cuts.

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33 Comments

  1. Posted April 9, 2010 at 8:48 am | Permalink

    Another irony is that Conservative policies are going to help the public sector, Labours policies over the last 13 years (and their policies put forward of continuing massive spending and borrowing) are going to destroy the public sector.

    This level of spending cannot go on, even Labour begrudgingly admit this. Labour have made the public sector completely unsustainable and if cuts are not made they will be imposed by a lack of funds provided by the market. All those new public servants who have been given a false sense of security by Labour that they have a job for life with a nice fat pension at the end of it will have their hopes dashed if Labour continue down this road. Economics will not allow it.

    Conversely, if the public sector had been kept at manageable levels investment could have been better targeted on front line services, we could have seen out the recession with no public sector spending cuts and emerged at the other side far healthier and, most important of all, the people whose very public sector jobs are now under threat would have found jobs in the private sector and not now be worrying about the perilous state of the nations finances and whether or not they'll have a job in a years time.

    That's socialism at work for you.

  2. Posted April 9, 2010 at 10:07 am | Permalink

    W

  3. Posted April 9, 2010 at 10:13 am | Permalink

    If large numbers of non jobbers and bureaucrats in the public sector have to be thrown on the dole then so be it if it means that it will have a major impact on reducing the countries debt. If sacrifices have to be made at least start with the fat cats if in the end it saves the country. If it is done now the private sector can be revitalised it then eventually will be able to soak up the excess labour. Leave cutting the public sector ruthlessly now or do it only halfheartedly will just be postponing the inevitable massive reduction later on and a moribund private sector.

  4. Posted April 9, 2010 at 10:16 am | Permalink

    You know full well that were it so easy no company of any size in the UK would resort to redundancies. There is no easy option and you of all people know this too well.

    You also know that job losses in the public sector are cost savings to the private sector and that you will be doing the country a great service by releasing these already redundant workers in the public sector to meaningful employment in the private sector…. but only if you start the process of cutting taxes in order to stimulate private sector activity.

    It should by now be clear to the Tory leadership that the public are not fearful of cost cutting exercises in order to get the finances back into shape but that they are fearful that neither of the two main
    parties have any real plan up their collective sleeves on how to go about it.

  5. Posted April 9, 2010 at 10:17 am | Permalink

    It is all going as swimmingly predicted.

    Labour and Libdem all decry the Tory plans, sometimes making up false allegations.

    The media pick these up and run with them without question nor analysis. Gleefully!

    Tories in fulltime denial mode hence falling for the trap that there is no smoke without fire.

    Labour and Libdem not put under the scrutiny box.

    Gap between main parties remains on the cusp either way.

    Hidden media agenda of hung parliament etc well on its way thus giving the media lots to pontificate about.

    Result for the UK – catastrophy.

  6. Posted April 9, 2010 at 10:18 am | Permalink

    Whilst your point has some real merit about natural wasteage, what you also have to change is the cult and attitude of many in the public service sector.

    For too many years it has been a well paid and secure comfort zone for many. The we are big brother, so do as you are told syndrome also needs change.

    Thus I think it will be a little more difficult than you suggest.

    What you need is a real change in management attitude. Will the present holders of those positions of influence change without a battle ?

    Government also needs to cut back on its requests for more and more reporting (for the covering of backsides) from these establishments as well.

    Let us hope we can at last get to grips with Public expenditure but I fear it will be more difficult in practice than it is on paper.

  7. Posted April 9, 2010 at 10:44 am | Permalink

    On the Today program at 7.15 there was an interview regarding the Conservative proposals about cost reduction. The interviewee (sorry I missed his name) basic concept was cuts meant job losses and these were bad. He picked up on agency workers and the plan by the Conservatives to stop using these agencies. His central theme was that many of these were key works such as financial directors or IT Specialists who, if removed, would mean the organisations would grind to a halt.

    Anyone who has knows the recruitment agencies that supply temporary staff know they charge fees ranging from 25% up to and over 150% of the salary cost of these employees. Getting rid of these staff can be a very easy saving and an organisation in the private sector will tell you know one is indispensable.

  8. Posted April 9, 2010 at 10:50 am | Permalink

    'It is one of those strange ironies that a Labour government which talks the language of more equality should have presided over such an explosion of top pay in the public sector.'

    Their hypocrisy is breathtaking. They are supposedly the party of the poor and yet they have presided over the biggest increase in wealth disparity in recent memory. Right now they are busy destroying everyone's savings.

