After making the Commons speech I found the figures for public sector productivity. Between 1997 and 2010 there was no growth at all in public sector productivity. If the public sector had been able to match the manufacturing sector longer term trend of say 2.5% a year productivity increases we would now have 37% more public service for our spending, or we could spend 27% less money to receive the same level of service. That is big money.
In the private sector what the public sector calls “cuts” are sensible reductions in cost to make things cheaper, or sensible improvements in quality by cutting out waste and error. One of the big differences I have seen between those parts of the public sector I have led as a Minister and those companies I have led as a Chairman or director is the approach to quality and cost. In the private sector lower cost is often seen as an ally of higher quality. The best ways to get costs down are to do things right first time, to waste less input, spend less time doing something, and avoid customer complaints by offering good product and service. In the public sector taking out cost is seen as a threat to staff, and is often used as a reason for poor performance or for the need to reduce service.
In a cost cutting shop the manager does not usually tell the boss that the next cut has to be a cut to the number of customers who can be handled, or a reduction in the number of products they sell to customers. The manager looks for ways of automating more, helping staff perform better, finding ways to sell more goods to bring in more revenue. In parts of the public sector, when asked to cut costs, managers parade a set of cuts to services in the hope that these will prove unacceptable to the boss.
Given the new enthusiasm for productivity gains on both sides of the Commons, now would be a good time to launch a plan to raise quality and productivity throughout the public sector.
June 23, 2015
“Between 1997 and 2010 there was no growth at all in public sector productivity.”
Sorry to do this but that is a meaningless comment, a bit like how the BBC keep saying (for effect only, I suspect) that something has been “record breaking” without specifying what the record was and when it was set previously. Any chance of going a little context to the above figure such as what the growth or otherwise was between 1987-97 and/or 1010-15?
If public sector growth was 1% in the previous ten years, if growth has gone negative in the last 5, then what is the big deal, on the other hand if growth was running at 50% between 1987-97 or has been that since 2010 then indeed you have made a valid point!
June 23, 2015
Between 1997 and 2010 there was an increase in the numbers of people employed in the public sector of around half a million, so you might expect there to be an increase in output created by all these extra pairs of hands.
June 23, 2015
The figure is a growth of more like 750,000 of public sector jobs. Surprisingly, the loss of 1,000,000 under the Coalition does not seem to have caused much loss of amenity to the users of public services.
I am not sure that productivity was an aim for the last government and John’s analogy of the mindset of private vs. public rings true.
June 23, 2015
@Edward2; Depends, it might have just been Labours way of fiddling the unemployment figures, pay them to double man a public sector job at the NMW or pay them JSA to sit at home watching TV! 🙁
June 23, 2015
My point entirely Jerry
In that time period half a million new public sector workers.
Yet no improvememt in sevice levels nor productivity.
Also in that time period we doubled the money we spent on the NHS without a doubling of service levels.
June 24, 2015
@Edward2; “Productivity” can be measured in many different ways, in the 1980s the UK had very good productivity but we also had enormous non-productivity from 3.5m plus unemployed…
June 25, 2015
That is not relevant Jerry.
We are talking here about specific period of time when productivity did not rise despite huge increases in people employed.
PS productivity in the 1980s was not good.
June 25, 2015
@Edwars2; “We are talking here about specific period of time when productivity did not rise despite huge increases in people employed.”
You and your ultra-capitalists would like that to be the case (see my original comment, that you have been replying to) because it allows the unprovable or basically wrong assumptions to be ‘proved correct’. Whilst the number of economical inactive and thus unproductive people in the economy is very relevant, otherwise why all the concern about the numbers of people claiming JSA etc?!
PS productivity in the 1980s was very much better than the 1970s…
June 25, 2015
I’m puzzled where you get your”ultra capitalist” phrase from.
Is it meant to be an insult like many of your other pet phrases?
Yet again you move the argument as soon as you are beaten.
First retreating to the eighties now in this post going back to the seventies.
Completely irrelevant Jerry.
This article is about productivity in recent years.
It is a fact that during the period we are talking about productivity did not rise.
Yet public spending rose faster than at any recent time as did the number of people employed by the State.
June 23, 2015
Also the private sector has had the benefit of low wages subsidised by taxpayer top-ups and an easy (but costly to taxpayer) immigration policy.
The private sector is not nearly the model of efficiency that Dr Redwood makes out.
Shall we privatise the Royal Marines ?
