Category: Blog

We learn today that the £30 m a year Partnerships for schools quango was responsible for providing Mr Gove with a list of the projects that were going ahead and the projects which could be cancelled under Building Schools for the Future. This body is led by Mr Byles, on a salary of £216,000 a year.

If this body is unable to provide a simple accurate list of the new school buildings it presides over, what is the point of it? Can we please save the £30 million a year? The old system of schools working out their capital needs and then submitting proposals for government money to their paymasters was a cheaper and better one. What need have we of all the consultants, memo writers and quango kings that have muscled in on the act?

I thought Andrew Lansley’s decision to stop the £75 million a year advertising campaign lecturing us on what to eat and not to eat would be one of the least contentious cuts. On Friday night the Any Questions audience, egged on by Margaret Hodge and John Harris from the Guardian, contained many who felt this was crucial to our survival as a nation. In their world people will eat the wrong things, get fat and ruin their lives, unless a caring government spends some money on telling them they should not do so.

I explained that the government was inviting the food and retail industries to spend some of their large advertising budgets on consumer advice on healthy diets and lifestyles, as some already do. This was a blue rag to the socialist bulls. The laughed and scorned the food and retail companies, and argued that you could not trust such institutions to undertake this crucial public interest role. They seem to imply they don’t mind if their consumers become fat and suffer the consequences of poor diet and cannot be trusted.

I pointed out that food manufacturers and retailers in the UK produce a stunning choice of foodstuffs in a wide range of outlets. I could have added that in many places now there is 24 hour access to good quality food in the stores. Choice, keen pricing and high quality have resulted from the competition we enjoy.

A part of the audience was underwhelmed, claiming to dislike the very shops they rely on for their daily bread and milk. It is their money and their choices which sustains the successful larger chains. Those chains keep close to the opinions of their customers, and are happy to include health promotions, and community good works in their approach.

Cancelling the government advertising would make a modest contribution to sorting out the deficit withough losing something of value. Margaret Hodge was unable to answer two simple questions. Why did obesity rise under Labour if these ads were so useful? How many people do what a government ad tells them to do, unless it is reminding them of a legal duty with penalties for non compliance?

Last night I was not surprised by the arguments used by Margaret Hodge and her Guardian helper. Labour have gone straight into the public sector Union trenches. They plan to fight every cut, and make any discussion of improved public sector economy or efficiency into the actions of unacceptable axemen from the “Condems”, as they unkindly call the Coalition.

It was as if the last thirteen years had not happened. There is no sense that they left things in a parlous financial state, not even a memory that their last act in office was to pass legislation requiring that the next government halve the deficit, mainly by revising down Labour’s own plans for substantial increases in public spending. On capital spending there is complete amnesia. The Coalition government has decided to spend exactly the same amounts on new schools, hospitals and transport systems as the outgoing government. Because this was the one area which Labour did cut, they are now up in arms about the cuts they planned but failed to specify in detail.

What did interest me was the audience reaction. There was a strong body of support for any proposition that required the expenditure of more public money. It showed that Labour will find an audience for its advocacy of higher public spending, even at a time of national financial crisis over the levels of state borrowing and debt.

The Coaliton government needs a strategy for handling this situation. I think the government must present in a calm and measured way the truth about the figures. All too many people think that public current spending is going to be slashed. They express surprise when I point out the government plans to increase this spending from £600 billion in the last Labour year to £690 billion in 2014-15, with modest increases each year. If the public sector works together and accepts these figures, it should be possible to provide a good level of public service in all the important areas. There is no need to cut schools or hospitals or policing by 25%. There will be even more money for these core services, if there are 100% cuts in needless, wasteful and less desirable spending of the kinds we have often talked about on this site.

The government also needs to come up with some answers on its school building programme quickly. Many of us are happy to see an expensive and cumbersome way of building new schools swept aside, as Michael Gove has done with the Schools for the future programme. What we need to see is what projects we will then get for our money and how he will allow or approve the building of better value schools. I appreciate work needs to be done to sort this out, but Labour will occupy any vacuum, play on any uncertainty in the meantime.

The endless rows over “cuts” at a time when public spending continues to rise in cash terms highlights yet again the totally different approach to public service by the private and public sectors.

In 2008-9 many private sector companies faced declines in their revenue of 25% or more. This was all far more horrific than the cash figures for the public sector this year and next. I do not recall these companies appearing in the media telling us they would have to take lumps out of their service to customers, identifying in public ways they could make their service or product worse, or proposing strikes to complain about the loss of public revenue support.

