We can’t afford to cut the public sector
Bubble — By Paul O'Shea on April 2, 2010 7:00 am
Stop me and buy one? No thanks - we can do without the double dip
THE COMING years present us with many challenges and in Wales we are going to face our fair share of difficulties as we tackle the long term impacts that the recession has brought us. The next Welsh Government budget will signify the start of a period of austerity, but we must do everything possible to ensure that the vulnerable in our society are protected and so we must make certain that our public services in Wales are appropriately funded to deliver.
However, let’s not forget that it was not the public sector that took us into recession. It was the irresponsibility of so many in the banking sector who led us to where we are.
But public services are the foundation of a fair and civilised society. They protect the vulnerable, extend opportunities, and improve everyone’s quality of life. They are essential to our economic development and prosperity. They strengthen our communities and bind us together as a society.
Indeed, public services and public service workers are already on the frontline of recession. We’ve seen a marked increase in demand for debt counselling, housing support, employment advice, community finance and help claiming benefits. Meanwhile, social services and voluntary organisations are responding to the rising incidence of mental illness, relationship breakdown, and homelessness. The NHS continues to ensure that those facing reduced income or unemployment do not lose their entitlement to healthcare, despite the increased dependency upon it’s services at this time. Schools, colleges, universities, career advisors, training and adult education providers are providing support for people to ensure that they have the information and skills they require to find work.
And don’t believe the misinformation that it’s just the private sector that’s been hit so far. The Wales Audit Office recently reported that the public sector in Wales has continued along a path of business as usual – that the economic downturn has not made a jot of difference to the way that the public sector has been operating. The report suggests that somehow the public sector has, to date, been immune from financial pressures faced by the rest of society, that the public sector has been a beneficiary of the luxury of ever increasing budgets and that now it is time for the public sector to sit up and take their share of the pain.
So, with this in mind, maybe it is difficult to explain the pay freeze that public sector workers are facing despite the rise in living costs and the spate of huge public sector job loss announcements, with headline figures predicting public sector job losses in Wales in excess of 10,000 over the next three years. As a consequence, it is not so difficult to explain why public sector workers and public services users have taken to the street in a number of local authorities in Wales to protect frontline services and protest against funding cuts and privatisation, and why vacant positions are not being filled leading to more work for less people.
The Wales Audit Office report recommends that the public sector should be operating in a similar vein to the private sector. That unemployment has, apparently, not been as bad as anticipated because of the take-up of more flexible working including job share and part time working – a workable practice for the private sector which has seen a decrease in demand for commercial goods. Applying this to the public sector, however, does not work. If you are a social worker, a dinner lady, a teacher or a refuse collector it is not possible for you to just pack up and go home mid way through your working day. The public sector has been a lifeline for so many during this difficult period.
Furthermore, the argument within the report that Wales has a relatively high proportion of people employed in public services is misleading. Yes, 24% of our working population are employed in the public sector – which in percentage terms alone is high. In reality, however, Wales has no more public sector workers per head of population that England, but we do have a much smaller private sector. We need to focus upon growing that to balance the picture. Also, it is worth noting that the UK spends less on public services than France, Germany, Italy or Sweden.
It must also be pointed out that, in fact, public sector job losses may cost the economy more than it would for that individual to continue delivering public services. The CIPD has warned that every redundancy creates £16,000 in extra costs, in addition to undermining morale and productivity. Research shows that it costs almost as much to place someone on benefits as it does to keep them working, paying taxes and delivering public services. In addition, for every pound spent by the public sector, 64 pence is recycled to local businesses which supports the regeneration of local economies.
We need to think long term. It would be foolish to slash and burn to balance the books now. We need to think beyond that. We need to work to ensure that we do not again find ourselves in this situation which has allowed short-term profiteering and widened inequality. We must ensure that we do not return to business as usual. We need to build a fairer and more sustainable economy for the future: a future that does not allow the unregulated pursuit of private profit by a wealthy, powerful minority.