Reply, No, of course not
June 23, 2015
The private sector is indeed not always that efficient, but at least someone is buying (and actually thus wants) the output they provide.
Much of the state sector output has little or no value at all. A lot of it is just pointless inconveniencing, licencing, mugging and incompetently regulating the productive – so it has a negative net value.
Much of it prevent real & fair competition in health, education, transport, energy and housing.
June 24, 2015
Take the counter productive wars, the Millennium Dome, the endless green grants, the burning of biofuels in power stations, Concord, TRS2, much of the inept military procurement and HS2 as good examples of “lots of money in nothing useful out”.
June 23, 2015
Anonymous
Complete drivel. There are 31 million people in work, the average salary is £27.5 k what low wages? Yes there are a proportion of worker earning NMW, any idea how many? No thought not. Well its 8%…..which just in case you’re a leftie and don’t do basic arithmetic means that 92% EARN MORE.
No NMW workers aren’t subsidised by Gordon Browns insane top ups, the government take away the money in taxes and then hand some of it back as in work benefits. Another stupid leftist idea.
June 24, 2015
libertarian: “the government take away the money in taxes and then hand some of it back as in work benefits. ”
It also undermines the very concept of work, to be independent.
June 24, 2015
Libertarian – £27,500 is a low wage. Barely above the benefit cap and not enough to live on comfortably or raise a family in many areas. Mainly because house prices (rents) are inflated through housing benefit top ups.
NMW is what the men-in-sheds and kids-in-digs are living on. Playing a good game parents on NMW can make a good living with top-ups and even have enough to send their kids still living abroad.
For a realistic picture of the value of pay we need to discuss Mean wages/housing costs per economic area as all are different.
For most areas the withdrawal of Brownian redistribution is needed to bring housing costs within range of realistic working wages. Either a drop in house prices or a boost in earnings unsupported by top ups.
It won’t be a drop in house prices. They will not allow it. House prices are the Golden Goose. Private debt is key to this so called recovery.
Even with record low interest rates to encourage private debt the standard of living can only decline. The government is allowing too many people (of unchecked abilities and behaviours) to compete for work, public services and benefits to keep that standard where it is.
The economics are very simple. Supply a surfeit of any commodity and the price drops. That is just as true of the price of labour.
It’s not always a straight forward case of what people are paid but what things cost. Especially where there is pressure on the demand for accommodation. That demand need only be marginally above what is available to cause the grave distortions we see these days.
One would expect Conservatives to understand this.
June 23, 2015
The proposed £7Bn refurbishment of the Palace of Westminster (about £200 per UK worker) alone will hugely harm the country’s productivity too. All these billions add up and render the private sector (who have to pay for them) simply unable to compete in World Markets.
I have three contacts all working who have had operations hugely delayed and cancelled at the last minute by the dysfunctional NHS recently. What does this do for their productivity?
June 23, 2015
A private sector company faced with refurbishing its HQ at a £7 billion cost would look at alternatives, like converting it to residential property and leasing it out or selling up, itself moving to Corby or Swindon where a similar sized building, possibly even purpose-built if redundant warehouses proved unadaptable, could be had along with cash of several billions realized from its London property. There is productivity for you!
Reply This is a very special property with a very special purpose. I do not myself think it needs £7bn of work to carry on doping what it is meant to do.
June 23, 2015
Reply to reply – It is merely a building to house a regional council department of the EU. It houses people whose work has been outsourced or made redundant.
If this had been a working class industry it would have been sold off or closed down years ago. It is a complete waste of money and a drag on the EU economy.
June 23, 2015
Well, maybe we should make the restoration of the building which is supposed to be the focus of our national democracy conditional upon the prior restoration of our national democracy. Now there’s a thought: we should tell MPs that if they take us out of the EU so that their existence regains its lost meaning, then, and only then, they can have the money to refurbish their accommodation.
June 23, 2015
What a thoroughly worthy suggestion !
I read a proposal the other day, can’t remember where, that it would be a lot quicker and cheaper to strip out all the woodwork, demolish the existing Palace of Westminster and build an identical new replacement on the site re-using the same interior.
We could then sell bits of the old stonework to tourists as souvenirs and recuperate part of the cost.
June 23, 2015
It also seems to be a special building full of many who want to give away the very reason for its existence.
Many in the private sector would struggle to raise £1 million for an office refurbishment let alone £7 Billion. Still I suppose there are all those subsidised bars, restaurants and creches to tart up too.