    The Office for National Statistics issued their March Producer Prices Report this morning. The output price index for home sales of manufactured products rose 5.0 per cent in the year to March, compared with a rise of 4.2 per cent in the year to February. This is the highest annual rate since November 2008, when the index also rose by 5.0 per cent.

    Perhaps even more worrying was the input price index which rose 10.1 per cent in the year to March, compared with a rise of 7.5 per cent in the year to February (Table 5). This is the highest annual rate since October 2008 when it rose 16.0 per cent.

    Reply: You may remember I warned of rising inflation last year and asked Mr Brown about it. I also recommened a different popicy towards banks, money and the deficit to tackle it.

    I am sorry, JR, but this indicates that Base Rate has to rise.

  9. Posted April 9, 2010 at 10:54 am | Permalink

    Agree absolutely. The public sector must be slimmed down to acceptable levels in it's non core activities. This will not only take pressure off our taxes but help in allowing a strengthening of the front line workers in this sector. My company helps industry in doing just this ie: reducing non essential back room headcount and aiming the resultant extra resources to their front line activity.
    The next step would then be to overhaul our education and welfare systems in order to help the necessary expansion of the private sector. If done properly this will also allow us to remove the need for the continuing mass imigration that is putting such a strain on, ironically our public services.
    Unfortunately apart from yourself parliament appears to be too full of career politicians with too few having a business backround.

    • Posted April 9, 2010 at 3:21 pm | Permalink

      I agree that the welfare system needs to be overhauled so that long term unemployed cannot keep claiming benefits instead of doing the low skilled jobs filled by imigrants which Britains do not want to do .

      Please explain why a halt to mass imigration have to wait for an overhaul of the education system ?

      Are you saying there are skills shortages which are holding business back ? If so where ?

      • Posted April 9, 2010 at 7:19 pm | Permalink

        Surely imigrants are not just filling low skilled jobs. We agree that immigration can be greatly reduced by getting the economically inactive out of idleness but business's continually complain of the lack of the necessary quality coming out of our education system. If this problem is not addressed too much immigration may continue. Something i believe is unsustainable.

        • Posted April 10, 2010 at 10:27 am | Permalink

          Roger ,

          I agree that the three points you mention are valid but question the conclusion you draw that they are the reason why business petitions for imigrant labour .

          With such a weak government who have intentionally diluted the British people with mass imigration it is now trivial for a company to obtain a fast track visa for someone from a low wage economy .

          These workers frequently do not pay tax in the UK , live in shared houses , spend next to nothing while they are here and take everything they have learned back to their home country .

          Meanwhile we have highly skilled professionals in the UK with years of good experience out of work .

          Although highly skilled these UK workers are generally not expensive ones . For example a business software analyst programmer with 10 years experience might expect to earn a package of £30,000 – £40,000/year which is about the starting salary for a police constable when perks and pension are taken into consideration .

          There is hardly a job in the country paying more than £20,000 which could not be done though not neccessarily to the same standard by lower paid imigrants .

          Importing cheap labour and offshore outsourcing is ultimately a policy which will destroy our country .

          I maintain that if mass imigration was stopped now business would be able to source suitably skilled people from the UK workforce .

      • Posted April 10, 2010 at 4:56 pm | Permalink

        "…the welfare system needs to be overhauled so that long term unemployed cannot keep claiming benefits instead of doing the low skilled jobs filled by imigrants which Britains do not want to do ."

        Explain this to me, please, roger. Why should the long term unemployed have to take up low skilled jobs with pay that pays for little? Wasn't slavery abolished some time ago?

        Work is a a quid pro quo, a bargain in which two parties exchange something that is valuable to the other. Hard work from one party – decent pay from the other

        If you offer pay that doesn't meet the (now fast rising) bills, it's hardly surprising people don't want to get out of bed.

        • Posted April 10, 2010 at 9:26 pm | Permalink

          Tim . I made that comment , Roger merely agreed with it , please let me try to explain .

          My Sister lives in a small town opposite Loughboro which for about a thousand years was a notable wool fabric town .

          Unfortunately about 8 years ago they were terribly exposed with only one major customer (Marks and Spencers) who decided to source shirts overseas . The factory closed overnight with the loss of 400 jobs .

          There wasn't sufficient industry to take up the slack but many people have adjusted to a life made possible on benefits . A few of those have had the fibre knocked out of them and become so low that they have decided to find a way of existing with benefit subsidies and given up hope of full time work .