In contrast, public sectors workers are not well paid. The majority earn less than £20,000 per annum – a sharp contract to the City bankers, many of whom have received bonuses in excess of £1 million. Worryingly, we are already seeing a trend back towards fat bonuses being handed to bankers which, despite being heavily taxed, would be life-changing sums for many families in Welsh society. And, more worryingly still, we are seeing these bonuses being defended.
However, we are not naïve enough to think that public services don’t have a part to play in reducing the deficit. Of course public service workers know that they are not immune and despite this they will continue to work diligently to support those that need them. We need to ensure that we get value for money from investment and nobody could argue with that. We need to ensure, however, that the Welsh Assembly Government does not see outsourcing or management consultants as part of any solution.
There is far too much evidence that demonstrates that outsourcing is not good investment, that it is a waste of money. We need to ensure that public services are kept public to obtain the best value for money possible; value that retains quality in delivery; value that puts people first. We need to consider alternatives, such as raising taxes. Not an easy decision, but the facts show that 53% of the public believe that the government should raise taxes rather than reduce spending on public services as a way of paying back public debt.
We also need to return to notions of real collaborative working through which we can take advantage of economies of scale. We know that 22 local authorities with 22 education departments and 22 social care departments is not the most effective way to deliver service and clearly savings could be made by collaborative working in these areas.
In addition, billions could be raised by ensuring big companies and the super rich pay a fairer share of tax, perhaps a windfall tax on banks and oil companies. Furthermore, axing ID cards would save huge amounts and scrapping Trident alone would save us £72 billion. This is what we would hope. However, reports indicate that city bank bonuses will continue to rise this year. The Centre for Economics and Business Research said that payouts could hit £6 billion because of rising profits and less competition. Excessive bonuses have been cited as one of the causes of the world economic downturn, as bankers in the UK and beyond took greater risks driven by potential reward.
But it would seem that lessons have not been learnt, and that yet again the wealthy in our society will continue to prosper while public services – and the people that use them – will suffer.
- This article is based on a speech delivered by Paul O’Shea to the Bevan Foundation’s One Wales, One Year to Go Conference on March 19
Tags: banking, cuts, economic recovery, Economy, local government, public debate, public services, public spending, recession, trade unions
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24 Comments
“Indeed, public services and public service workers are already on the frontline of recession”.
Just who are you trying to kid, Paul?
According the to most recent employment statistics, private sector employment has fallen by more than 4 per cent since the beginning of 2008, while the public sector has expanded by almost 6 per cent.
Over the past year, some 46,000 jobs were created by the state whilst 527,000 jobs were lost in the private sector.
http://www.statistics.gov.uk/pdfdir/pse0310.pdf
By all means let’s have a debate on employment and economic policies and whether you believe that the public sector should be safeguarded. In fact, make the case that the Labour Government has made the choice, rightly or wrongly, to protect those working in the public sector at a time of recession.
But don’t try peddle the line that the public sector has suffered as a result of the recession when the facts show the exact opposite. That undermines your whole thesis on the subject.
“In contrast, public sectors workers are not well paid. The majority earn less than £20,000 per annum – a sharp contract to the City bankers, many of whom have received bonuses in excess of £1 million”.
There are few would disagree with the premise that bankers’ bonuses should be curtailed but that is an erroneous comparison.
Instead, you should be comparing the average working person’s annual salaries in the public and private sectors. For example, consider WAG’s own statistics
http://wales.gov.uk/docs/statistics/2009/090429sb272009en.pdf?lang=en
which show that those with degree level qualifications in the public sector are paid 11 per cent more per annum than their equivalents in the private sector (36 per cent of those in the public sector have degrees as compared to 15 per cent in the private sector).
In contrast, the private sector in Wales pays workers with no qualifications £20 per month MORE than the public sector. This means that the pay differential between the most qualified and least qualified in the public sector is 24 per cent higher than in the private sector.
Surely, given the fact that two thirds of public sector employees are union members as opposed to a fifth of private sector workers, this issue should be the main issue for UNISON?
Therefore, let’s have a real debate on the role of the public sector in the economy of Wales. Indeed, such a debate is vital if we are going to emerge out of this recession with the minimal amount of damage to the economy, but let’s make sure that such a debate is based on facts.