Reply I am all in favour of limiting the costs of refurb, but this is a major historic building, important culturally and an important focus for tourism, as well as the cradle of our democracy.
June 23, 2015
Well £7 Billion could build rather a lot of culturally important buildings, or perhaps just build 70,000 houses. Or perhaps allow every worker in the country £200 to help maintain their own culturally important to them homes.
Will the cradle soon become the tomb for UK democracy anyway?
June 23, 2015
The conservation industry will ensure that the work will cost more than anyone thought possible. They insist on replacing the original decaying structure with exactly the same materials and retaining rotten structure wherever possible. They will refuse to allow the insertion of any modern components which would be able to stabilise the building much more cheaply. The whole process will involve many more ‘experts’ and consultants working with English Heritage, the National Trust, Westminster Council, The Mayor, and bodies regulating disabled access, fire escape, health and safety and energy conservation. And all this for a talking shop which is about to become redundant when Herr Schultz and his pals take over.
June 23, 2015
Exactly right. Endless well connected consultants, green loons and public sector quangos will ensure it costs at least 10 times the going rate.
June 23, 2015
Is it £7bn of work or £7bn total project costs including the costs of any temporary accomodation etc…? I understood it was the latter.
June 23, 2015
It will probably end up nearer £14 billion in the end. The Scottish Parliament building was, after all, 10 times over budget and three years late.
June 23, 2015
@formula57; Probably is that building has one hell of a international preservation order on it, so even if all the MPs. Lords and civil service were to move into some warehouse/office block some place the Palace of Westminster would still need a huge amount of money spent on it just to become a non working museum.
I would suggest that this is a perfect time for a English parliament to be considered, and some place were MPs and/or The Lords can sit whilst Westminster is restored, and still be the cheaper option than MPs and Lords trying to carry on amongst the all building work..
June 23, 2015
I think serious questions need to be asked about the astronomical cost of refurbishment of parliament (reported at between 3 & 7bn). . Why has this important building been allowed to decay to such an extent that such major refurbishment is needed ?.
Stonework can have protect coatings applied to prevent acid attack, metalwork can be painted, foundations can be reinforced BEFORE subsidence occurs , damaged stones can be replaced in a ROUTINE program of planned repairs. Roofs and window frames can be maintained so that water damage doesn’t occur.
Despite an annual maintenance budget of £30 MILLION pounds, the place is apparently falling apart. It would seem that the slapdash management of the maintenance budget reflects the houses poor management of the country in general. Can’t we get anything right in this country anymore! ?.
To put the costs in perspective the Abra Al bait Mecca tower in Saudi Arabia is 1972 ft tall, has 120 floors and is reported as being the worlds most expensive building costing £10 billion.
600 architects and craftsmen if they were each paid £100,000 PA for 5 years would cost £300 million.
So lets say £800,million to cover materials and other costs. How has the cost of £7.1 Bn for parliaments refurbishment been arrived at ?…how many ‘consultants’ are going to be made very wealthy…..
Who (with a jot of common sense) will oversee the refurbishment to ensure the taxpayer is not ripped off ?.
June 23, 2015
Please please don’t let it be another wretched quango made up of placemen and women with no knowledge of managing building projects. Or friends of pretentious consultants and building companies that stand to be made very rich.
June 24, 2015
Get Chinese contractors to quote – they’ve been building good copies of old buildings from all over…
Cradle of democracy it may be but democracy is conceptual rather than concrete and 1% of the projected 2016 UK budget is a very large amount to spend renovating a building. At 15+% of the MoD budget I wonder what vehicles, aircraft and kit won’t be provided as a consequence.
Reply I agree the £7bn is far too high – this is an option, not an agreed budget commitment!
June 24, 2015
@David Price; Typical press reporting, highlight the highest possible figure, without the context -of builders having to work around the working staff, Lords and MPs, which is always the most expensive way of doing any building work- and then have a rant about politicos, quangos and the waste of the tax payers money…
June 26, 2015
When faced with a guesstimate of £7b that on past experience will only grow and will not add anything at all to society or the economy, what else do you expect.
The question is why the managers of the country could manage their own buildings effectively, they should never have got to the stage of needing such costly work unless they were not maintained properly.
There will be no ROI on this expenditure so what should our priorities be. At that kind of cost level they should look seriously at alternatives from existing office buildings to an entorely new build, all to house how many people – 1200 or so?
June 23, 2015
Indeed as you say “a good time to launch a plan to raise quality and productivity throughout the public sector”. Also to stop them adversely affecting the private sector’s productivity as they do endlessly.
