Why does a Council end up cutting grants to the disabled or closing a loved local facility?

 

            The public sector, as we have seen, likes to assume that all last year’s current  public spending is a given and should be repeated next year. If you want something extra, as the public sector always does, when budgets are tight, you therefore have to cut something.

            Council officials live in hope that their Councillors will raise taxes or car park charges or successfully lobby for higher government grants. So they pile on the nice to haves and the unavoidables extras in their budget papers. Councillors are often forced to say in return that they cannot find all the extra money “required”, and ask for some cuts instead. The game playing officers will then often choose the most politically damaging or the least popular cuts to try to persuade the Councillors that they should look again at getting more money in from some source or other.

               The same thing happens in some government departments. Officials reluctantly put forward cuts when they just want their Minister to go off and have a battle royal with the Treasury for more money. Why not, they reason, put forward a clumsy cut. The Minister may spot it and come to see he needs more money to avoid it. If he doesn’t, he may lose the cut in the execution. This may  force the government to spend  more money after a bruising encounter with Parliament and the media. Either way the department “wins”. It requires a strong and confident Minister to reject the budget paper, and say it is based on false choices.

            I never recall as a Councillor or as a Minister receiving a budget  paper which recommended cutting the administrative overhead unless I had insisted on it. I was never voluntarily offered big savings on paper, pens, administrative staff, pensions, early retirements, absentee rates, volume of reports, postage, staff travel , conferences and all the rest. On the contrary. I remember letters sent out in government urging Ministers to do more overseas trips and conferences. Some of those were good, but they were always popular with the officials. They wanted to make sure their department kept up its totals and spent a full budget.

       In a competitive private sector company there is constant review of overheads. Management is always challenging itself to do more for less, or to do it better as well as cheaper. There is a common interest in buying better, in simplifying systems, in using talent better. In government there is often a common interest in maximising spend for no good reason other than that is what government does. Some politicians even send out claims that service X is better than service Y because more is spent on it, with no attempt to question how well the money is spent or what the users of the service think of its delivery.

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95 Comments

  1. lifelogic
    Posted February 14, 2012 at 6:49 am | Permalink

    Indeed their is usually only the politicians at the council (or department) who have any interest in spending efficiently. Even then only a few of the politicians really care. Many voters do not pay council or income taxes anyway getting them paid by others for them.

    As you say the politicians can be dealt with by threatening a much loved library or service (if the council has any). So much of what they do is however totally pointless or worse just an inconvenience (or back door tax) to the public anyway. There are also many contract awarded for dubious reasons to friends of friends. Sack one in two and list the priorities in order of priority tell the staff to manage starting with the top priority. Make the incentives work so the staff actually deliver.

    Get rid of all the silly green energy, forced equality for all, my “rights” agenda and just deliver a sensible level of basic services. And opt out of all the silly EU landfill regulations and other plain nonsense.

    • lifelogic
      Posted February 14, 2012 at 7:43 am | Permalink

      I also see the downgrading of the UK by credit agencies Moodys are starting, hardly surprising given the government’s policy of tax, borrow, print, give to the feckless or waste.

      Also in the Telegraph “Britain being overtaken by ‘militant secularists’, says Baroness Warsi”. Indeed it is very hard to believe that, the clearly out of her depth, chairman of the Tory party Baroness Warsi is not both a Baroness and in her current position as a direct result of her religion. I cannot see any other reasons.

      There is nothing militant about most secularists. We are just against certain religious groups having a clearly preferential input to government, input to state funded education and groups being able to indoctrination young minds at school. Just as we are against feng shui “experts”, priest of the green religion, soothsayers or astrologists having a “preferential” input.

      Our lefty C 0f E Bishops in the Lords are always highly amusing in their fancy golden robes with their half baked thought processes – but I am not sure that is reason enough for them to be there. They are clearly distorting, such democracy as still pertains, in the new socialist EU superstate. Rather like the BBC they rarely have much sensible to say indeed it is often difficult to even work out what they are saying that has any real meaning at all.

    • lifelogic
      Posted February 14, 2012 at 5:23 pm | Permalink

      Reported in the telegraph today “George Osborne accuses BBC of fuelling anti-business culture in Britain” indeed they do to a huge degree. Unfortunately many in (or who have been in the cabinet) Huhne, Cable, Clegg, Alexander, Clarke do too all the time.

      Perhaps Osbourne should concentrate on reducing the still 3.6% inflation, not wasting any more money everywhere as he has been doing, cancelling HS2, sorting out our dodgy credit rating, decreasing countless absurd regulations, getting cheap non green energy as well as sorting out the BBC.

      Then he might be in a better position to pass comment.

      • lifelogic
        Posted February 14, 2012 at 6:19 pm | Permalink

        Also Osbourne could also stop the, government owned, RBS/Natwest from pulling cash back from very many sound businesses or exploiting the general lack of credit by over charging them on fees, margins and terms. RBS/Natwest alone is one of the main causes of problems for small business – that and his 20% VAT and 52% income tax rates.

      • A.Sedgwick
        Posted February 14, 2012 at 7:51 pm | Permalink

        If anyone believes the accuracy of Government inflation figures they probably also believe in Santa Claus and see fairies at the bottom of their gardens – the weighting is ludicrously skewed.

  2. Antisthenes
    Posted February 14, 2012 at 7:08 am | Permalink

    Government departments, agencies, councils and the public sector are monopolies and are not subject to competition. Therefore there is no incentive for them to be efficient, less wasteful or act in anyone’s benefit other than their own. Able Chief Administrators are at best only able to make superficial improvements and at worst the less able exacerbate the problem. This is a powerful case for Government local and national not to do things that can be more efficiently be done by the private sector in a competitive environment. The great expansion of government at all levels is putting economies into crisis as resources are been misdirected and is therefore starving the private sector of productive investment. It is by accident or design replacing free market capitalism with socialist central planning and control. The outcome of which we are only too aware as the collapse of the Soviet Union so ably demonstrated. Why we continue along this path when there is such an abundance of evidence to show that it leads to catastrophe is a mystery. However along this path it appears we are destined to follow as our dear leaders have decreed that we must and so we must all eventually suffer the consequences.

