Investment we can do without

Should we be giving money hand over fist to the public sector?

WE STILL don’t know the figures, we don’t know where they will be spent, when the money will arrive and what research evidence there is that it will work. What we have is a vague promise of so-called Government investment.

Not much gets through the reinforced walls of Bunker Brown these days, but Tory health spokesman Andrew Lansley’s admission that a Conservative Government would have to find savings elsewhere in order to protect health and education budgets drew the Prime Minister out into the open to go on the attack . David Cameron tried backtracking but had to let him have his couple of days in the sun before ambushing him at the despatch box last Tuesday with his own officials’ data.

Yet Gordon Brown is nothing if not persistent. He has yet to waver from stated strategy of providing funding to the public sector in order – we suppose – to push ahead with substantial capital expenditure projects and consequently steer us out of recession. Let us suppose that this is more than mere rhetoric and, in the unlikely event that Brown will be handed the keys to Number 10 (this time by the electorate), how would this work, and how would the economy derive some benefit from it?

It appears that the PM’s inner circle has yet to ask itself if placing the important task of recovering from recession in the hands of a sector that has known nothing but profligacy for the past decade would actually work. If they had paid regard to any research into performance, it would have immediately raised doubts. Earlier this month,the Office of National Statistics found that the average public sector worker’s performance fell by 3.2% between 1998 and 2007. And, while there has been a slight improvement recently, the Office for National Statistics found that their opposite number’s performance in the private sector rose by 22.8% over the same period. It means that those in private business are almost a quarter more efficient than they were a decade ago.

This led to accusations that the public sector knows nothing about solving problems other than throwing sackfuls of cash at them, but there is a more serious point here. The Sunday Times‘ economic editor, David Smith, estimated that if public had improved at the same pace as private, we would have received the same level service for just under £100 billion less than the Government plans to spend on the sector this year, some £670 billion.

It’s a truly arresting figure, but its consequences are far further reaching. What it means is that despite ONS data, the Prime Minister is suggesting is that the under-performing, over-spending public sector should be given responsibility for reparing our economy, while the far more efficient private sector should be expected to pay for it through increased taxes.

In fact, the data isn’t really required at all. Most people, from their own experience, are capable of putting a private and public sector capital expenditure project side-by-side and making a comparison. What, for example, was the difference in time from concept to completion between your local Tesco and new local school? Education institutes are no more complicated to build than superstores – in fact, less so, since there is likely to be opposition to a Tesco from a community that would welcome a new school with open arms, as well as potential conflict with the local plan. So why do the public sector projects always take longer, unless Tesco build them?

This punches another hole in Brown’s plans – will the public sector really contrive a means of ending the recession, or will it prolong it? Visit any business club or networking event around Cardiff and the air is thick with complaint over the time it takes to deal with any public sector organisation. While it is only fair to say that, here in Wales, the Welsh Assembly Government has taken great strides in streamlining business support, being fleet of foot will always remain an advantage in business, and it is hard to imagine how the monolithic public sector will ever achieve such speed – not least because many of its officers are career civil servants who have never spent a day working in private enterprise. The priorities are just too different.

However, for those who have not thought through the consequences of a public sector ‘investment’-led recovery, it’s extremely likely to be a vote winner. From the checkouts to the boardrooms, everyone in private business has been touched by cuts, and they expect the Government to do the same, and lead by example. They no longer have any faith in the public sector to deliver value for money and to increase its responsibilities without truly considering how the benefits will be delivered, nor introducing measures that punish failure as well as reward tick-box achievement, all the while expecting the private sector to foot the bill. This suggests Soviet-style  reasoning, and it could have truly frightening consequences for the British economy for decades to come.