The scope to do this is clearly massive. Start by firing the circa 50% in the state sector who do nothing useful or worse spend their time inconveniencing the productive.
June 23, 2015
Possibly the best engine designer we in the UK have ever produced was reported to have said ,” Engine development is a sign of failure of the initial design”. Although he was a friend he never said it to me.
To understand productivity you should look at it’s proponents in Japan, namely Toyota, Honda, Nissan, et al. The initial key that unlocked their talents was a thesis by Professor Deming. Look him up if you need the details. Predictably his ideas were ignored by the British, European, and American motor industries with the historical results most of you have witnessed. The Japanese realised that he had something useful to say, adopted his principals and the rest is history. The Brits, Europeans, and Americans eventually got around to playing catch up as did the 1001 suppliers to the car plants The latter being the real motor industry whereas the car companies are largely assemblers.
The Deming ethos eventually found it’s way into all branches of manufacturing industry. I remember being surprised by a cement manufacturer I found myself sat next to on a plane to the USA telling me that his plant was now run according to the tenets of QS 9000, this being the direct result of Deming’s thesis.
The tools are there for all to see so it is incumbent on the ministers and management of public services to ensure that they are taken up in the public sector. Our hospitals and railways might then prove as reliable, efficient, and cost effective as your everyday Honda Accord.
June 23, 2015
ISO 9000 is a tool that provides assurance to an organisation that it can produce rubbish, but consistently, if it wants.
It also provides scope for endlessly diverting staff into ‘training’, ‘certification’, ‘assessment’ etc. It is one of the best tools going for reducing the productivity of the civil service whilst pretending that ‘capital’ has been created.
Politicians should note that when they ‘vote’ money to the civil service they expect it all to be spent; there is therefore no incentive to ‘come in under budget’.
June 23, 2015
Indeed come in under budget and they will snatch it all back and give you less next year to boot.
Can you deliver/invoice before the year end is still a very common request from the state sector.
June 23, 2015
Largely right on ISO 9000 too.
June 23, 2015
What a load of codswallop
June 23, 2015
I have an MSc in ‘Demingology’ and have had civil service training in ISO 9000 and budget management.
The civil service bids for money and parliament ‘votes’ it and expects it to be spent, (otherwise it could have been spent elsewhere).
The civil service was in the forefront of imposing standards such as ISO 9000 on its suppliers but was slow in adopting it for itself. The procedure is then to write down what is currently done and then provide ‘assurance’ that it will be done every time; no room for improvement as it cost too much to write up the original procedures. Then the staff is trained to assess someone else’s procedures, of which they know nothing; boxes are ticked, nothing changes.
‘Deming’ works fine for manufacturing, unfortunately a lot of civil service is really insurance in disguise. Manufacturing can do ‘just in time’ against customer demand, try doing ‘just in time’ against unpredictable ‘black swans’!
June 23, 2015
Jap crap…and then suddenly it wasn’t. Deming from the USA certainly influenced that and ultimately gave birth to ISO 9000 and more here. For ministries it was kicked off in the mid to late 80’s and remains in various forms.
Much of it is office procedural and to some extent did a good thing in reviewing extant processes. Perhaps they were known as tasks/SOPs originally. Trouble was that such processes merely replaced tasks and changed where change was unnecessary. Some good people involved but too many paid big lip service. I think it was a consultants money spinner largely and some from the USA, particularly where Stores was renamed Logistics.
With the Americans hanging around so much it would have been an ideal time to align general/technical standards between the US and UK. Nope! So obvious things like units of measurement could be unified did not happen. Etc ed
June 23, 2015
You are right about Deeming, who preached the gospel of continuous improvement in manufacturing activities.
Re the comments of your engine designer friend, these discount the potential of new technologies and the learning curve to make improvements to an existing product. And not all new engines have worked out as their designers hoped; a notable example was the Leyland 500 series engine, successor to the 400 series, which proved such a disaster in service that customers deserted the product and it had to be canned.
June 23, 2015
He was new technology and had a record of supreme excellence second to none.
June 23, 2015
It’s a shame your comment attracted such ignorant responses. You are quite correct that the Japanese built on Deming’s work to achieve their breakthroughs. Shigeo Shingo presented his Lean concepts as a development of work started by Frederick Taylor in the US and the Gilbreths in the UK, and developed by Deming.
Most of the work on Lean was done in my lifetime and I learnt it well after my formal education ended. I think people too easily dismiss things as rubbish if they weren’t taught them at school.