  3. norman
    Posted February 14, 2012 at 7:21 am | Permalink

    ‘Some politicians even send out claims that service X is better than service Y because more is spent on it’

    Can anyone give me an example of a current Cabinet Minister, from the PM down, who, judged by his or her actions so far, doesn’t think this way?

  4. Pete
    Posted February 14, 2012 at 7:54 am | Permalink

    Government is like a tumor continually growing until it eventually kills the host. What it requires is radical surgery. Cut out whole departments as they did in New Zealand some years ago. One department, Forestry, had 17000 civil servants before the cuts. Afterwards the minister and his secretary were the only ones left. That’s what I call a cut. Everything else was privatised and became vastly more efficient and accountable.
    With the news today of a credit rating downgrade for the UK today we’re heading that way, I hope.

    • lifelogic
      Posted February 15, 2012 at 4:37 am | Permalink

      Cameron could not even do this – the forestry sell-off was abandoned as Cameron ordered a U-turn.

  5. alan jutson
    Posted February 14, 2012 at 7:59 am | Permalink

    So if you can see it John, why are others so blind ?

    Perhaps shows the value of an MP having commercial experience, rather than all theory.

    Not much more I can add.

    • alan jutson
      Posted February 14, 2012 at 9:12 am | Permalink

      Off topic

      Wifes car just failed MOT, inside wall of both front tyres ripped, possible damage I am informed is usually caused by poorly maintained speed cushions, which when worn, rip the side walls of tyres as you straddle them.

      Outside tyre walls on both tyres perfect, as is tread.

      I Wonder how many thousands (millions) of pounds are wasted on replacement of both tyres and speed cushions nationwide.

      What a complete waste of money these road obstruction (traffic management) systems are.

      £250 down the drain, given original tyres only completed 8,000 miles in 2 years local driving.

      • lifelogic
        Posted February 14, 2012 at 6:56 pm | Permalink

        I once damaged my tyres 2 on a huge invisible in the dark traffic island in the middle of the road the bollard had gone and the light was out £300 down the drain and several hours.

        No doubt someone (overpaid and pensioned?) decided it was a good idea.

      • NickW
        Posted February 14, 2012 at 7:47 pm | Permalink

        We have local traffic calming measures to prevent rat runs which consist of two steel square section posts cemented into place 6’6″ apart.

        Judging by the huge variety of scratches and paint residues, these are causing a huge amount of damage to many vehicles. This is a narrow gap, even for cars.

        As for ambulances and fire engines, they have to take a long detour, and even then, have to navigate over ten speed humps at 5mph, klaxons blaring.

        Someone in our LibDem Council obviously owns a body shop.

        I’m just waiting for the first death to occur because the ambulance couldn’t get to the patient in time.

      • Electro-Kevin
        Posted February 15, 2012 at 12:23 am | Permalink

        £250 for two tyres over 2 years ?

        That’s not so bad if you include inflation.

      • Bob
        Posted February 15, 2012 at 11:05 am | Permalink

        Could you claim it from the council?
        I suppose you would need to know which humps caused the damage?

  6. Stephen O
    Posted February 14, 2012 at 8:03 am | Permalink

    Surely the minister should ask who authored the recommendations and then determine that the first cut should those posts which are the source of the bad advice?

    I have read mentions of the same strategy being deployed in a number of website posts (mostly related to the MoD, by purported insiders), so can well believe it. And when you hear of the cuts made they rarely sound like the most obvious and painless.

  7. lojolondon
    Posted February 14, 2012 at 8:07 am | Permalink

    John, you are absolutely correct as usual, except I am sceptical enough to see some real menace in the ‘cuts’ at the moment. It is exactly as you say, a local council (particularly Labour run council) decides not to cut executive pay, or the number of health and safety ‘executives’ or the affirmative action campaign, or their budget for ‘teamworking’ sessions. Instead, they cut the budget for libraries, old-age housing, infant care, and disabled care, for example.

    Cue BBC Radio 4, some priest talking about the ‘savage cuts’ of the ‘uncaring Tories’.

    Someone needs to take a scalpel to ALL these budgets, perhaps one council per day, 5 a week, telling them how much to cut and specifying exactly where to cut.

    Having an overview and best practices will reveal massive discrepancies, for example on council will be doing refuse removal at 5 times the cost per bin of another council, there will be dodgy backhanders going back 20 years, we, the taxpayers know all this.

    BUT most importantly, the BBC. They are not just a total waste of £3Bn per annum, they drive the whole country’s thought processes, by ignoring UKIP, relentlessly criticising everything the Conservatives do and incessantly supporting Labour and the LibDems, they undermine democracy itself. They completely support the collapsing ‘global warming’ theory, undermine the only democracy in the Middle East, and support (and are illegally supported by) the corrupt EU.

    If I were you, I would start there, immediately.

    • APL
      Posted February 14, 2012 at 9:26 pm | Permalink

      lojolondon: “Someone needs to take a scalpel to ALL these budgets ”

      Let’s not forget that much local authority spending is MANDATED by central government and Brussels legislation.

    • lifelogic
      Posted February 15, 2012 at 4:43 am | Permalink

      I agree fully on the BBC, their influence in pushing for an ever bigger, pro EU, pro quack green exaggerations, over regulated state is pernicious. Lord Patten however seems to be old BBC think to the core and was appointed by Cameron.

    • Bob
      Posted February 15, 2012 at 11:16 am | Permalink

      If you just watch catchup tv on your pc, you do not need a TV licence.

      Politicians will not deal with the BBC problem, it’s down us.

    • Bazman
      Posted February 16, 2012 at 8:12 pm | Permalink

      Drive the whole countries thought processes? No. I would say just yours by giving focus to views held by many and information and news often put forward by many other sources. The difference here is that you think it can be stopped by the red herring of the licence fee.

