Author: johnredwood

The collapse of public sector productivity in the UK is a national disaster. Productivity was down 8.4% on 2019 levels. It was down by an alarming 18.5% in the Health Service, which has received large increases in funding over the last five years. It is still not back up to 2019 levels.Government has expanded the public sector whilst allowing this collapse. This has resulted in record levels of taxation and huge deficits leading to big increases in borrowing. It is a simple case of poor public sector management.

There is no shortage of managers, as there has been a rapid expansion in their numbers to preside over and help cause the productivity drop. Their salaries and pension plans are much better than in the last century. Some of the worst managed parts of the public sector have been misled by people on more than £500,000 a year. Take the case of HS2. The job of CEO is to spend public money on building a new nationalised rail line to time and budget. There is no need to manage passengers and collect revenues, just spend well.

The result has been mega salaries and bonus for overrunning time and budget massively. Or take the case of the Post Office. CEOs paid more than £500,000 pay and bonus. They presided over losses running up to £1800 m. Worse still they falsely accused service managers of fraud and theft, leaving taxpayers with a huge compensation bill and some of their staff gravely damaged.

When I was a Minister I used natural wastage to slim the organisation. It worked better with fewer.

Old initiatives rarely die in the public sector, they just get shifted to a less prominent location. The culture of collective judgement and responsibility leads to overmanning and frequent changes of leadership on projects and activities. It creates inefficiencies and ensures no one is to blame if it goes wrong. When activities are contracted out there are quite often savings of 10-20% despite the need for the private sector to make a profit.

We’re not buying it.

The MOD is bad at buying things though weapons procurement is a major part of the budget. The Ajax military vehicle should not have posed big problems as it relied on conventional technology. Yet £3bn into the programme only a few vehicles had been delivered and there were quality and design issues that needed sorting out. How come so many intelligent and well paid procurement managers allowed that? Why was no one in charge who could create a good outcome? When government wants something new to happen it is often best to set up a new task force led by an outsider.

The development of  covid vaccines was based on just this model. It does not always work as it needs a good leader with Ministerial backing. The construction of the Nightingale hospitals needed Ministerial and military assistance and leadership. The NHS then did not make use of them, preferring to close down non covid activity to keep covid cases in general hospitals. Why? The idea of specialist covid places was a good one to contain infection

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The enthusiasm for too much regulation in recent years has burdened us as taxpayers and as consumers as we pay for it. Some of it is wasteful and needless. Take the paperchase when someone buys a home. If they are paying with a deposit saved in a UK bank or building society why is there need of anti-money laundering paperwork, as the bank satisfied itself of their customer and can see the taxed income that provided the savings coming into their account. AML controls should be for the minority that pay in cash or draw on a foreign bank.

Having a driving licence and a utility bill does not prove someone with exotic sources of cash is not a money launderer, so in the minority of cases there needs to be a proper examination.

The Bank of England is the biggest loss making public sector institution by a mile. According to the OBR at budget autumn 2024 they will lose £240bn from end 2022 to the final run off of their bond portfolio. Why are they allowed to lose such huge sums? The Treasury and taxpayers have to send them the money for the losses and Chancellors approved the original bond buying. The European Central Bank made a similar error in buying too many bonds at high prices. It has loss containment policies which mean it will lose far less proportionately than the Bank of England.

The rail industry is largely nationalised. It is heavily loss making and needs big subsidies and borrowed capital. When train company franchises end their activities are nationalised. The high cost tracks, signals and stations have been long nationalised. The nationalised train companies do not perform better for customers and taxpayers than the private ones, and often perform worse.

Why can’t public sector management of a monopoly system do better? Throughout the public sector there is need for fewer but better managers. There is need for good bonuses only paid for good delivery. There is need to mentor and train Ministers to take an intelligent interest in management of their departments.

