Pain and hurt?

We do make heavy weather of controlling public spending in this country. The £6 billion of cuts which caused such anguish in the Election debates represented less than 1% of total public spending. Tomorrow’s budget will probably be proposing cuts of less than 10% over the lifetime of this Parliament. Sensibly managed, this need not entail cutting anything that really matters.

The UK state has been living a middle class lifestyle. If you are living on a low income then of course cutting spending is difficult or impossible. If you are living a middle class lifestyle and your income goes down by 10% you have plenty of options. You can holiday nearer at home and cut out the foreign trip. You can eat in more than in the local restaurants. You can trade down for a cheaper car. You can draw some money out of the savings account to tide you over until your income goes up again. You can buy more of the value items at the supermarket, and put more vegetarian dishes into the home menus. You can discover home entertainment to keep the leisure bills down. You can turn down the thermostat a little and put on a jumper.

The UK state finds itself in that position today. It has plenty of assets. Some can be sold to help out. It has been dining out on consultants and temporary labour. It needs to do more in house. It has been appointing all too many to exotic job titles which we could manage without, and sending many of them on expensive overseas fact finding trips and seminars. It has indulged in a mind blowing array of politically correct regulations which often fail to tackle the underlying problem they wanted to address. It has been a master at buying the “nice to have” or the “why do we need this?” instead of concentrating on doing the basics well.

I know it is asking a lot for an outbreak of commonsense by public sector CEOs in Councils and quangos. But can they spare us the crocodile tears and the parade of the bleeding stumps? Can they do what any household or company does when faced with a few percent off their income? Just get on and manage it in the least damaging way possible. The cuts in funding are going to be nothing like as severe as the loss of income in industrial companies during the great recession of 2008-10.

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31 Comments

  1. Javelin
    Posted June 21, 2010 at 7:29 am | Permalink

    Just heard in the UK we spend £60 million on tennis in the UK. Lithuania has a budget of £90k

    The UK lost to Lithuania in the Davis Cup.

    What does this tell you about the balance between spending tax payers money and being motivated and assertive about achieving results?

  2. Norman
    Posted June 21, 2010 at 6:32 am | Permalink

    Let's hope the public service Trade Unions/Unite leadership also have an outbreak of commonsense.

  3. Martin
    Posted June 21, 2010 at 8:14 am | Permalink

    One figure the public sector gravy train is spouting is the value of the “average public sector pension”. It sounds low at around £6000 per annum.

    The government should get some research done on this as I suspect it covers part time workers and is also a figure per employment ( say 5 years with Council A) rather than a lifetime figure.

    I suspect the comparative figures for private sector workers are much lower. Many of us have pension pots that sound worth a lot but will generate a lot less than £6000 per annum.

  4. Posted June 21, 2010 at 7:44 am | Permalink

    Unfortunately, whilst most of the family accept the need to make sacrifices, we have a pampered wife (the unions) who is going to have to be brought kicking and screaming into the real world. Hopefully she realises that if she screams too loudly we can always get a divorce.

  5. Ex Liverpool Rioter
    Posted June 21, 2010 at 7:50 am | Permalink

    Delighted to see The Sunday Times checking car parks to see what people drive @ MY COST !

    Let us hope that the Bloody Buy to Let market gets killed!

    For too long "Gordon & co" allowed the banks to loan money to no marks to buy (& drive up) houses. 1st time buyers driven out, forced to pay INSANE levels of debt or live with Mum & Dad……………

    I DO hope the banks (Which we mostly now own) have been told " No more BTL loans!"

    If someone whats to do this, fine he/she can go get a normal bussiness loan @ THOSE rates!!!!

    Lets us also hope that savers will be given a better deal. We need to rebuild our capital base quickly & low/zero tax & GOOD rates are the best way. We get people to save!

    Mike

    • libertarian
      Posted June 22, 2010 at 12:03 pm | Permalink

      Dear Mike ( Ex LR )

      Oh dear, class war cuts off your nose to spite your face again. If you kill the buy to let market, then all the people that currently rent to live will do what exactly?

      Those that can will have to buy, thereby driving up the price of houses, those that can't will have to live with relatives.

      If rental properties were only acquired on short term business loans how much rent do you think the average tenant would be charged????

      The people of this country stagger me sometimes. They are so twisted with envy and jealousy that they would gladly subject themselves to a life time of poverty rather than see someone else succeed.

      • APL
        Posted June 23, 2010 at 11:58 am | Permalink

        Libertarian: "If you kill the buy to let market, then all the people that currently rent to live will do what exactly?"

        Do we agree the housing market was/is in a bubble, which was created with the encouragement of the government?

        In which case the Buy to Let market such as it is, is overleveraged and thus represents poor financial judgement.

        That sector needs a realignment, the price of houses needs to come down to, as a maximum 3.5 time a working man/womans salary. That was the historical norm and in my opinion is a sensible stable multiple of an individuals earning potential.

        Once that reallignment has taken place, then the buy to let market will be able to reestablish itself along more 'sustanable' economic lines.