          Believe me , I am distraught for the victims and fear for my Nephews and Nieces growing up in such an environment .

          I do not think people should be compelled to take low paid jobs immediately but if they cannot find work after a couple of years then they should be encouraged to take less desireable jobs instead of staying on the dole .

          This also achieves the desireable objective of reducing immigration and relieves presure on housing .

          Without the immigrant labout employers would be forced to offer better pay and longer term possibilities .

          Tim , what do you think ?

        • Posted April 10, 2010 at 9:29 pm | Permalink

          PS

          I stopped buying everything except underwear from M&S in protest . Should review even that buying decision .

          When I tried to buy the Pinks Shirt I had longed after for 15 years was told they were no longer made in Britain of Irish Linen so bid them farewell .

        • Posted April 11, 2010 at 10:16 am | Permalink

          I don't know, Simon, it's a very tricky thing.

          I understand and endorse the sentiment in your argument, but am not convinced by the argument itself. I am reminded of Victorian England, when immigration was lower (I think) but many workers were expected to work hard for low pay. I think the problem was and sometimes now is that the 'work ethic' is trumpeted as a stand-alone principle. Don't get me wrong, the 'work ethic' is a good principle but only when it is accompanied by the equally important principle that work must pay.

          I don't profess to have the answers, but I think that some people are over eager to bash the long term unemployed when they are simply disincentivised. There are also too many applicants and not enough jobs.

  10. Posted April 9, 2010 at 10:56 am | Permalink

    Very easy to make government bigger. Any idiot can do it. Very hard to make it smaller. That's the best reason for not making it bigger in the first place.

    In bygone centuries government faced the opposite problem, as inefficient tax collection systems made it horribly hard to enlarge the state, but ease of dismissal made shrinking it easy.

    I wish they'd get you on the front bench, Mr Redwood. And I wish they'd remember the sign on Harry Truman's desk – no, not the famous one about the buck stopping here, but the other one: "Do right: you'll please a few and astonish the rest".

  11. Posted April 9, 2010 at 11:21 am | Permalink

    How many of those 300,000 voluntary leavers will be from the legions of Climate Change Adaptation Directors, Chief Touchy Feely Directors, Municipal Sewage Works Strategic Vision Directors, and all the other parasites who do so much damage ?

    I'm guessing: not many. They've never had it so good, and they never will again, and even they will have the wit to recognise this.
    They will hang on to their current non-jobs like limpets.

    And they will all be trying to figure out what they can do now to provide useful evidence at a subsequent employment tribunal to show that they have been made redundant for some un-PC reason, thereby pumping up their compensation claims.

    • Posted April 10, 2010 at 8:26 pm | Permalink

      This is the problem, flexible ambitious and capable people apply for promotion and move. The insolent, complacent and incompetent cling to their posts. A job freeze therefore favours the useless deadwood.

      It is far more effective to choose people to go, with compulsory redundancies. I write as a doctor in the NHS, where I am actively hampered by some managerial employees. There are plenty of savings to be had in the NHS, but selective culling would be far better than vacancy freezes.

  12. Posted April 9, 2010 at 12:10 pm | Permalink

    Like it or not JR, the lack of public sector efficiency starts at Westminster. All the time parliament keeps vomiting out more and more legislation, it is creating more and more public sector employees to operate that legislation. Particularly as socialist political correctness, now means it is legislating for the one in a million perceived injustice, rather than one in a thousand.

    According to SLD, there are currently 5,578 pieces of primary legislation, which are requiring 42,026 pieces of secondary legislation to make them work. As the latter never gets properly scrutinised in the HoC, we end up with the public sector mess that Westminster has created.

    There is less and less "on the face of the Bill" and more and more delegated to the executive and its Quangos. Is there any wonder we have a hopeless disenfranchised parliament.

    Any one involved in it, knows that Gershon was a joke. In round numbers there is a chance that what presently requires 6 million, could be done with 5 million public sector employees. But; to get to less than that, Westminster has to start getting the blue pencil out for a few sessions. So far, none of those that seek to represent us has convinced me, that they have the testicular fortitude to do that.

  13. Posted April 9, 2010 at 12:12 pm | Permalink

    John,

    I think there is a bigger issue here with regards to jobs. I read that only 30% of graduates could find jobs and 6% could find graduate jobs. Even if these figures were doubled it would be pretty alarming.

    I saw in the Mail yesterday that there were 2 mlilion jobs created under labour and 2 million new immigrant jobs. I also reas the report from Manchester Uni that said that 90% of new womens jobs were public sector jobs and 70% of jobs in the North were public sector jobs.