They should be criticised for allowing bad productivity. In the industrial businesses I have led I always found a limited number of well-paid good people was best. Quality and efficiency are two sides of the same coin. Getting things right first time matters. Honesty and quick remedies are essential when you get something wrong. Learn from your mistakes, design error out and always put customer and service users first.

Labour under Tony Blair was good at spin. Keir  Starmer’s team is hopeless.This  week saw a too stupid by half briefing against leadership challengers spectacularly backfire as Wes Streeting  tackled it head on and came out stronger. The public wants the PM to stay at home more and solve the big problems. Making the toxic atmosphere of the advisers the issue is a disaster.

The big difference between government and Opposition is Ministers own the actuality. Opposition can describe a world as they want it to be, and set out  how they  might get there. Ministers own the current facts. If they cannot defend them  then they need to make urgent changes and quickly show they are starting to work. On first coming into office maybe for a year you can blame inheritance, but a year on you have had plenty of time  and resource to change things for the better.

There will be more alarums and undermining of the PM all the time he fails to change key areas for the better. He promised smashing the gangs. Instead illegal migration has risen a lot. Instead of strengthening the law he repealed tougher measures the Conservatives were belatedly  bringing in.

He promised ending cost of  living pressures. Instead he has put inflation  up from 2% to 3.8%. He has fuelled inflation  with increases in managed fuel and water prices and big public sector lay  awards.

He promised no big tax increases. He instead put a big jobs tax on via employers National  Insurance, and is now threatening an Income Tax hike.

He promised faster growth and more jobs. Instead unemployment has risen  sharply to 5% and last month the economy contracted.

He cannot spin his way out of these truths. He needs to stop people near him talking about a Labour civil war and get on with practical measures to right these obvious wrongs  He owns higher taxes, higher borrowing, slower growth and more illegal migration. When will he make changes that tackle these big issues?

The government’s worst mistake as it surveys the damage it is doing to our economy is thinking an EU re set will boost growth. As the EU is making  clear, any attempt to get closer to them would come on their terms. It would mean us paying big bills to them. It would mean us accepting their laws on many matters. It would mean even higher carbon taxes and dearer energy.

They want us to pay  £5 bn a year to have a chance to bid to supply them with some weapons. They want us to surrender the Turing  scheme which helps UK students to go to a university anywhere in the world, and to go into Erasmus to pay  for more EU students to come to the UK at the expense of the freedoms of UK students to go to non EU universities.

They insist on us joining their carbon market to impose a still higher carbon tax on everything we do. They want us to impose big tariffs called a carbon border  tax on imports from outside Europe, making things dearer. They want us to accept a lot more younger migrants into our country, who may come with the need for subsidised housing and free public services. They require us to accept their rules  over farm products and will impose a charge for supervising our food trade.They have demanded many more years of taking too many fish from our waters, stifling the UK fishing industry.

None of this would make us better off. Linking to a slow growth protectionist customs union gave us dire growth in the last decade. Their rules make them uncompetitive   with the USA and China. The OBR should mark down their forecast of growth for the re set policy.They should add in around £10 bn a year more cost and lost activity.

There is one simple word for Ministers to use for every one of the EU’s demands. It is No. When I was single  market Minister No was in constant use as we had to fight off  so many costly and damaging proposals.

Many of us forecast a rise in unemployment.Three months of undermining confidence last year was followed by a tax raising budget. Telling us all the  UK economy was in a dire state and nothing worked was followed by a swingeing tax on jobs and a large hike in the minimum wage.No wonder job vacancies tumbled and companies  decreased their workforces.

When you are in government you own the government actions and administration you inherit. Talking it down depresses staff and annoys the voters who want government to manage it better and be positive about what they manage.The government has had plenty of time to change things that were not working well Pity they changed them for the worse.

One of the reasons there is a new black hole in the finances is the big rise in unemployment, now up by a quarter from the low in summer 2024. Two  of the big successes of the previous government was the near halving of unemployment during their time in office, and the introduction of Universal Credit to make it more worthwhile to work . This governments failure to extend this to disabled and to help  more people into work has led to more public spending on benefits . Granting too many sick notes for life, benefits without  the need to look for work, is ballooning the costs.