“Without control there can be no Kaizen”. In most UK organisations, especially in the public sector, the efforts at making changes are wasted because there is no proper management control. If you have control you can make a change from one controlled state to the next and evaluate the effect of the change. If you are running out of control then all the efforts at improvement are wasted.
As an example a local maternity unit has management obsessed with “change” but they are losing staff at an alarming rate, especially the experienced ones, and covering with newly qualified overseas staff that stay for a year or so before continuing their travels. This results in an operation that is borderline safe. Without stabilising the basic operation with proper staffing and skills levels the efforts at “change” are just causing further loss of morale and people.
June 24, 2015
Certainly agree about the impact of Deming , though I though he was an American.
Deming certainly had a big impact on software development along with the “Mythical Man Month”, particularly for critical systems such as in telecoms. Designing quality into the product from the beginning rather than rely on inspection, address TCO rather than just the sale price, continuous improvement and having everyone adopt responsibility for product quality were key factors in building low defect, complex systems. Without such an approach I doubt we’d have the quality of global mobile telephony and internet we have today.
Unfortunately, as in so many fields good things get perverted and jobsworths seek to control and exploit them for their own benefits. It doesn’t detract from the positive benefits from Dennings ethos but has needlessly added to the cost and bureaucracy.
June 23, 2015
Very fair comments, but you seem to forget a dimension of the problem. Again and again, governmentS, public servants and MPs (who could be thought in charge of “monitoring” the process) have been shown unable to do so: the Blue Streak missile system in the 1950s, Concorde in the 1960s, the poll tax, SERPS in the 1980s, Child Support Agency, the ERM saga, the Millenium Dome, the Capita/DfES in the 1990s, the IT-related mess in the Child Tax and Working Tax Credits, the Assets Recovery Agency, the Rural Payments Agency, the IT-related (again) mess in the National Insurance Recording System, MetroNet, the ID card project in the 2000s, and all the next ones that will come to the surface when the next edition of “The Blunders of our Governments” (A. King & I. Crewe, 2013) will be written in a few years’time.
In a large number of the cases above, even if the waste is squarely put to the debit of the public sector, it is often created by the deficient interactions between “inexperienced” public servants and private companies, which bamboozled them into more and more expensive contracts to provide fewer results than promised or in most cases plain failure.
And the role of the MPs? Very little beforehand, and the Public Accounts Committee, Public Administration Committee or the Public Services Select Committee when it is far too late.
So is it really necessary to crow about the obvious efficiency of the private sector?
June 23, 2015
Spot on.
June 23, 2015
I would like to ask you this: has anyone ever looked at the salaries for the top administrators of the Public Sector? And the golden handshakes, or the silver farewell? If I were a person in the public bureaucracy, then I would be certainly aiming at becoming a very fat cat who did little actual nursing, social work, tax collection, learning a foreign language or reading Flexcit on a massive, unearned salary which took me away from “the coal face”.
I reckon that in every Department of the Public Service a copy of Parkinson’s Law ought to be provided for every single employee.
And that goes for the Pilgrims too.
June 23, 2015
They do not need to read Parkinson’s Law they live it out every work day!
June 23, 2015
Generally speaking, the workers in the public sector spend their time implementing government policy. That is at best “a horse designed by a committee”, at worst a set of measures designed to win political advantage rather than to run the country efficiently.
When in the Commons you next ask for increased public sector productivity, look around at those who will be designing how to do it.
But do keep asking.
June 24, 2015
Indeed but usually a horse designed by several competing and arguing committees, and all with different and conflicting political agendas.
June 23, 2015
Productivity could be increased at a stroke by sacking the unproductive 50% who make life positively miserable for business and public alike. We seem to have whole departments dedicated to immigrants and climate change. We also have the reduction of services rather than culling staff to save money
Recently I had an operation in our local NHS hospital. I have never seen so many staff wandering about with folders. The experience of the private hospital was eye opening. As soon as a bed became empty the lot was gutted by nurses ready for the next patients.
We get very poor value for the taxes we pay.
June 23, 2015
But the immigrants you mention get VERY good value for the taxes we pay. One payment to a trafficker and they get a free life till they drop dead. If THEY can get a whole life of house, money, healthcare, schooling for the umpteen children – -and eventually a pension – just for getting here – – why can’t WE get the same value? Oh I forgot – our govt only see US as a cash cow.