  8. frank salmon
    Posted February 14, 2012 at 8:25 am | Permalink

    We know the public sector takes two people to do one job. We could halve the numbers and still have the same service…..

    • Sean O'Hare
      Posted February 14, 2012 at 5:58 pm | Permalink

      Your wrong there Frank. The factor is at least five to one!

    • Bob
      Posted February 15, 2012 at 11:00 pm | Permalink

      Mr Redwood,
      Would it be possible to cancel the contract for rental of fig trees in the atrium of Portcullis House?

      £32,500 p.a. seems rather extravagant, especially when we are borrowing the money to pay for it. At the very least you should be able to negotiate a lower rent.

  9. ian wragg
    Posted February 14, 2012 at 8:40 am | Permalink

    The councils end up cutting high profile services because they must punish the incumbent government for daring to reduce their budget.
    Cutting waste doesn’t excite the same level of debate as does cutting meals on wheels.
    Departments like climate change and asylum support will continue to grow because these are councils priority.
    Why doesn’t the government ban councils from cutting front line posts without Ministerial approval. Sorry, stupid question. The Prime Minister can’t even block the appointment of a left wing professor to the university access post as it may upset Clogg.

    • Winston Smith
      Posted February 15, 2012 at 11:22 am | Permalink

      I think Vince Cable ignored parliamentary protocol by over-ruling the committee that voted against the appointment. Its just another example in the long list of left-wing politicians showing their determination to get their placemen in all corners of the State machine. Unfortunately, the Tories are full of wet, middle-class wimps; unable to fight the socialist tide.

  10. Electro-Kevin
    Posted February 14, 2012 at 8:41 am | Permalink

    http://uk.finance.yahoo.com/news/warren-buffett-gold-no-value-154016044.html

    Warren Buffett says that gold has no value. This is what I said on this blog a few months ago.

    Back on topic:

    Why does a council cut funds for the disabled and loved local facilities ?

    Mainly because the public will gripe about visible cuts to their MP and the people involved in providing those services are mainly ‘lowly’ working-class and therefore dispensable.

    Professional carers are among the most put upon and low paid in the country. When their hourly rate is worked out they get a pittance – their travel time between ‘clients’ is unpaid and they get a paltry car allowance for it.

    I’m not a class warrior by any means but I do happen to believe that the greatest problem within the UK has been a condescending middle-class meddling with – and engineering – the working-class.

    Councils now exist mainly for the careers full-time senior council officials.

    • lifelogic
      Posted February 14, 2012 at 9:36 pm | Permalink

      Indeed Buffet is right is has little use or value. Just like a Picasso it only has value because people think it will have more value tomorrow. A bubble in the making, inflated by governments printing money. It perhaps has more value than paper money as it cannot be printed but little use – unlike silver and very many other metals.

    • Electro-Kevin
      Posted February 15, 2012 at 12:09 am | Permalink

      Council = Pension scheme + services attached.

      (Funded on pain of imprisonment)

    • Zorro
      Posted February 15, 2012 at 3:30 pm | Permalink

      If any of you have any valueless gold you want to get rid of, please send it to Zorro. John will hopefully provide my email if you wish to get in touch. You can believe whatever Warren Buffet says, he made all his money by openly declaring his investment strategy in advance to all and sundry…….probably

      Zorro

      • lifelogic
        Posted February 15, 2012 at 8:42 pm | Permalink

        Fine I am happy to take any Picassos on a similar basis but will sell them and invest the money elsewhere.

  11. Javelin
    Posted February 14, 2012 at 9:05 am | Permalink

    Obviously there is no balance in Ministries. It is thousands of civil servants against a minister.

    The obvious solution is that budget proposals along with accounts should – where possible be published. They should be published on the Internet and the civil servants who publish them need to be accountable to the public – just like a director of a company.

    This shadowy process of ever inflating budgets needs to be brought out into the light. The civil servants at senior level are spending the publics money and need to be public figures.

    • lifelogic
      Posted February 14, 2012 at 9:40 pm | Permalink

      Indeed it takes very little time for new ministers to acclimatise and sound just like their civil servants. We need vastly more input from the private, wealth producing, sector – but not those seeking particular legislative “favours” via lobbying companies.

      • Bazman
        Posted February 16, 2012 at 8:15 pm | Permalink

        That’ll be banking.

  12. Robert K
    Posted February 14, 2012 at 9:13 am | Permalink

    Well, it’s not so surprising .The state has no competitors for its services, the recipients of these services have no choice, so there is no pricing mechanism to determine what the services are worth.
    This is why, in the public sector, the mechasim to determine how well the state provides, say, a health service or an education system, is how much is spent on it.
    When the private sector is involved in life-essential services such as the provision of food, clothes and housing, the opposite is true. The provider whose product or service is the best value will succeed and the one which cannot compete will either improve or disappear.

  13. Martin
    Posted February 14, 2012 at 9:17 am | Permalink

    Well Mr Redwood I hope that Baroness Warsi and her friends are paying for their trip to see the Pope out of their own funds and not out of the public purse. Indeed what value does the taxpayer get from this woman addressing the Pontifical Ecclesiastical Academy?

    If Baroness Warsi wishes to visit religious bodies she should be ordered to take time off work and pay her own fares.

    Little wonder with this woman wasting public money that the UK’s credit rating is under threat.

    • lifelogic
      Posted February 14, 2012 at 9:43 pm | Permalink

      And the overseas aid budget paid for the pope to come here. Doubtless the third world is very grateful for his “policy” on condoms and aids.

    • Winston Smith
      Posted February 15, 2012 at 11:25 am | Permalink

      Warsi is the Party Chair presiding over the worst decline in membership ever.

      • APL
        Posted February 15, 2012 at 7:34 pm | Permalink

        Winston Smith: ” the worst decline in membership ever.”

        The plan is to fund political activity entirely through tax revenue, then they won’t have to bother about party membership ever again.