The government should worry about the self employed, hit by IR35, higher National Insurance and more regulations. They should be concerned about small business, put off employing people by higher taxes and the new Employment legislation .Government says  it wants cheaper energy, so why press ahead with the extremely expensive renewables and more grid plans?

We still need a growth plan. We need a productivity boost in the public sector, and policies for cheaper energy and less migration that work. more unemployment is the last thing we needed, but it was baked into the disastrous first budget and into much of the preparation for the second.

Facts4eu and GB News have recently published charts showing the big increase in government spending in recent years. Here is my take on the numbers and their revealing findings.

In 1996-7, the last year of Conservative government before the Labour landslide win, the UK public sector spent £314.7 bn. (127 page 1997 budget book). By 2010 when Labour left office spending reached £671 bn (260 page 2009 budget book). Annual government borrowing rose from £33 bn   to £175 bn.So spending was up 113% in cash terms and borrowing up 430%.

Inflation ran at 27%, so spending was up 86% more than prices.

In 2023-4 spending hit £1190 bn with borrowing at £159 bn, so the Coalition and Conservative governments put up spending by 77% and borrowing down by 9%. Inflation ran at 50% so spending was up 27% more than prices.

Rachel Reeves has put spending up by a further £88 bn this year, with borrowing planned at £118bn but in danger of over running.

So we see this century the public sector got a large real boost in spending power under Labour, helping the  financial collapse in 2008-9 when government and private sector borrowing was excessive. It got a further boost under the last government averaging almost 2% a year after allowing for inflation. What austerity?

The truth is the explosion of spending, up  306% since 1997, has not been well spent. Lots has gone on inflated costs, low productivity, and on population growth of 20%.  Borrowing has soared , helping drive the inflation higher.

Every year since 2010 we have heard of cuts, and some cuts have been made. Yet overall the surge of spending has been relentlessly upwards , with every public sector budget and body demanding more.

If my income had been as high as £31,000 in 1997 and was now £128,000, a  cash increase of 306 %, I would have thought I had done well and could afford a better lifestyle. That is what has happened to the government’s spending multiplied by ten million, so why do  they not feel better off?

Today we remember all those who lost their lives in conflict. They died to defend our freedoms and to allow a better world. We need to remember their sacrifice.  We need to strive to defend and enjoy the freedoms they fought to preserve.

Being an MP and maybe a Minister is a privilege. Any law or tax you disagree with can be removed if you persuade enough colleagues to vote with you to get rid of it.

Being an MP also brings with it plenty of accountability for your own actions. As an MP who wanted fewer taxes and rules I was very conscious I needed to ensure I obeyed all the ones I disagreed when I could not get them changed.

I set up a system of personal diary alerts to ensure I did not miss Council tax bills, tax returns, vehicle licensing, Congestion charge compliance and all the rest.

When parking I poured over the parking rules to ensure I had paid the right amount. I worried all the time about complying with so many rules and tax requirements. I did not think I would get much sympathy if I had made a mistake, with some bound to assume I had deliberately failed to pay or comply. I avoided any error.

Labour MPs should find compliance easier, as they are the ones who campaign for more rules and higher taxes. There should be joy in their heart  that they have to pay more tax on making a profit on their home, or have to buy an expensive licence  to rent  it out. They should be model landlords always putting their tenants first if they have investment houses.

It is strange three Ministers have tripped up over these housing related issues where their government is so keen to boost tenants, regulate  landlords  more and tax people  more who make money on their homes. We know the Chancellor was well aware of the landlord licensing schemes in general as she was promoting them. We know the former Deputy PM was keen on taxing better off people with property more as she argued that case. We know the former Homelessness Minister knew about landlord regulation to stop bad landlords as she managed that as a Minister.