Instead they got on with the difficult but essential task of bringing costs down to meet the reduced revenue. Managers and workers worked together to reduce stocks, cut costs without damaging customer service, accepted pay freezes or even cuts in remuneration for the bad times, lost pension benefits and bonuses, negotiated cheaper purchases from suppliers. They often also at the same time worked on how they could improve their service or product for customers.

I am pleased to see the government seeking to cut out the inessential, and press the message of value for money within the public sector. Councils, the remaining quangos, MPs and others need to learn the same approach.

I find it difficult to believe that the Anglican Church has made such heavy weather of women Bishops. They made the crucial decision to have women vicars years ago. How can they deny their female employees the chance of promotion? Today’s Synod should just get on with it, and allow any woman who is capable of doing the job to be able to compete for it.

What text from the Bible do they use to deny them? Do the so called conservatives deny the important role of Mary Magdalen in the Bible story? Do they acknowledge that women were important in the early Church, just as they are often more numerous in the congregations of the contemporary Church?

Gradually the Coalition government is restoring our lost liberties. They moved quickly to get rid of compulsory ID cards. Yesterday Mrs May announced the end to using counter terrorism powers to stop and search anyone without grounds to believe they could be a terrorist.

One of the worst features of the last government was the build up of the surveillance state, turning the cameras and state power against the innocent majority whilst claiming this was the way to catch the tiny minority who might be up to no good.

I raised the issue with the Prime Minister of the over use of guns, guards and gates in public buildings. These methods are unlikely to be effective against a determined opponent, as we have seen at the Commons. They just coarsen public life in an unpleasant way, and need to be changed.

Michael Gove was right to apologise yesterday. When he made his statement to the Commons about Building Schools for the Future he should have shared with us the list of projects affected. Where his Labour predecessors might well have tried to “bury bad news” without volunteering a statement, he correctly appeared, but unfortunately did not share all he knew. He made a fulsome apology, and took full responsibility for mistakes made by others as well as himself.

He now, however, has two other problems not covered by his misjudgement about what to say and not to say in the original statement. The first is the failure of his department and the associated quangos to provide him with accurate lists of the schools covered by the Schools for the future programme. Given the huge sums spent on the bureaucracy of these building schemes, and the generous staffing of his department and the related quangos, it is predictable but worrying that they could not supply the boss with a simple list of all the schools under the programme, and with a related schedule of which ones were currently approved for building and which were not.

This should be a timely reminder or wake up call for all Ministers. The levels of administrative and advisory competence are not always as high as they need when running a busy department. The Minister himself has to check the detail and insist on higher quality work. All the extra spending and recruitment of the Labour years has not created a more competent administration.

The second is the presentation of what the government is doing. In the statement I heard Michael Gove make he was clear in saying he was cancelling the approach of Building Schools for the future because it was an expensive, long winded and inefficient way of building schools. He did not say he was cancelling all new schools building. Indeed, if he is right and he can save substantial sums on the box ticking detailed regulatory approach of the old programme this could leave him with more moeny to spend on bricks and mortar. This message has got entirely lost in the broadcasts and newspaper stories about cuts, leading most people to think there will now be no new schools.

This needs turning round as quickly as possible. According to the figures the Coaliton government is going to spend as much on new capital projects as the outgoing Labour government. In that case they might end up building more schools than Labour for the same amount of money if Mr Gove is right about how to do it more cheaply. I asked him what savings he expected from stopping the BSF approach. He said he would write to me with the answer. The sooner I get that letter the sooner he can tell the country about the waste that is being eliminated and the extra money that should then be available for bricks and mortar.

Ministers would be wise to tone down the rhetoric of massive cuts. They need to mobilise, energise and reform the public services. Labour made clear in their marathon moan in the Commons yesterday into the early hours of this morning that they are out to talk the economy down, highlight alleged huge cuts in jobs and services and campaign with the Unions against sensible change. The government needs to be smart and careful in its choice of words to bring about the improvements in quality and performance needed.

This morning I am talking to the wider share ownership movement. We need to encourage new types of public service, where former state employees take on running their own public service. We need to offer participation in Third sector solutions to public service problems, and to use more companies to help deliver what we need.

The British debate is dogged by such a narrow definition of public service. To Labour a public service has to have state employees delivering a service free to users at the point of use through monopoly provision. Public monopoly can so often stifle innovation and give us the high costs of monopoly rather than the economies of scale. To me the provision of the daily bread, milk and newspaper is as much a public service as the local library or refuse collection. We need in each case to ask how can the public service be best delivered, where state money is involved, and find that right combination of companies, charities and direct employment which delivers the best answer. Often the popular feature of current public sector provision is being free at the point of use, which the government is pledged to keep, more than the method of delivery.