June 23, 2015
I was reading an article yesterday which said that absenteeism and days taken sick are significantly higher in the public sector than the private. If true there’s an easy route to increase productivity by tightening up the rules.
June 23, 2015
Maintaining development and competitiveness are critical factors in staying afloat ; underlying this is the prerequisite of training . The Public sector is very protective of its numbers and needs to be put under the continuous scrutiny of outside observers . Apart from the one-time problem of the Unions ( mainly put to bed by Margaret Thatcher ), the private sector uses outside scrutiny and keeps itself in trim ; sadly , this is not true in the public sector . There are huge savings to be made and the Government should not drag its feet in making swingeing cuts .
June 23, 2015
“After making the Commons speech I found the figures for public sector productivity.”
Any chance you could provide us with a link or reference?
June 23, 2015
You only have to look at the BBC and the NHS to see how wasteful the “public” sector is. I worked in the BBC in the ’70s and even then was appalled at the wilful waste which nobody worried about. As the saying goes “it is so easy to spend other people’s money”. It is time for both these organisations to be broken up in some way and sold off so they have to take responsibility for earning their money and spending it wisely.
They are all mirrors of the EU. Nobody bothers about money or where it comes from when it is given and not earned. A recipe for disastrous corruption and dishonesty.
June 23, 2015
Plus if you muck up at the BBC up you used to get a £1M pay off too plus an absurdly generous pension.
Nearly all at the Beeb seem to be rather dim, Guardian think, pro EU, greencrap, art graduates, who would command no more than about £50K in the private sector – at best – and rather less than that in Manchester or Salford.
June 23, 2015
We need a new way to measure public sector performance. The preferred measure on the Left tends to be the amount of money that is spent on it!
A much better way would perhaps be for the OBR to come up with some metrics for each public sector that would measure performance (it sounds like this may be happening already, but being kept quiet?).
It’s great that JR found this data after some digging, but this should not be so hard to find. Quite the contrary, it should be regularly reported.
June 23, 2015
First things first…. 1,970 local councillors in London in 2014. Some areas have as many as 4.3 councillors per 1000 residents. Others 1.3. The ratio varies up and down the country.
It would be unkind, unfair and unjust to do a Mikado on them and put them on a list and say “none of them will be missed, none of them will be missed “. But with voter turnout of less than 16% in some cases and, 30% heralded as democracy in practice it can be seen customers are not beating a hot path to their shops.And some of them would certainly not be missed. In that they are known to exist at all.
It will not surprise anyone when I say that many individual councillors have pet projects in their areas and despite all considerations ( public money ) fight for them and win.
Get rid of at least one third of councillor posts. A democratic-deficit resulting? Hardly. And if there is , then it will enthuse the majority who do not vote to go to the polls for the ones remaining or, not. A win-win scenario.
Some Labour Local Authority bosses are likely to instruct managers to come up with cuts in departments and areas such as care of the elderly and disabled provision and present the result to the public to show how the Tories in Government are (very bad ed). And then foxily weave some temporary fix to “save jobs” and “our values”, costing in the long-term even more money.
The key to increased productivity is the minimizing of what passes for local democracy. Ending the farce of so-called Arms Length Management Organizations which are not arms length at all and are wasteful.
Naturally, the productivity of the public sector, does not end with the curtailment of fake local democracy. But it is a start.
June 23, 2015
The key difference between the private and the public sectors is that the former must seek continuously to improve the products and services it sells to the consumer – or risk decline and failure. The public sector all too often appears to exist to serve the producer interest; a state of affairs that can be blamed on the absence of competition. That is the reason the word “privatisation” is regarded as a dirty word in those circles that feed on and depend on the public sector and, ultimately, the taxpayer.
June 23, 2015
But another key difference between the private and the public sector is that the former generally has much greater freedom to choose its customers.
State schools can’t refuse to take children who don’t speak English and have much more difficulty freeing themselves from awkward children and their stroppy parents; the police can’t quietly discourage the kinds of customers they would really prefer not to have because dealing with them is excessively wasteful of resources in one way and another; likewise doctors and hospitals can’t turn away people because as customers they would be more trouble than they would be worth; even local councillors, and MPs, have some kind of duty to respond to all the people living in their constituencies even if they are timewasters.
Reply Private sector shops and restaurants etc have to accept any customer who turns up as well.