        Unfortunately those who bought overpriced houses at the height of the boom will find themselves insolvent. But that is the market, it doesn't tolerate poor judgement for long.

  6. Simon
    Posted June 21, 2010 at 8:14 am | Permalink

    "You can draw some money out of the savings account to tide you over until your income goes up again."

    It is a mistake for an individual or a country to assume income will go up again .

    Better to assume a worst case scenario that the underlying trend is continued slow decline and cut the cloth to fit .

  7. Kevin Peat
    Posted June 21, 2010 at 9:34 am | Permalink

    We've done all of those things with regard to cutting household expenditure and have been on such an economy drive for many years. Any more cuts and we end up with a standard of living which is actually lower than that of the benefit dependants around us. Clegg's plan to scrap our child benefit is going to really hurt. That's equivalent to the price of our annual family holiday.

    I understand fully why this is being done and am prepared to do my bit, but I (and many like me) are watching carefully to see that it's not just us who bear the brunt.

  8. Richard
    Posted June 21, 2010 at 9:34 am | Permalink

    Another excellent article, my only observation is that companies and families are much better at deciding on their priorities when cutting back, probably because they are not political organisations.
    The problem for central govt is going to be how they make local govt and quangos make the right kind of savings.
    Already my local council's PR dept has been working overtime telling us that they are cut to the bone and that any savings will have to be made in areas like meals on wheels, disabled services, school crossing patrols, and library opening hours
    Nonsense of course, but this is the propaganda battle that is being waged to stop any of their top jobs being lost in the HQ's in these organisations
    The desire for local democracy is fine, but should central govt now be looking to force local govt to maintain a specific list of essential services and thereby make them cut into their own cenralised waste in the Town Halls

    • Kevin Peat
      Posted June 22, 2010 at 9:40 am | Permalink

      The danger is that the councils will deliberately punish the public by cutting essential services.

      • David Price
        Posted June 22, 2010 at 6:38 pm | Permalink

        So introduce some attitude adjustment – punish council executives who deliberately cause or allow such gratuitous mis-interpretation of what is needed by their customers and paymasters.

  9. Robert Eve
    Posted June 21, 2010 at 9:59 am | Permalink

    Spot on John!!

  10. James
    Posted June 21, 2010 at 10:25 am | Permalink

    In these days of finding economies, I do not understand why the PM is determined to proceed with his plan to spend billions of our money to hold elections for police commissioners. The present system works perfectly well. If such elections were held, I for one would have absolutely no idea whom to choose, and wouldn't waste my time and money travelling to the polling station.
    What will be the next bright idea to extend 'democracy'? Perhaps electing the Chief of the Defence Staff?

  11. waramess
    Posted June 21, 2010 at 9:32 am | Permalink

    Fat chance we have of Osborne restricting himself to spending cuts.

    Let's remember that any tax rises, apart from the damage they will inflict on the economy, will be a sign that the government is failing to focus clearly on the underlying problem facing the UK and is instead willing to fund its future spending plans by imposing a further direct burden on the private sector.

    These are not times for tax rises but we can be sure that in true time honoured tradition the politicians will see tax rises as an important part of this exercise.

    I would suggest as a token cut we abolish the bars and restaurants in both houses and refuse to reimburse all expenses incured in respect of alcohol purchases.

  12. Olly Garchy
    Posted June 21, 2010 at 11:19 am | Permalink

    "I know it is asking a lot for an outbreak of commonsense by public sector CEOs in Councils and quangos."

    It won't happen until they are seriously deprived of money. We have Councils giving pay offs of £350k, after one years work, because the person they employed didn't like their commute. Who, in their right minds, would ever create such a contract?

  13. Alan Jutson
    Posted June 21, 2010 at 11:49 am | Permalink

    John with your new system which limits the length of comment, Can we have an idea how many words are allowed in one posting.

    Whilst I understand that you do not want over lengthy comment, its frustrating having to keep on attempting to trim, and it getting rejected over and over again, without knowing the ground ruless.

    Aware you can post more than once but sometimes the thread is lost.

    Reply: Not somewthing I have asked for, so will make enquiries.

    • Acorn
      Posted June 24, 2010 at 10:15 am | Permalink

      This new system is a pain Alan.
      Mr Speaker; a point of order. Point of order Mr Acorn. Mr Speaker is it in-order that:-
      Members can demand more words in reply posts.
      Demand this site use a system that opens replies in a separate window. (something like ECHO used at BOM). Then we won't have to keep going back to the bloody home page; another pain.
      Demand this site get a sub-editor who can check out links for posters in less that a week.
      Order. Order!!! The Hon Member has used too many words in his point of order, so park your a*** and shut the **** up; Order; Order.

  14. Posted June 21, 2010 at 12:30 pm | Permalink

    "can they spare us the crocodile tears and the parade of the bleeding stumps?"

    They can but do they have an incentive to do so. If a couple of quangos who said they would be unable to do their job with a a5% cut immediately found themselves with a 100% cut there would be few further complaints. Organisations are incentive driven & normally there is a great incentive to parade bleeding stumps because it does get you extra money.