Thank you for this timely, well written and informative article.
It puts paid to the much disseminated myth that 70%+ of employment in Wales is in the public sector and highlights the fact that most public service jobs are paid at well below the UK average wage. It also reiterates the fact that the problems with the Welsh economy are not due to the public sector but to the extremely poor performance of the private sector exacerbated by the chaos in the banking/financial sector.
Of course there is waste and inefficiency in public services but that is because it is run and managed by people not machines. This is infinitely preferable to the idiocy and greed bordering on criminality shown by the casino gamblers in the City.
Rightly or wrongly, one of the sentiments that resonates most with voters at the moment is why should we, whether we are public servants or in business, be paying for the mistakes and excesses of the banks. As this article says, it is not the public sector (or small business) that has driven the economy to this precipice – it is the financial sector. The NuLabour government has been and still is complicit with this and must pay the penalty at the election booth for its failure to understand, predict or regulate.
However, it should not be the Tories that benefit as their answer appears to be a too simplistic attack on ‘waste’ in the public sector and a too hasty attempt to pay back a deficit and outrageous interest on this to unnamed and unknown creditors. This is not a solution it is an ideological reaction.
As we have written in several articles in Cambria Politico, the way forward is a total restructuring of the financial systems that underpin business (and therefore jobs), introduction of US or Irish model credit unions and to go back to making, building and selling things (business) even if this requires emergency ‘New Deal’ type public works programmes (to help reduce unemployment ). To accomplish this inevitably requires more devolution of powers (even federalisation) which, if you like, can also be called ‘independence’ and should result in more localised control within Wales and by the people of Wales.
What a superb article. It recognises the real causes of the financial crisis.
It’s remarkable that this article effectively is Plaid Cymru policy. Cutting trident, cutting ID cards, windfall energy tax, curbing bonuses, reforming the funding to Wales.
Considering Plaid were once allegedly not welcome at the TUC, it just shows how things can change.
It’s also extremely welcome that the TUC is now one of the driving forces behind devolution, when in 1997 parts of the left were lukewarm or reluctant about it. Again, things change don’t they!
The Professor wrote …Therefore, let’s have a real debate on the role of the public sector in the economy of Wales
By all means there should be a real debate on this but surely what is needed is not more statistical debate or blame laying . What is needed is action and pragmatic solutions because at the moment there is a total paralysis in the economy and government with all politicians attempting to stay on message and trying to save their troughs oops sorry careers.
As I said above the private sector must take blame for their own problems. There are too many poorly managed, poorly funded and poorly marketed businesses in Wales. A ‘good business’ will be running properly and doing making things that people want to buy irrespective of the ‘economic’ infrastructure.
Welsh government should not really be involved in business support, it has a very poor amateurish track record in this and has allowed a grant addiction mentality to fester . It has had to become involved because it is the only ‘trusted’ channel through which EU funds are allowed to pass. It has attempted, with very limited success to regenerate the Welsh economy in its passage from heavy industry and manufacturing to other types of business. However, the methods they have been using is not how real ‘regeneration’ can come about and the proof of this is all around us, in that Objective One has not delivered meaningfull success in terms of improving Welsh economy and instead of acting as a channel for EU funds the public sector has aledgedly become the beneficiary. It is an indictment of the economic departments of the WAG over the years that they have not, through idleness ignorance or lack of vision, adopted or studied successful models of economic regeneration that can be found in the US and other developed economies where there are clear cut ways that the ‘public sector’ can support the business environment without getting involved in trying to teach people how to do business.
My main argument with Tories, like the ‘Professor who shoots from the hip’, is their constant championship of the concept of the ‘entrepreneur’. In my view, the very last thing we need is more ‘entrepreneurs’. Most of the good qualities now attributed to an entrepreneur are already embodied within a ‘good business person’. Many of the attributes that make up a crooked fly by night Del boy chancer character are also found, in possibly greater degree, in so-called entrepreneurs. When it’s all hands to the pump you want a footsoldier with you not an entrepreneur who will probably attempt to sell you the bucket you are using. Finally, on a controversial note, there is not an HR department in the land that is not secretly down scoring individuals who profess to be ‘entrepreneurial’! It is more prevalent than ageism.