  14. Zorro
    Posted February 14, 2012 at 9:28 am | Permalink

    They are hopeless at negotiating. They tie themselves into silly contracts on pens or computers and pay over the odds. If you ask to buy something, you are again told that you must go through the official supplier. This is particularly true on travel contracts. It is often much cheaper to go through open sources, but no, you have to go through the more expensive (they of course take a cut) supplier for audit purposes, even though you use an official card to travel.

    On the point of bleeding stumps….again usual tactics….the government has been looking to cut REMPLOY contracts. So, instead of giving disabled or invalids a chance to earn a living, they would rather make a point by threatening their contracts.

    Zorro

    • Zorro
      Posted February 14, 2012 at 9:32 am | Permalink

      My younger brother’s job in this scheme has been threatened. His disability requires frequent hospital treatment.

      Zorro

  15. MajorFrustration
    Posted February 14, 2012 at 9:36 am | Permalink

    Preaching to the converted – plse send copy to your front bench.

  16. David
    Posted February 14, 2012 at 10:00 am | Permalink

    This post should be sent to all council official and civil servants in administrative positions.

    John – how can this be changed? How can our leaders change the model? Is it through education – and leadership? Are ministers too weak, too lazy or too incompetent to address what needs to be done?

    Surely it needs to start at the Treasury?

    Please push this forwards before it is too late!

    • APL
      Posted February 15, 2012 at 2:04 pm | Permalink

      David: “Are ministers too weak, too lazy or too incompetent to address what needs to be done?”

      Yes.

      But, the civil service is huge, the minister has no friends there and the whole edifice looks after its own interests.

      That = always more money and bigger budgets.

  17. oldtimer
    Posted February 14, 2012 at 10:06 am | Permalink

    Where I live, in Bucks, the local authority sent out a questionaire asking voters what their priorities were in the face of the then growing financial contraints. This was a couple of years ago or so. I believe they got about 5000 replies (but could be wrong about the number). This seemed to me to be a good starting point because it enable them to pay attention to the views of residents who took the trouble to reply.

    In addition to this steer on priorities, which indicated what could be cut and what should continue to be supported, they do seem to be making a serious effort to improve efficiency. It is clear that this needs a clear and firm steer from the elected officials and from the council chief executive.

    The normal business practice of seeking efficiency improvements year on year should be built into all taxpayer funded activities as a matter of course. In business it is a matter of survival; the same condition should apply to activities of the state.

    • NickW
      Posted February 14, 2012 at 7:50 pm | Permalink

      The problem with this approach is that it is too easy to phrase the questions in such a way as to get the answer you want.

      I had such a questionnaire from our local council, and I thought it preferable not to answer it.

  18. Roger Farmer
    Posted February 14, 2012 at 10:08 am | Permalink

    The weakness of the scenario you describe is that the onus for cuts is left in the hands of the council. Turkeys do not vote for Christmas. Suggeestion, on taking over as minister demand an A4 sheet from everyone in the department outlining his/her job. Title, what they actually do, and what is their value added to the enterprise. Once the evidence has been assessed by a small team of professionals and the minister, they make the cuts not the department. That way it should not be difficult to weed out the unwanted. Any job arising from an advert in the Guardian should invite particular scrutiny.

  19. Bob
    Posted February 14, 2012 at 10:38 am | Permalink

    So, in a nutshell, what you are saying is that the public sector should provide necessary public services in an efficient and economic manner, as opposed to what it has been doing for the last fifteen years, i.e. an enormous non-job creation scheme which acts as a huge drag on our economy.

    “It requires a strong and confident Minister to reject the budget paper, and say it is based on false choices.” Do you know of any?

    • Roger Farmer
      Posted February 15, 2012 at 8:25 am | Permalink

      Ministers who are not strong confident and above all competent should not be there in the first place. I can only think of one from the past and he just got hounded by colleagues who found it politically expedient. I will leave you to guess who.

  20. NickW
    Posted February 14, 2012 at 11:35 am | Permalink

    It is easy to cut an overhead when you have a clearly defined product, whether that product is a tangible item or a service such as a haircut.

    What is lacking in Government is that focus on “Product”, which is the starting point to an achievement in efficiency.

    It may well be that some changes in the basket of each Ministry’s responsibilities are necessary to achieve better focus. Once a Ministry is focused on “product” it can have “efficient delivery” installed in its psyche as a goal rather than “spending money”.

    If Sir Humphrey is incapable of achieving efficiency; once the department’s products are defined, they can always be outsourced, the best route for which would be to allow those already doing the job in the civil service to form or participate in an independent co-operative if they so wished.

    It could work with the NHS too.

    • NickW
      Posted February 14, 2012 at 11:50 am | Permalink

      What would follow from the definition of Government or Council “Product” is a formally agreed prioritisation of “Products”, which would allow everybody to agree that maintaining a “Gender diversity awareness Officer” was less of a priority than care for the elderly.

      Formal prioritisation of responsibilities should be imposed on all those receiving tax payers money, in order to ensure that cuts are made intelligently. Any manager who cut priority services could then be easily identified as failing in their job, and the appropriate sanctions applied.

      Council’s service priorities should be made a matter of public record, and they should cover all areas of council activity, (including the hidden cost of twinning arrangements with freebies all round for Councillor’s going on “Fact finding missions” to their twin town or city).

  21. cosmic
    Posted February 14, 2012 at 11:35 am | Permalink

    Obviously because things have come to be arranged so that it’s in their interests to behave like this.

    It was put to me about 30 years ago that if council budgets are under pressure, they cut visible things like school lollipop ladies and other things which the public notice. They don’t cut jollies and courses.

    Electing councillors doesn’t provide much democratic feedback.

  22. John C
    Posted February 14, 2012 at 11:57 am | Permalink

    “Some politicians even send out claims that service X is better than service Y because more is spent on it”

    Gordon Brown always used to talk of “investment”. He never mentioned outcomes or ROI. At the time, the Tory opposition front bench never picked him up on this. I know this is true as I used to scream at the TV every time GB did it.