June 23, 2015
Mostly true, although even they can try to operate in ways which tend to deter people they don’t want as customers and attract those they would prefer to have. But anyway that’s only part of the private sector. The point is that much of the public sector is under a statutory duty to deal with all comers and has much less scope for cherry picking those who are less of a drain on resources while excluding those who are nuisances.
June 23, 2015
Too much of the public sector are monopolies, with little or no competition.
June 23, 2015
Some truth in that. It is clearly far easier to run a private school, with motivated parents and where you can get rid of any disruptive pupils.
June 23, 2015
JR and Denis,
Some sectors in the private ownership haven’t increased their productivity either. Jump in a taxi, for example, and you’ll need one driver and one cab to make exactly the same journey in almost exactly the same time as it took 50 years ago. There’s just not much scope at all for extra productivity. Sat navs and better roads will have just a slight beneficial effect.
So we have to look at typical jobs in the public sector and see if they are more prone to this effect than typical jobs in the private sector. Is it possible to introduce technology to have fewer teachers, fewer policemen, fewer nurses etc and not have worse outcomes as a result?
Reply The fuel efficiency of the taxi has improved, and the taxi may now offer better service in other ways.
June 23, 2015
While agreeing with your basic point, public sector productivity cannot be compared to manufacturing. It has to be compared with private sector services. Manufacturing always has higher productivity growth – one reason for maintaining this sector wherever feasible.
June 23, 2015
I’ve always found empire building inherent in the public sector. More staff means your own job is more important.
June 23, 2015
Indeed it’s all about empire building and the egos of the managers in charge who in many cases would face shelf stacking if forced to relinquish their state supported comfort blanket.
I wonder how many millions of gallons of diesel are wasted every year – all the non-essential public servants driving about clocking up mileage at 50p/mile.
Higher budgets and more staff mean they are more important and have greater job security. A friend of mine tells me that each year he has to make sure he spends every penny of his departments budget often when it is not needed.
Otherwise next years budget gets cut.
He is never short of stationery…
June 23, 2015
Before I retired I worked in the private sector for 35 years and then for a government agency for 10 years. I was horrified by the low productivity of the department for which I worked for the last ten years. In fact the department of some thirty people could have been reduced to a couple of people and have been more efficient as a result.
Examples
When my boss left the department I had the job of clearing out his files. A large number of these were project files covering dozens of projects. For each of these a monthly report was produced and distributed to a wide circulation. Most of these reports simply said no activity this month, project not started. These reports had been produced for a number of years.
The department had two people located in each region of the country. These simply duplicated each others work. They also travelled to a central location every few weeks to review and co-ordinate what they were doing with the other regions.
This list could go on and on.
June 23, 2015
One major problem, which I have a tendency to mention every time you talk about public sector spending, cuts, and so on, is waste in the public sector which clearly negates positive productivity figures. This waste goes right to the very top level. In fact in most cases it starts at the very top level. Building new buildings on the cheap leads to expensive maintenance and repair costs. Waste. Awarding 10-year contracts to very clever businessmen who shaft the government and string out jobs whilst being paid a daily rate. Waste.
Another example. 10-20 tons of fuel a day, plus food, wages, and other expenses to provide a free ferry service to illegal immigrants is wasteful. Especially considering the cargo is going to incur further costs when it is kindly dropped in one of our EU partners’ back gardens and we have to contribute directly or indirectly.
I thought part of the reason for the HoL was to enable the Govt to appoint successful private sector people to assist and advise with this kind of thing.
June 23, 2015
I would think HMS Bulwark consumes about 5 tonnes per hour of diesel. The County Class destroyers used about 15 T/hr on full tilt. Much of it is for power generation.
June 23, 2015
Surely the government have it running it on wind turbines and PV cells now -to be consistent with their absurd greencrap agenda!
June 23, 2015
Having seen you appear on Daily Politics today I was interested to see you supporting the idea of taking even more people out of income tax.
I have posted before that I think this is a profoundly misguided policy for a Conservative as the more people taken out of tax the more will vote for increases in state spending because there will be no personal consequences if they do so.
Surely it would be better for everyone in work to pay some element of income tax, however small, ( say at the old 10% rate ) , to give them a reason to keep taxes low ?
Reply Not if you then at the same time pay them tax credit top ups. The system is currently very complex and the Conservative aim is to simplify without cutting the incomes of the lower paid.
June 24, 2015
The trouble with skewing the tax system to favour low pay is that you incentivise business to split full time jobs into part time ones. Why shouldn’t even the lowest paid make some contribution to society ?.