When people like Dylan and others from New Labour/Tories/Lib Dems talk about cutting waste in the public sector, they all target the same groups in their political spin: local government and civil servants. This is not because they are any more inefficient than other areas of the public sector, but because the public percieve them in a dim light when compared to nurses and police officers.
As a local government worker and Unison branch officer, I accept that there are savings to be made in my vocation. Yet, the constant attack on council workers from all British parties is soul destroying for so many low paid employees who I represent. I wonder how many of these very affluent ministers and political scribes have done a bin round on a wet Monday morning, cleaned out public toilets after a hectic Friday night in town, or had to deal with impossible choices in a child protection case.
When they make these throw away remarks about cuts, they are actually talking about people’s lives, often workers at or just above the minimum wage-doing jobs that no-one else would even contemplate. The point Paul is making is that cutting crucial services in these jobs will not only hurt the employees, but also the most vulnerable elements of society who rely on them. The cuts are too large and too fast to avoid hurting the vulnerable, but the British parties skip over this issue in their tasteless scramble for Middle England votes.
So far, I have found the election debates from these parties thoroughly depressing, and sincerely hope that if there is a hung Parliament, Plaid and the SNP do hold them over a barrel and give at least some protection to our most vulnerable.
As Ian seems to be getting on his high horse about this debate, let me repeat what I said again as he seems to have missed the point.
“Those with degree level qualifications in the public sector are paid 11% more per annum than their equivalents in the private sector (36% of those in the public sector have degrees as compared to 15% in the private sector). In contrast, the private sector in Wales pays workers with no qualifications £20 per month MORE than the public sector. This means that the pay differential between the most qualified and least qualified in the public sector is 24% higher than in the private sector.”
So what exactly has UNISON done for its lowest paid members who are doing these minimum wage jobs that no-one else would do? Very little it would seem.
Public service – remember it’s paid for by the wealth creation of the private sector.
In Wales its easy for the WAG and the Assembly, they can squander the Barnett income any way they like.
They don’t have to build and support a thriving economy to pay for it.
Paul, as a trade union official will rightly make his priority jobs, pay and benefits, and argue to protect them.
Where he says: “But public services are the foundation of a fair and civilised society. They protect the vulnerable, extend opportunities, and improve everyone’s quality of life”, fundamentally he is very right.
However here in Wales and to a lesser extent the rest of the UK , public services have become an out-of-control parasitic monster. They no longer support society, they are living off it. Costs have escalated to the point where the intent to provide the basis “of a fair and civilised society” has been perverted. We are simply spending too much, running vast empires of bureaucracy who try to do and control everything.
The vulnerable (old, sick and poor) are NOT being adequately protected, resources frittered away, and wasted on political flavour of the month ideas. The monies and manpower to provide essential front line support diverted to higher up the food chain. Worse, many decent honest citizens have been damaged by an overbearing bureaucracy and officialdom.
Red Tape, officialdom delays, and cripplingly high taxation strangles development, destroys opportunity, puts people out of business, and is seriously damaging every one’s quality of life.
We have to pay for our public services, but what we can afford depends on how much we earn. Surely the priority has to be wealth creation. After all, without money, there will be no public service.
Public services must not be our master. They are here to serve us. We should dictate to them, not them to us.
It really is time for a root and branch overhaul. Jobs will go in the public sector. Unfortunately, they have to.
Hopefully we can rebuild our private economy to give employment to those who leave, and eventually create a better wealthier Wales.
I’m going to attempt to get past some of the sweeping generalisations made by Llewelyn and get at a valid point that lies in his comment.
“In Wales its easy for the WAG and the Assembly, they can squander the Barnett income any way they like.” You need to be paying more attention to Assembly matters. It isn’t easy, and there certainly isn’t enough of it to squander these days. Argue the merits or otherwise of specific projects or spends, but don’t bracket it all together and put it down to some kind of institutionalised frittering.