    Surely, it is easier to cut grants to various groups as then you don’t have to sack the people sat in the same office as yourself.

    • cosmic
      Posted February 14, 2012 at 10:20 pm | Permalink

      The corruption of the language is a serious thing. Investment implies to me the reasonable expectation of a measurable return. Brown inflated ‘spending’ to ‘investment’; ‘squandering’ is the more accurate word. Brown glossed over the measurable results.

      I don’t think this question can be addressed until the people doing the squandering are held to account by those stumping up and the question of what is properly the government’s business and what is not, is sorted out.

  23. PayDirt
    Posted February 14, 2012 at 12:06 pm | Permalink

    This example just shows that democracy is doomed.

    • cosmic
      Posted February 14, 2012 at 7:42 pm | Permalink

      And the alternative to democracy is?

      Possibly a benevolent dictatorship?

      How do you ensure it stays benevolent?

      A theocracy?

      We’ve been there before.

      I think you are making the mistake of confusing having elections for democracy.

      As I see it we’ve arrived at the position where we are electing rival teams of managers who have more in common with each other than with the people who elect them and are tempted to bribe the electors with their own money or money they are borrowing on their and their children’s behalves. They’ve converged and are drifting apart from their electors. This is obvious from the plans for further public funding for political parties (of the right sort). When they get to office, whatever their ideas, they have to cope with a permanent administrative establishment which has its own agenda.

      I’m convinced we need to move on from this and to something more along the Swiss lines.

  24. NickW
    Posted February 14, 2012 at 12:10 pm | Permalink

    In the USA, Companies officially have two sets of books, one for the shareholders with grossly inflated profits and asset values, and one for the Inland Revenue, with the exact opposite approach.

    Banks in the USA claim billions in profits to their shareholders whilst paying no tax and even claiming subsidies from the Government.

    There is a lot of scope for discussions between the USA and the UK on the subject of business taxation. Paying tax in a country should be a requirement for any Company which wants to do business in that Country; by law.

    Reply: US companies have to comply with reporting and tax laws.

  25. David John Wilson
    Posted February 14, 2012 at 12:17 pm | Permalink

    Some years ago I worked for a company where the local director banned the purchase of paper clips. (It was actually done because he lost a vital piece of paper in a meeting because it had accidentally become caught under a paper clip). About five years later they started to run out of paper clips and no-one could remember why their purchase was banned.

    I know there is a lot of fuss about bonuses but unfortunately they are an ideal solution to this problem of false budgets. Council Officials need to be offered bonuses to reduce their budgets year on year and then to beat those budgets while still carrying out the functions of their departments.

    When working in a private company I had a potential 15% budget each year half of which was directly linked to my department, the group in which I worked and the company as a whole beating their budgets. The other half was linked to my department achieving difficult delivery(in the wider sense) targets.

    When working for a government agency I agreed annual objectives with my boss. At the end of the year at my salary review I was ranked as average and given an average salary review. When we reviewed my objectives (after the salary award, at my insistence) he had to agree that I had exceeded every single one of them and had the embarrassment of going back to his boss to upgrade my salary review.

    The point. Public authorities have all these marvellous procedures and controls in place: in fact there are usually too many of them. However they have no idea of how to use them for the purpose for which they were designed.

  26. Damien
    Posted February 14, 2012 at 12:26 pm | Permalink

    JR: I see that under a FOI request it has been disclosed that the cost and maintenance of 12 weeping fig trees in the atrium of Portcullis House has cost the taxpayer £438,250.I know you raise this question regularly; Is this really justifiable and what other extravagant expenditure is taking place that MP’s should be questioning?

  27. Ben Kelly
    Posted February 14, 2012 at 1:20 pm | Permalink

    So having identified the problem (again) why are public sector budgets not based on zero sum budgeting having defined what services will be delivered?

    George Osbourne’s first budget stated that carry forward would be allowed (which was a step in the right direction if only putting off the problem) however i work for an organisation which supplies the public sector and suddenly orders are coming for products that were previously deemed unnecessary. he surplus budget is being used up to safeguard for next year.

    This is great for my organisation but as a tax payer I would prefer to see the money spent a little more wisely.

  28. Posted February 14, 2012 at 1:36 pm | Permalink

    Yes. Just like local councils. New minister/councillor arrives, feeling a new boy and isolated and the first people to reassure him and give him support are the permanent officials. He needs them and their cooperation so won’t rock their boat too much. The dumber the politician the more he is putty in their hands. Their precis & advised options for the politician, are all in favour of their objective but at least he is allowed to think the decision was his; so that’s OK then!

  29. BobE
    Posted February 14, 2012 at 1:38 pm | Permalink

    When governments talk about cuts its always Hospitals, Schools and the Police. Its never admin or BMWs oreven fact finding jollies. Your all as bad as each other. I see that (Named peer-ed) was recently sent to South Africa, no doubt first class all the way.
    Ken did something similar in London. He said he only used public transport, this turned out to be black cabs and great cost.
    From what I see there will be no real change as we draw near to the next election.
    Nothing done except blow smoke. As per usual.
    BobE.

  30. Posted February 14, 2012 at 1:46 pm | Permalink

    Legal limits like the proposed US balanced budget amendment & a a limitation on the proportion of GNP the state may take, alterable by referendum alone (al alternative would be referism – a similar right for popular rejection of any budget) would concentrate minds wonderfully. If it were known that the money was limited the civil masters would havge to find the cuts in each other’s budgets rather than uniting to demand more.

  31. pete
    Posted February 14, 2012 at 1:57 pm | Permalink

    Simple answer – fill the government, civil service and local government with business people to shape a new culture – that will never happen!

    • lifelogic
      Posted February 14, 2012 at 5:31 pm | Permalink

      It won’t work business people even good ones usually rapidly go native when they get into the state sector.

      • Bazman
        Posted February 16, 2012 at 8:18 pm | Permalink

        That’ll be banking again.