    I also see from within the bank where I work a HUGE number of non-EU skilled workers are brought in from abroad to take the jobs of UK graduates, on the basis that they are cheaper and hav a few years more experience. The companies use visas that are meant for executives for cheap labour. When big companies talk about a skills gap they are talking about not wanting to train graduates up.

    I also heard that this week they changed the visa rules so that graduates from outside the EU could come into the UK (instead of post-graduates).

    Why if very few graduates can get jobs did the Labour Party just change the rules to let non-EU graduates into the UK a few days before washout. I can only think that somebody has been promised a directorship by a company that brings in foreign graduates.

    The argument about shutting down skilled immigration is very strong. If so few graduates can get jobs then it is obvious that the University sector will be completely WIPED OUT in the next few years if UK graduates are losing out to foreign graduates. If I worked in the Univeristy sector I would be spitting teeth at New Labour

    What future for the UK if things carry on as they are?

  14. Posted April 9, 2010 at 12:53 pm | Permalink

    Here’s a recommendation on cutting down waste in the public sector – an outright rejection of any proposal to increase the number of MEPs. These people are bribed with huge salaries and regular jaunts on expenses to ‘believe in the project’ but in reality their powers, compared to an MP’s in the days before the EU, are severely limited.

    Any objections from the "colleagues" should be met with the promised referendum on any Treaty Changes.

    The elephant is still in the room. Let us decide whether Britain should be governed by an unaccountable body whose bureaucratic arm specialises in steadily squeezing the private sector with thousands rules and regulations.

    Recovering the UK's net contributions to the undemocratic government in Brussels will help bring down our deficit. Freeing British industry will be the icing on the cake.

  15. Posted April 9, 2010 at 1:18 pm | Permalink

    The real point being that the number of jobs lost from government departments is bound, if economics has any scientific validity, to be much less than the number created by cutting NI. In Spain it was recently proven that net effect of all the subsidised jobs "created" by windmill subsidy reulted in a net loss of 2.2 times as many overall. The ratio across government is likely to be even higher since windmills do actually produce something, no matter how uneconomically, while the net economic effect of government is to destroy the equivalent of 100% of the existing economy. The answer to Brown every time he says his government has created 2 million new jobs in government is that he has thereby automatically destroyed a minimum of 6.4 million in the productive economy.

  16. Posted April 9, 2010 at 1:45 pm | Permalink

    Will we be getting more information on two very pertinent policy suggestions I have heard spokesmen making in the manifesto when it comes out , namely , that a pension in the public sector will be a maximum of £50000 pa and that the chief executive of a public body can be given no more than twenty times more in salary and perks than the lowest paid full timer in his organisation?

    I was heartened to hear these very sensible suggestions and I am certain they will draw support from all levels of society. Not many are harbouring the illusion that our public service is bristling with Gordon Geckos at the top .(despite what they tell us!)

    • Posted April 9, 2010 at 4:19 pm | Permalink

      Surely the main point is that pensions liabilities must be fully costed and funded and not be pushed onto the next generation .

      There is a high probability the next generation will be unable to honour existing pensions committments even if they want to and will have no choice except to partially default .

      I cannot agree with attempting to limit a persons pension because it implies defined benefits pensions .
      The public sector should shift to defined contributions .

  17. Posted April 9, 2010 at 1:50 pm | Permalink

    After the Spectator's analysis of employment and immigration data has shown that the vast majority of new jobs has gone to immigrants, surely a reduction in public sector jobs can be achieved simply by lowering the numbers of immigrants imported to fill them.

  18. Posted April 9, 2010 at 1:54 pm | Permalink

    I don't think the Conservatives are the same as the Labour on this one.
    The Labour, as I see it, is quite deliberately doing its old trick of "jobs for the boys", except that this is the year 2010, so, of course, the loyal girls are in there too now. If I were a school leaver, from a good public school, with qualifications, I should most certainly be looking at people like Baroness Ashton, who is more highly paid than Hillary Clinton, as a role model. I should also be looking past Rooney at Harriet Harman or Tony Himself.
    Or I might do law and become the Attorney General who, of course, (does not break?-ed) the law of immigration.

  19. Posted April 9, 2010 at 2:16 pm | Permalink

    In order to get public sector debt and debt interest under control, we must – at the very least – reduce the borrowing requirement to zero by FYR 2014/15. Combine the natural AND NEUTRAL assumption about economic growth (average GDP growth since 1979 has been 2.1%) and the Conservative policy of 80% of the deficit reduction coming from public expenditure cuts.