Paul isn’t the only person arguing against big public sector cuts. Philip Gibbs, who manages Jupiter’s Financial Opportunities fund, which has returned around 800% since its launch in 1997 and gained in 2008-09 when all other funds were being hammered, last week warned that steps taken by western governments to control sovereign debt risked adversely affecting earnings outlooks and bank asset qualities. We also need economic growth to repay our debts (well, the bank’s debts), and you don’t get that if you are putting loads of workers onto the dole. And if we don’t pay our debts, we won’t be able to borrow.
To grab up all public sector services and label them as parasitic needs answering. Go tell that to the minimum wage care workers in Neath Port Talbot the next time they march for their jobs – and the people they look after. This, together with other assumptions made above, lead towards a private-sector-good, public-sector-bad opinion position that has, quite incredibly, gained some currency among voters. There is a perception that this New Labour experiment has failed, so what we need instead is a neo-Thatcherite approach (forgetting, of course, that the country was in recession more than it was out of it during her tenure).
There is much to argue against in the way that New Labour, both in Westminster and here in Wales, has created and then managed the public sector. And yes, parts of it are parasitic, most notably the mandarin class of highly-paid officials that have followed the private sector lead in remunerating themselves extravagantly for a job poorly done. It is my belief that this must be addressed most urgently within the Welsh NHS, but there also needs to be a debate about why so many of our leading local authority executives are on six-figure salaries.
People like Paul (I know, because I’ve heard him speak on the subject) have argued until they are blue in the face that if there are to be cuts, savings, efficiencies – call them what you want to call them – it should be directed from the coalface, by those who deliver the services, day in and day out. They are the people who know their jobs best, can identify duplication and so on. However, if the public sector is left to itself to make the reductions with minimal political input, we could end up with a ridiculous and unacceptable situation where very well paid officers preside over a much-reduced service that fails to deliver. If politicians are unwilling to take a lead in directing this, there is no way that these officials will cut themselves out of a job (even though, as my father used to say, you don’t make savings by firing the secretaries). Even though that, both those on the left and the right of this argument agree, is where the waste is perceived to be.
One last thing. I will no longer tolerate private sector evangelists lecturing the rest of us on what is good for the economy of this country. It wasn’t the public sector that got us into this mess. It was the insatiable greed of unfettered capitalism. if you care so much for this country’s economy then physician, heal thyself. Begin the debate on how banks are to be regulated, how its senior staff must be brought to book, what deterrents we must put in place to make sure that never again should care workers in Port Talbot be threatened by irresponsible billionaires. That is the result, and everyone – but everyone – knows it is wrong.
Whether we can or can’t afford to cut the public sector isn’t the point. Whoever wins the next election is committed to cutting the public deficit. There might be arguments about timing but no serious politician in the UK is arguing that the public deficit should not be cut. As the IFS points out the difference between Labour and the Tory plans is about 0.6%. Paul O’Shea quotes with approval research from the CEBR on the banks. Perhaps he should also have read their press release on the recent budget where they argue that the Chancellor’s growth figures are too optimistic and ‘much more pain will be required to get the deficit back to a sustainable path.’
Anyone who argues that the deficit can be reduced by a combination of efficiency savings,collaboration and the cancellation of ID cards and Trident just isn’t living in the real world. ID cards will only save about £55 million and major spending on Trident will not occur until the end of this decade when a decision whether or not the submarine platform will have to be replaced will be required.As for collaboration it can bring savings but it also often needs initial capital investment and savings often take years to be delivered. Unfortunately time is something the public sector hasn’t got at the moment. Politicians might talk about efficiency savings and protecting frontline services, but at the end of the day all the evidence of past efficiency drives suggest that only half the potential savings are ever made. This is because of the decline in productivity in the public sector. Half the cost of the public sector is in the wage bill. As the Audit Commission in England pointed out last week, efficiency savings means cutting the pay bill.
The Assembly will have less money over the next two Assembly terms than it has had over the first three. It will be up to the Assembly to decide where the cuts will fall in Wales. If they decide to protect health and raise education spending by 1% above the increase in England it will mean larger cuts in the unprotected services. The IFS is talking about potential cuts of nearly 25% in the unprotected services.