The business I know when a full time worker leaves is hiring part timers as replacements – they are cheaper and easier to part company with
Employer and employee then don’t have to factor in paying national insurance and income tax on 16 or 20 hour contracts…and often receive top up benefits so it’s a win win.
June 23, 2015
People who have used the “pension freedoms” introduced by George Osborne have generated an extra £150 million of direct tax revenue for the Government already. Assuming that half of the residual gets then spent on VATable goods and services, that is potentially another £52.5M of VAT income for the Government.
Well done, George, and it is not surprising that the Government is so keen for the uninformed to use the new facilities, with not a small benefit to the private financial sector.
Just a question, who is really benefiting from this freedom?
Reply The people with the pensions savings. They don’t have to exercise the freedom if they do not want to!
June 23, 2015
This was the whole idea in giving pension freedom. My colleague has been taxed at about 30% on his £90,000 pot (after the lump sum) and he will have to reclaim any overpayment next April. By the time it’s spent and you include VAT the government stands to collect about 50%.
June 23, 2015
reply to reply
Pension “freedom” like “freedom” to buy your Council House. Both fine if you don’t then blow the proceeds and feel “free” to go back onto state coffers later. At least get people who blow their pensions to sign away their right to top-ups later!
June 23, 2015
With the Libdems no longer in a position to stay the government’s hand,will we finally get to see the bonfire of the quangos(vanities?)or will we be forced to conclude that, actually,Cameron likes things as they are?
June 23, 2015
If you want a more reliable comparison of productivity growth in the private and public sectors then I think you have to look at cases where the same activities are being carried out in parts of both. For example, have private schools improved the productivity of their staff while state schools have not done so?
June 23, 2015
Excellent points in the euro finance debate today John. Hilarious how so many MPs from pro euro parties are upset with EU. Great point from SNP Peter Grant about Luxembourg having a vote on common fisheries policy!
June 23, 2015
One way in which the public sector is improving productivity quickly is in the area of, that horrible word, enforcement. In particular, the area which annoys me is car parking with licensing computer checks and heavy handed removal. Recently, a pensioner in Kent was caught driving when his old driving license had expired at 70 and he had not received a reminder, as he had moved house. He was given a week to get a new one and, as it involves checks and an online application did not meet the deadline. Very efficiently, they took his car, which was in good condition, and crushed it.
On my way to the shop today I noticed a notice stuck on a little car which I think is owned by a student. It is in good condition and licenced. The notice from the Council said ‘This car appears to have been abandoned- contact us within 7 days or it will be removed. It is parked legally, licenced but they think it looks abandoned! The student may well have been away, as courses often involve travel and practical work. I often leave one of my cars for over 2 weeks when traveling. The arrogance of these officials seems to increase and the powers to allow them to take property, charge and fine is handed to them without any democratic debate.
This sort of public enterprise actually cause negative growth but at the same time is environmentally damaging, as to take the car a crush it means that another will have to be bought and manufactured, creating as much CO2 as 4 years of use.
June 23, 2015
Tell me what is classed as a product these days. State work ,that is public sector work is where my heart lies . It was always about a more noble cause, dedication, altruism and finer ethics.Money was rarely talked about; it was vulgar. What a change now; it is all about money and there is something ingrained in me which finds it distasteful. I suppose it is the residue of Victorian work house values where we were lucky to be alive and fed, yet can people be products? What is more I feel a sense of pride in the past although it was hard.
The endless fights and petty snobbery to own a better car ( a more powerful exoskeleton) to purchase a better brand ( to demonstrate a little more power ) I find silly, but selling our stuff is productivity .’The Death of a Salesman ‘ always touched me and now the salesman seems to have become the product himself. Ironically Marilyn Monroe was definitely metamorphized into a product and look what happened to her.
June 23, 2015
While we are on this subject, it is a good time to remember that regulators don’t produce anything at all. Whatever happened to the bonfire of restrictions that we were promised? The Conservative Party is now governing on its own; no more excuses.
June 23, 2015
I hear the Houses of Commons needs five billion pounds worth of work. Why doesn’t the British government save all that money by shutting down the commons and sacking all the MPs. Since all UK law is imposed from Brussels, it seems that UK MPs have no purpose at all beyond making British people think they still live in an independent country.
Get rid of it! We don’t need 650 pointless troughers and their hangers on! You know it’s true! I know it’s true! The only people who don’t know are deluding themselves!
Thank you
R
June 23, 2015
How productive is the EU? It costs a fortune and apparently produces nothing but problems.