  32. Slim Jim
    Posted February 14, 2012 at 2:00 pm | Permalink

    It seems to me that they do these things because they do not appear to accept personal responsibility for their actions (they = politicians and their officials), other than being voted out of office (and in many cases, they’re in a job for life!). Stupidity by committee is no excuse! Perhaps if they were held responsible by being declared bankrupt or lost their homes and pensions, they would think hard about how they spend other peoples’ money! What is the scope of the criminal offence of ‘malfeasance in public office’? How many times has that been used?

    • outsider
      Posted February 14, 2012 at 6:05 pm | Permalink

      Malfeasance in public office is, I believe, a civil tort. As memory serves, it was last used by a receiver of BCCI against the Bank of England. The lawsuit was so expensive and so comprehensively rubbished that no-one is likely to repeat the exercise lightly. The crime of misconduct or misfeasance in public office is quite commonly used against naughty policemen and the like but sadly I cannot quite see the Government charging itself with wilful neglect, let alone the DPP.

  33. Disaffected
    Posted February 14, 2012 at 2:01 pm | Permalink

    The essence of the problem is that private have to make tough decisions or go bust. Councils do not. The flim flam around the edges and keep the mantra in every department that if you are stupid enough to cut your budget your department will lose our or that your decision will effect the existence of your department.

    Suggest Mr Pickles undertakes a boundary review changing the size of each council this will allow a fresh look at each service and department and cut the number of councils to unitary ones only. Moreover it will allow cuts to the number of overpaid CEOs, senior and middle managers and crucially change the culture and mindset which is so entrenched.

  34. Ralph McHendry
    Posted February 14, 2012 at 2:11 pm | Permalink

    “I never recall as a Councillor or as a Minister receiving a budget paper which recommended cutting the administrative overhead unless I had insisted on it.” You’ve never worked with me Mr Redwood!

  35. derek spence
    Posted February 14, 2012 at 2:17 pm | Permalink

    when I ran a large public hospital in Australia and we were faced with budget cuts my consultants wanted to cut services that we exclusively provided and were high priority services-they did not want to cut in areas where there was an alternative service or where we could cut our cloth. I took the view that we were not in the game of politics or to cause embarrassment but simply to make the best of the resources available and make recommendations accordingly. I held my ground. I also asked all departments to include in their annual reports to include a “what if” strategy if their budgets were cut by 10%. A very useful discipline and helped the process when cuts did happen and also gave us a forum for debate based on input from staff. We were also able to advise the politicians very quickly the consequences of their decision to make cuts rather than for them or any external body tell us what to do! We need a similar process in the UK but in my role setting up and running the National Supra Regional Specialty contracts and the Regionla contracts for Trent I never saw such a disciplined approach. Derek Spence

    I also have views on teh Lansley proposals which are totally unworkable. The diagnosis is right-the prescription totally inappropriate. It may well cost the Conservatives the next election imo.

  36. Martyn
    Posted February 14, 2012 at 2:18 pm | Permalink

    John, your 2nd paragraph “Council officials live in hope that their Councillors will raise taxes…..” perfectly describes my district and county councils and, I suspect, many others across the nation. Nothing is too good for the ‘officers’ to whom our elected representatives appear to be subservient in all important issues these days.

    Unelected tax-funded quangos such as NALC, ACPO etc continue to recommend or negotiate huge salaries for the higher level council officers without any regard to the real world of commerce or, as we have so often seen, performance whereby failure in one post is no bar to taking up a higher paid post in another county. These huge salaries carry with them a debt burden for decades to come for council tax payers? My district council accounts show local government pensions scheme deficits of £13.8m in 2007, £17.6m in 2008 rising to £18.2m in 2010-11. Their report says that this “has a substantial impact on the net worth of the council balance sheet” and that the total contributions expected to be made to the pension scheme 31 March 2011-12 is a modest £1.24m. That’s just the District council, can’t be bothered to see what the County council debt is, but it won’t be small….

  37. outsider
    Posted February 14, 2012 at 2:23 pm | Permalink

    In a well-run company, a distinction is made between one-off spending, which can can be judged on a quick cost/benefit assessment, and even tiny additions to regular overheads, which should have to pass more stringent investigation.
    Zero budgeting is great in theory but hard to practice. A simple alternative is to make sure that all contracts have a fixed (preferably 12 month) duration and all departmental programmes, quangos and commitments have a sunset clause.

    • lifelogic
      Posted February 14, 2012 at 5:34 pm | Permalink

      In the state sector they go round putting nonsense values on trees which are clearly a liability – as we have seen. They are not well run by a very long way – I see very little chance of them doing anything sensible – such as you suggest.

  38. Bickers
    Posted February 14, 2012 at 2:25 pm | Permalink

    John,
    This succinctly sums up the problem of allowing Government to take too much of our money. We have to have a law that restricts what Government can take from us. We need this because it’s become clear that in a modern democracy, with high levels of unemployment & an entitlement culture, it’s all too easy for a wasteful Government to be voted in that panders to the needs of those that don’t create any wealth or live off the largesse of the tax paying private sector. To a significant degree this is what’s been going on in the Eurozone and under the last Labour Government. Worryingly, I don’t see the Coalition reversing this damaging process quickly enough.

  39. Atlas
    Posted February 14, 2012 at 2:53 pm | Permalink

    Quote: “In a competitive private sector company there is constant review of overheads.”

    And what happens in monopolistic outfits like the record companies? Little. They just pile on the charges for their years-old back catalogue. Recently this collection of rent-seekers blagged their way to extending copyright for 50 to 70 years. What a rip-off.

  40. Brian Tomkinson
    Posted February 14, 2012 at 3:05 pm | Permalink

    You have laid out the problem but what is the solution? This government seems to be no better than any other at enforcing proper monetary discipline in the public sector even though the call for it is desperate.

    Reply:Imposing the kind of controls I hae advocated here in previous posts, and cutting the things I have often identified for cuts.

    • Brian Tomkinson
      Posted February 14, 2012 at 9:15 pm | Permalink

      John,
      Thanks for replying. Our frustration is that no one in office seems to follow your sound advice. How do you keep so calm? Perhaps you shouldn’t!