There are good people in state employment who would like the opportunity to run their own school, organise their own bit of public service, seek to do things better than they have been allowed to do under the top down state directed model of the last government. Labour last night showed in the debate they have learned nothing about to how to modernise and improve public service, still seeing it in a narrow partisan and ideological way. The one thing they are good at is running a strongly worded opposition to all change that might benefit us with better and better value public service.

On the Today programme this morning we debated the impact of public spending changes on the construction industry.
I argued that according to the Office of Budget Responsibility – and most private sector forecasts – overall investment in the economy is forecast to increase every year to 2015 from next year. Business investment will rise substantially, investment in housing somewhat, whilst public capital investment will fall until 2013 and then will start to rise again. The total figures are:

Investment
2009 – 14.9%
2010 -0.5%
2011 +3.9%
2012 +7.9%
2013 +8.8%
2014 +8.0%
2015 +6.9%

Total growth in investment 2010-15 40%
Total growth in investment 2009-15 19%

I am glad to say the others accepted that total investment is likely to go up over the next few years. They concentrated on falling capital expenditure in the public sector. The BBC’s Economics correspondent said that public capital investment was going to fall from £38.9 billion in 2010-11 to a low of £19.9 billion in 2013-14, before starting to rise again.

I said the departmental captial spending limits showed capital spending at £51.6 billion this year, falling to a low of £37 billion in 2013-14 before rising again. I could have used the gross public sector investment figures, which show spending of £59.5 billion this year, down to £43.3 billilon in 2013-14, before rising again.

The difference is important. The BBC figures are net of depreciation. In other words they take away from the amount spent an estimate of the losses on exisiting buildings and equipment from wear and tear and old age. This is not a cash item. It is an entirely notional figure. Their figures do incidentally show that despite the cuts the stock of government capital continues to rise.

The correct figures to use to assess construction output are the gross figures. This is the amount of money the public sector spends on capital spending, raised from taxs or borrowings. It is spent on new buildings and equipment.

I promised David Willetts I would review his book “The Pinch” . The sub title tells the story – “How the baby boomers took their childrens future – and why they should give it back”.

My first reaction was that he is wrong. His case that the baby boomers have amassed so much wealth in houses and pensions that they have made life difficult for their children seemed to miss the obvious point that the baby boomer’s children will benefit from their parents wealth. David argues that baby boomers have pushed house prices beyond the reach of too many young people, but surprisingly few children inherit homes because the baby boomers go on to spend the value of their home on a good time or later on care in old age. Yet I meet children whose parents pay their home deposit, children who inherit their parents’ homes, and younger people who work in the businesses and care homes that the elderly are spending their money on. One way or another the wealth of the older generation has to find its way into the pockets of the younger generation. You cannot take your wealth with you on death. Parents often remain very generous to their children long into their childrens’ adulthood. If they spend it on themselves instead, those younger people in work get some of the benefit.

My second reaction is he is right in one very important respect. The baby boomer generation has been very selfish when it comes to public spending. It was on the watch of those quintessential baby boomers, Blair and Brown, that the UK public accounts were trashed comprehensively. The baby boomers in power wanted to spend, spend, spend. The bills they have left will fall more to their children to repay than to themselves. The baby boomers treated themselves to a great party in office, and have left the bills to the generations that follow on as Ministers and taxpayers. Under Blair /Brown we were all plunged into debt to the tune of £50,000 a head if you take into account the unfunded pensions, the PP/PFI and the bank liabilities ther state took on. The state debts the boomers incurred remain for others to settle. The private debts of the boomers die with them, usually covered by the assets they also leave.

The baby boomers were not as bad as David implies. They avoided the ruinous European wars which killed so many and did so much damage to British power and wealth in the twentieth century. The boomers did not send their children under compulsion to fight. The generation of leaders who took us into the Great War of 1914-18 have more to answer for than the baby boomers. The presence of US power on European soil cemented the good intentions of the new European continental democracies not to fight each other after 1945.

The baby boomers have presided over a huge surge in income and wealth creation through their enthusiaism for the consumer and digital revolutions. It is good news that on their watch poverty in the west has been redefined from not having enough food and clothing, to not owning a car and some of the consumer durables most now take for granted.

As a keen advocate of wider ownership I agree with David in disliking the way in the last decade progress to better funded pensions for all has been aborted by the tax and regulatory raids on the pension funds. I also agree that we need to make home buying easier for the up and coming. That requires a different approach to banks and credit, as has often been described on this blog.

David’s book is thought provoking and informative. It reminds us that government decisions are often about transfers of income and wealth between the generations, seeking to help the young and the old from the taxes of the middle aged. It is a good idea to look at the wider issue of transfers between the generations and see the willing transfers that occur as well as the compulsory ones. I recommend it to readers as a useful quarry of information about social change and the Generational tussles.