In a mature democracy we should be a having a debate about where spending priorities should be and which services should be cut. If trade unions and others continue to stick their heads in the sand then as Mark Drakeford quite rightly argues the cuts will be made by civil servants and senior officers. As a result of the credit crunch the public sector and in particular local government faces its greatest challenge since the 1930s. A challenge made worse by the increasing demands on its services, the pension time bomb and the costs of introducing equal pay.
It really is a time to get real. Speeches about changing the Barnett formula and cutting Trident might win applause from an audience often made up of individuals who have never had to make a decision in their lives. But they contribute nothing to the real debate that should be taking place. Instead of criticising organisations of the right such as the IOD and Taxpayer’s Alliance who have produced a list of possible cuts, the progressive left has to engage in the cuts debate. Arguing that there should be no cuts and frontline services at all costs have to be protected is not a credible alternative. The Left has to admit that money has been and is continued to be wasted in the public sector. It should be a debate in which at all levels of the public sector nothing should be ruled in and nothing ruled out.
In Ireland public service salaries were reduced by 5 to 15% to achieve a quarter of the 4 billion euros (3.58 billion pounds) saved in last December’s budget. The Irish government agreed with trade union leaders on Tuesday that it will not cut public sector pay further for the next four years to try to avert strikes and end work-to-rule protests.
But the cut-backs have helped Ireland to win back investor confidence compared with other heavily indebted euro zone members, and opinion polls have shown little sympathy for any escalation in a series of low-key protests.
According to Reuters, the lead negotiator of the trade unions’ umbrella group said the deal offered a real chance to end the disruption, which has consisted of refusing to answer phones and early office closures, following on from November’s one-day all-out strike. He expected all unions would put the agreement to a ballot. “The outcome presents everybody in the public service with the real possibility that we can find an alternative to the industrial conflict that has dominated the landscape in recent months,” the Irish Congress Of Trade Union’s (ICTU) Peter McLoone told national broadcaster RTE.
We look on with interest in the private sector. In this sector, “reality” means you engage with insolvency law if you cannot pay your way after, of course, taxes are paid to keep public services afloat.
Yes, I believe in scrapping Trident at £72bn. But what do you think we should do with it, pay all the 22 local authorities departmental heads a million a year?
I believe we should try and save people’s jobs, especially those most expendible at lower pay scales. The way to do that is simply not ‘freeze’ public sector pay, but halve chief exec’s and dept heads pay. It’s up to the local government minister Carl Sergeant. Local government is devolved to the Assembly. The newspapers should be looking for lack of political will here.
“However, let’s not forget that it was not the public sector that took us into recession.” I agree but it will not the public sector that takes us out of it either.
What I see all around me is the public sector stifling the wealth producing private sector. For instance, public leisure centres, can private ones compete? Roadside maintenance services, why not private business? Many other examples…..
Guess who partly administers the EU convergence programme? Yes, it’s councils. What a farce. The convergence programme is there for the EU’s poorest regions to increase GDP through wealth creation. Seems all the recipients or much of them are mini-quango service providers, sowing a seed……not here.
The power of the local government sector in Wales should be reduced and more to the Assembly itself which unlike local govt has a mandate given by the people to govern. This will create more oxygen for the wealth producing private sector.
A little case study. I know a young entrepreneur at local market, all she made all day was £6 a couple of weeks ago, I felt really sorry for her. There are many like her. Small businesses and entrepreneurs trying to independent. Yet I see greedy men taking time off work and begging for more dosh on the public service strike, who get a regular easy pay packet. Something wrong here.
“We look on with interest in the private sector. In this sector, “reality” means you engage with insolvency law if you cannot pay your way after, of course, taxes are paid to keep public services afloat.”
We have public services to protect the vulnerable and the poorest society. We direct taxes into them because we know capitalism does not provide for those people.
“There are many like her. Small businesses and entrepreneurs trying to independent. Yet I see greedy men taking time off work and begging for more dosh on the public service strike, who get a regular easy pay packet. Something wrong here.”