    • APL
      Posted February 14, 2012 at 9:27 pm | Permalink

      JR: “Imposing the kind of controls I hae advocated here ”

      Does that mean ‘localism’ is dead as a Tory policy?

      Not that it was ever manifest in reality.

      Reply: NO, localism is a direction of travel and can be pursued in various ways. The Coalition is also aware of the need to keep some control on tax and costs, and so is requiring local referenda for larger Council Tax rises.

      • APL
        Posted February 15, 2012 at 7:59 pm | Permalink

        JR: “and so is requiring local referenda for larger Council Tax rises”

        OK, good so far as it goes.

        But council tax reflects a relatively small fraction of a Local Authority budget. The rest coming from Central government grant. At the same time, much of local authority spending is mandated by central government. Putting the local authorities in an unenviable position.

        But in a similar vein, would you agree the finance bill ought to be put to a referendum?

  41. Barbara Stevens
    Posted February 14, 2012 at 5:39 pm | Permalink

    I just think politicans and councillors spend money like smarties without bothering to see if the expenditure is needed. They sit like little Hitlers within the walls of councils and parliament and spend OUR money as they see fit. Many must need glasses, and should be referred to ‘Specsavers’. They close libraries which help children to read and get interested in books, not all have kindles and computers; resulting in many starved of education which was available for free. Not free really we paid for it throught Council Tax.
    Now we have nothing left and there’s not much more they can close down. Most new libreries are way off the High Street. and hard to access, have been recently built but in the localities where they have been shut down, there remains, nothing. Many won’t travel after dark to them for fear of muggings. This is the fact we live with each day, no services, on offer now at all, areas not safe to walk out in after dark, who says this is a nice country to live in? I despair of it all, am disgusted and feel let down, betrayed, and have come to the conclusion they are all to blame. My vote will go elsewhere and try my luck there.

  42. Monty
    Posted February 14, 2012 at 5:43 pm | Permalink

    Some folk have mentioned what happens in a typical private sector business. There is one other aspect of the private sector function that needs to be considered, and that is the tracking of productive direct service provision, versus indirect ( admin and “support” functions). The private sector seeks always to minimise unproductive overheads. Dead wood in the organisation is regularly pruned out. I suspect that the public sector do not even maintain a very close or accurate track of the direct versus indirect labour force. And when cuts are mooted, no attempt is made to shield the front line staff from the axe.
    More than ten years ago, I spent a brief interlude working in the state education system. And I was disgusted to find how top heavy the administration at county hall was, in comparison with the schools struggling to make ends meet with whatever meagre resources the LEA hadn’t already spent on itself.
    Public sector departments, including local authorities, should be required to track direct versus indirect staffing and expenditure according to objectively defined criteria, and this information should be online where the public can see it. When cuts are needed, that is where they should be most stringently applied.

  43. john
    Posted February 14, 2012 at 5:49 pm | Permalink

    It’s not true that these budget scams, like committing the organisation to a programme that is knowingly underfunded, or rushing to spend this years quota bef0re year end to protect next years quota, etc., is not also present in private enterprise. These practices certainly occur in my private organisation, and for the same reasons as they occur in government. That reason is complicit management.

    It would be easy to stamp these practices out if senior management wished to stamp them out, but they don’t. Empire building and taking a slice of the profits from the scams are the motives, and these motives go from top to bottom in every organisation.

    In the private sector those that could stop these practices are prevented from doing so. Institutional share holders are bought off, and individual shareholders are disempowered. In government, there being no discipline enforcing bottom line, and little (if any) realistic voter control over ministers.

    Might I make a suggestion that you John could have easily adopted during your ministerial career. For senior civil servants, set a relatively low salary and a relatively large bonus, qualification for which would depend on very clear and simple targets maximising delivery and minimising cost. It’s perhaps unfair to criticise you for not doing that which no other politician has ever had the courage to do. Even so, I find all the hand wringing, and soul searching from senior managers and ministers concerning the difficulty in enforcing budgetary control very difficult to take when I know that they are usually part of the problem.

    Reply: An individual Minister has to accept centrally agreed pay rates and bonus arrangemetns for his officials.

  44. forthurst
    Posted February 14, 2012 at 6:02 pm | Permalink

    The private sector exists to firstly stay in business, and second to make a profit; this applies both to legitimate businesses which employ law abiding English people and those less so, such as drug running, the prostitution of underage English girls, banksterism. Both classes of concerns, banksterism less so because of political party donations, are subject to degrees of enthusiasm by government to put them out of business.

    The public sector has no such discipline; it is there to provide a ‘service’. Many of those in the public sector are competant, hardworking professionals; if they are not doing anything which most people would regard as useful, that is because of the instructions of politicians from above. In addition, there are some who are not harworking because, for example, they are employed by the BBC and because they are not fully signed up to Cultural Marxism, they have been sidelined into a non-job. Alternatively, there are some who are not competant, but are employed in order to fulfill a vibrancy quota, in which case, we can only hope, someone else will also be doing the same job properly.

    Do politicians not imagine there is a degree of cynicism amongst civil servants when they are asked to develop a strategy for an integrated transport policy or to allow people into the country which they genuinely believe may not beneficial to us?

    Politicians have all the power; they can make it a statutary offence to deliberately waste tax or charge payers money eg by spending an outstanding budget in a wasteful or reckless manner. They can make it legal to simply make people redundant when they are not useful without any redress other than redundancy pay; they can cut the judges out. They can cut the judges out of immigration and asylum law; why should foreigners have legal rights of representation on such matters; how can simply arriving in this country qualify anyone for anything?

    Politicians need to work on the principle that civil servants are similar to people in the private sector in that they turn up for work expecting to be given a sensible task to perform and are perfectly willing to carry it out. It is up to politicians to ensure that they all have such sensible work to perform.