    The consequences are that by 2014/15, public expenditure must be reduced by 12% overall and by 16% in the spending ministries (after you strip out debt interest, which is increasing). Of all state spending, 60% is on payroll.

    Therefore, if you want to avoid redundancies in the state sector, there needs to be natural wastage AND a freeze on average salaries for 5 straight years AND control of generous public sector pensions.

    Over to you, Mr Redwood.

  20. Posted April 9, 2010 at 4:40 pm | Permalink

    The dog doesn't bite the hand that feeds it.

    I just feel that Labour has made friends with public sector workers by throwing money at the public sector in exchange for their political support, to the detriment of the rest of us. To me this is a kind of corruption.

    I also wonder what effect the billions the Government spends on advertising has on the news editor of an independent radio station, etc.

    As far as my family goes, there are 9 of us working. 7 are gainfully employed in the public sector (1 of which works for a building society owned by the government). Only 2 of us are in the private sector. I am one of the two in the private sector and I have been unemployed for a year, though I have now found part time temporary work.

  21. Posted April 10, 2010 at 12:45 am | Permalink

    I would hope that the recruitment freeze would be just a first-stage solution. In two or three years it would cause severe disruption, as the differences between where numbers fall most and where they are optimally required become apparent. Indeed, in areas where skills are easily transferable to the private sector there will be shortages, whilst in other areas this may not be the case.
    Furthermore, the problem of bureaucracies is not that there is plenty slack in the overall organization, but that
    – many activities are self-sustaining in themselves,
    – or are insufficiently effective in working towards the sections objectives,
    – or the decision-making processes are too convoluted.
    Simply cutting numbers, particularly through retirement of key personnel, can massively reduce a section’s effectiveness and productivity, whilst causing many staff to suffer stress-related illness.
    It is a managerial and cultural change that is required, to motivate the low-level works and managers to look at their own tasks and procedures and learn from others. This requires decentralization, and rewards for success. The opposite, modern socialist, method is to provide centralized initiatives, rules and heavy-handed monitoring. It is a choice of people justifying their existence through box-ticking, and making the decisions and taking the actions that make a difference. In the recent past such a different culture could have less, but more effective monitoring of the banks, of South Staffordshire Hospital and of social services. It is the difference between producing endless reports that no-one reads and serving the public.

    On a slightly different note, in the later stages of the campaign, will the conservatives broach the subject of the current Government’s competency to push through any cost-costing? This is given:-
    – Their long period of denial that there was the need to cut expenditure.
    – Their track record of announcing initiatives and maintaining them for sometimes less than a day.
    – Their inability to learn from their mistakes, or to even recognize them.
    – Their use of tricks to gain short-term effect for short-term gains in the opinion polls, rather than for the long-term gain of the Nation (e.g. the cut in the basic rate of tax, funded by the abolition of the lower rate).
    – The twisting of financial meanings. So investment now means increases in liabilities (such as salaries and extra staff) rather than procurement of assets with future benefit streams. Or the Golden rule – to only borrow to invest – wrongly applied to non-financial benefit streams. The result being a structural deficit that has worsened the public finances by hundreds of billions of pounds.

  22. Posted April 10, 2010 at 10:50 am | Permalink

    Mr Redwood, the good news is that even Guardian readers (of which I am one, occasionally!) have, judging from readers' reactions to Polly Toynbee's latest effort, given up on NuLabour:
    http://www.guardian.co.uk/commentisfree/2010/apr/

    Now if only the Tories really were radical!

  23. Posted April 10, 2010 at 11:03 am | Permalink

    "This does not mean compulsory redundancies."

    Well it should do. You should never underestimate the extent of over-manning in the public sector.

  24. Posted April 11, 2010 at 11:37 pm | Permalink

    you are describing the HR policies used by ( a named leading company) over the last 10 years plus

    all the decent folk with marketable skills leave

    all the dross or folk with skills with little demand stay

    all you need to add on top is mass replacement of Brits with Indian nationals and you will be there completely

    in case you have not noticed (named company's) customer service is very second rate, and their success in business is very questionable

    you maybe saying what you think is more palettable, but its not what anyone with real experience of delivering success (and not just talking about it) organisation change would do

    Reply: I disagree concerning natural wastage. I have often used it to good effect to raise quality and cut costs. It's about leadership and training.

  • 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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