  15. Alan Jutson
    Posted June 21, 2010 at 11:46 am | Permalink

    Yes its time to knuckle down.

    Problem is, its those who were careful in the first place and lived within their means, who are also going to suffer the consequenses for those who lived beyond theirs.

    What a shame that we as a Nation (the Labour Government) wasted so much money on non essential items and services.

    Just returned from a holiday in France, where I am amazed at the number of roads being resurfaced (even secondary and minor roads) and the efficient way in which this is being completed.

    Clearly the French value money being spent on the infrastructure, unlike many of our our roads (of all types) which are in poor condition.

    Just got my Road Fund Tax licence to see it has increased by 8.5% over the past year, and for what, Even worse road conditions.

    Government spending on the infrastructure is neccessary for the efficient running of UK PLC, higher taxes make us less efficient and give less incentive to work harder.

  16. Javelin
    Posted June 21, 2010 at 1:00 pm | Permalink

    Alcoholics and junkies call it a "Moment of Clarity" – when they suddenly realise they have to stop their drinking habit.

    Osborne needs to deliver a Moment of Clarity to the UK debt junkies so they know their habit is destroying their country. This budget must be as tough and as wide ranging as is possible. Nobody must be left in any doubt that debt junkies have brought this country to the brink.

  17. Irene
    Posted June 21, 2010 at 2:21 pm | Permalink

    I wish you were in the Cabinet .

  18. Posted June 21, 2010 at 2:43 pm | Permalink

    What assets does the UK have?
    We could sell Wales but I'm not too sure the Welsh will be very happy about that!

  19. Rachel Mills
    Posted June 21, 2010 at 3:48 pm | Permalink

    I am worried the poorest people will be hit most by the cuts about to be made. Life on benefits is barely possible now, and after the budget it will no doubt be more difficuIt.

    I find it hard to believe that 'we are all in together' when the wealthier people in this country will not be affected to anywhere near the amount the poorest will.

  20. Mark J
    Posted June 21, 2010 at 5:42 pm | Permalink

    When will MP's lunderstand that we the working person are becoming increasing sick and tired of being taxed to the hilt to pay for Government mistakes. There are plenty of ways to raise extra taxation to help balance the books including corporate tax avaoidance that is anywhere between £35-70m Billion a year! However I cannot see this being actively persued as it is far easier to tax the public instead. More emphasis should be towards cuts as long as services are not overly adversly affected. Whilst I understand and accept that the pubic finances are in dire straights thanks to Labour (in particular Gordon Brown), punishing the working person on low and average wages is not the answer.

    I would also like to see Gordon Brown, Alistair Darling and other key Labour figures charged with deceiving the public, and financial mismanagment.

  21. mark
    Posted June 21, 2010 at 7:34 pm | Permalink

    Very true John. I do however fear a backlash from public sector workers re pensions and pay. Lets hope we avoid strikes and the resulting chaos. Mark

  22. NickM
    Posted June 21, 2010 at 11:17 pm | Permalink

    JR said: "Just get on and manage it in the least damaging way possible."

    One thing you can be sure of is that the public sector managers will get on and manage it in the MOST damaging way possible. They have everything to gain and nothing to lose by causing as much disgruntlement as possible. The trick for the government will be to stop this self serving behaviour. No government has managed it yet.

  23. Phil Russell
    Posted June 23, 2010 at 8:59 am | Permalink

    Excellent common sense. It's not rocket science… live within our means and then the natural creative forces, the entrepreneurial drive will create, wealth and jobs. Basic economics.

  24. Posted June 24, 2010 at 10:42 am | Permalink

    Thamk you for the tips on how to address the budget cuts, I think a lot of us know how to save money but we do still like to live a little. I am a bit concerned about your comment on consultants to help the public sector I thought the idea was to encourage private business; if the public sector do not engage with consultants what is going to happen to these businesses?

  25. Tim
    Posted June 24, 2010 at 4:06 pm | Permalink

    Dear Mr Redwood,

    It looks like your piece here has attracted a bit of media criticism; please see:
    http://www.dailymail.co.uk/news/article-1289250/B

    These papers have been misrepresenting people for a long time. They are expert at turning disabled people into 'benefit scroungers,' for example. I hope that politicians recognise that the media is often pursuing an agenda rather than reporting truth.

  26. Myke
    Posted June 26, 2010 at 10:24 am | Permalink

    Former Romanian dictator Ceaucescu recommended the same thing many many years ago: "put on a jumper". What joyfull event that someone did learn from him and now gives the same advice!

    Reply: I gave no advice – Labour’s spin doesn’t get any better. Even in Opposition they try to strangle debate.

  • About John Redwood


    John Redwood won a free place at Kent College, Canterbury, He graduated from Magdalen College Oxford, has a DPhil and is a fellow of All Souls College. A businessman by background, he has been a director of NM Rothschild merchant bank and chairman of a quoted industrial PLC.

    Promoted by David Edmonds on behalf of John Redwood both of 30 Rose Street Wokingham RG40 1XU

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