  45. Jon
    Posted February 14, 2012 at 7:52 pm | Permalink

    One thing I don’t see in the civil service is a separation or focus on the operational cost. Whilst there too is a problem (big) with commissioning costs and contracts the operational costs should not just remain constant but as in the private sector should become more efficient.

    Should the government look to separate out the operational costs so that there can be no cross subsidy of say closing a library to keep an obsolete job or pension costs up. Two clear areas clearly divided.

  46. Jon
    Posted February 14, 2012 at 7:58 pm | Permalink

    Or maybe private sector efficiency auditors. On the commuter train to London I heard some corkers from the civil servants on it. One was a couple of building manager types who would fly to Edinburgh etc to survey government buildings. The two of them boasted that they would always use the short stay car park at Luton or Gatwick which would cost £1500 a time each. There reasoning was that they had to get something back from the tax payer.

    There was obviously no one noticing or being bothered that a 3 or 4 day trip should not cost £1500 in parking. Get the private sector to audit the spends.

  47. Steven Whitfield
    Posted February 14, 2012 at 8:47 pm | Permalink

    The short answer is that those running the public sector now believe that it exists principally for the benefit of the people working within it.

    Job security, pay and pensions all come before the rights of the paying public in the pecking order.

  48. uanime5
    Posted February 14, 2012 at 8:49 pm | Permalink

    The solution is simple, have the Minister take part during the entire department budgeting process so they can decide what should and shouldn’t be cut. Councillors should do the same. Ministers and Councillors have to accept that controlling the budget is their responsibility and that no one will do their job for them.

    Also there is another reason why ‘clumsy cuts’ can occur; the cuts are based on reducing costs by a fixed amount rather than efficiency savings. For example let’s say a Council has been told by the Government to reduce their budget by X amount. The Council then undertakes the long process of evaluating all their procedures and finds that if they implement efficiency savings they will save a lot of money but not enough to meet the Government’s targets. So they look for other savings and find that if they close down a library and make small efficiency savings they can reduce their budget by amount X (they have no incentives to make savings greater than amount X). The Council now has two choices either they can try to convince the Government to reduce amount X and make savings through greater efficiency, or they can make an unpopular cut and meet the Government’s targets.

    In conclusion if the Government wants to encourage efficiency savings they need to accept that such savings may be minor and are unlikely to be part of any plan that requires major cuts.

  49. Matt
    Posted February 14, 2012 at 10:08 pm | Permalink

    Your post has a lot of accusations but no clear examples. As a piece of politicking it is first rate but it has no substance or evidence base. Not surprisingly most of your like minded readers agree with you. Posts like this undermine your more well researched articles as I start to think they are all as poorly informed.

    Reply: There are many examples I could quote, but I have no wish to spend the rest of the week fending off angry and ill i nformed attempts to deny the truth of the specific allegations.My readers have supplied some good workingg examples of what I am saying about priorities.

  50. Posted February 14, 2012 at 10:28 pm | Permalink

    P’raps they are taking their lead from this Government>

  51. Yudansha
    Posted February 15, 2012 at 12:36 am | Permalink

    Doubtless the council local to ( a named heavily overweight person-ed) has some extra expenses to cover.

    Who is feeding him ? Who is paying for it ?

    In what other country is obesity a sign of poverty ?

  52. StrongholdBarricades
    Posted February 15, 2012 at 10:21 am | Permalink

    Without too much arguemnet I would suggest that it times of lean the suggestion goes out to protect oneself.

    Thus the desk flyers will always argue their positions bear merit, whilst thus leaving less discretionary spend for other projects.

  53. David Langley
    Posted February 15, 2012 at 11:14 am | Permalink

    Dear John, has the government lost sight of the J M Keynes economic principles that have guided us in general since the war. Management of monetary policy and the stimulus of money in government sponsored projects. The circular flow of cash and I emphasise the circular flow, the multiplier effect and the natural propensity to spend and save by business and individuals all coming into play. The trouble is this will be anti EU and frowned upon, although ignoring the EU by other countries to their credit. We need to spend massively the savings created by sacking civil servants and quangos that are not adding value to the balance sheet in favour of creating whole industries that have been laid waste. Reopen pits, reopen steel works, build ships, rebuild manufacturing everywhere using the cash generated by ditching all EU contributions and foreign aid for a start as well as the massive pruning shears described above. Lets use the government cash saved to discount prices and make us competitive again. Borrowing billions to support idlers and non jobs is crazy.Create meaningful apprenticeships and manufacturing jobs. Get the Chancellor to visit a small company on their budget setting day and light will shine in his dim business mind.

  54. Hammersmith Resident
    Posted February 15, 2012 at 11:22 am | Permalink

    Hammersmith Council have cut council tax by about 3% for every one of the last 5 years making it now one of the lowest in the country. However, we still have bin collections twice a week, a brand new library, improvements to parks in the Borough, a visible police presence and two new secondary schools. Whether you agree with them politically or not it indicates the massive levels of waste there must have been to support cuts like that with no visible impact on services. It must be the same in other boroughs.

  55. David Burch
    Posted February 15, 2012 at 1:20 pm | Permalink

    Spot on I think, however the type of budget holder that engages in this type of budget padding just does to get they are wrong and no amount of reasoning will make them change their mind. I is probably due that they do not make the link between their taxes paid from their salary and the expenditure they are responsible for.

    As an accountant I have tried to reason with this type of budget holder however it is fairly pointless. I could be critical of the current government in that there are not enough ministers (and councillors) happy to stand up and say we MUST balance the budget and we ARE doing this to bring that about. Not a popular policy and one that media such as the BBC would do their best to portray in the worst light possible on grounds of “in the public interest”.

    Maybe a Greek style default for the UK would have a silver lining?

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  • About John Redwood

    John Redwood has been the Member of Parliament for Wokingham since 1987. First attending Kent College, Canterbury, he graduated from Magdalen College, and has a DPhil from All Souls, Oxford. A businessman by background, he has been a director of NM Rothschild merchant bank and chairman of a quoted industrial PLC.
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