What is wrong is the connection. That your friend decides to take her chances as an entrepreneur and it isn’t working out has nothing to do with public sector workers who strike because their employer is trying to renege on previously agreed working conditions (and, worse, do it under a cloak of making efficiency savings in an attempt to win public opinion for what it is doing).
Which way do you want it?That we give support to your friend? How will that be done? Through public services, such as business support? I can’t see the private sector giving it’s backing. Your friend is losing money because there is no demand for what she does, not because of a “stifling” public sector.
Dylan accuses me of getting on my high horse, yet on reading his response, he is using statisitics to prove what exactly? He is not comparing like with like and so with respect Dylan, your figures mean nothing. Sadly, he has jumped on the current Tory bandwagon of attacking the public sector and trade unons, in the hope that linking the two will bring electoral dividends. Just to prove the fun that can be currently had with employment statisitics, did you know that the inflated salaries of the top earners in the Government bailed-out banks are included in the public sector salaries?
I have never stated that there should be no cuts in public sector spending and accept that it is inevitable. The point that I am trying to make is that the cuts are coming too fast and too large to avoid cuts in crucial services. Also, the perception of the members I represent is that the banks and politicians in Government created this mess, yet the bankers are now once more receiving bonuses and politicians are ‘protecting’ these individuals as otherwise they will move abroad. Many of these well paid financial advisers have the public sector as an employer, yet are professionally advising the richest in society on how to continue their £120 billion in lawful tax avoidance. These individuals gained most from the boom years, yet are now sheltered from the consequences of their investments. If their tax loopholes were squeezed with a little more zest, then the oncoming cuts may be a little more manageable.
Jeff Jones yet again speaks a lot of sense when it comes to the public sector but Jeff, the issues of ID cards, Trident and other spending committments cannot be treated in isolation to the current crisis. They will not solve the debt on their own, but they would make a difference and also send a message out to the public that all avenues have been explored, in dealing with the financial mess we all face. Also, you have a dig about fair funding not being relevant. But in fact it is fundamentally important to the future direction of the Welsh economy and if implemented, will also enable Wales to create a economy that would hopefully not fall into the trap that the UK has done.
I am a Unison officer who will be called upon to negotiate cuts in public services in the nest five years, the like of which I have not seen in my lifetime. I still do not believe that the public have yet grasped the enormity of what will be foisted on them after this May’s elections and it concerns me that so many politicians appear to make glib comments about cutting crucial public services without understanding the true implications.
We do realise that glib comments do not help and your points are heard by those who sympathise. Without seeing the economy at the top of the agenda in elections and the real position understood – Wales will go nowhere. The public understand superfical empty publicity seeking vote winners who will be left shining up policies on anti- capitalism or Union bashing. That is why the public distrust politicians. The lack of congruency is tangible. The public understand that without a job for them and their children, hope will be lost.
The private sector understands the importance of protecting the vulnerable. The NHS is a cornerstone of society but without resources we have a problem. Trust of public services is essental.
Unions like the TGWU played a great part in the economy especially in the automative sector. To change the words – ” The pursuit of economic growth to provide for all is not a dinner party,not an essay,nor a painting,nor a piece of embroidery…”
Excellent first comment by Duncan, almost as strong as the article itself! I find it harder to stomach Jeff Jones’ points, and I disagree with them strongly. To quote Mark Drakeford and then argue for the left to support cuts is misleading, when a speech by Drakeford (obtained from the Compass wales blog) clearly says that the whole cuts debate is extraordinary and that the banks are entirely to blame. “Nothing ruled in and nothing ruled out” is simply not a left or progressive position. We simply have to rule in frontline health services if nothing else. If you want to cut everything and quote the IOD and taxpayers alliance then fine, but please don’t dress it up in the clothing of the left. I am more concerned that alot of Jeff Jones’ arguments, on various subjects, seem to consistent of trying to attach progressive credentials to essentially centrist viewpoints. Doing this without balancing the argument with an exploration of why the deficit is so high, is misleading and contentious in my opinion.
It’s also surely time to stop the private vs public sector confrontation. It should be a reciprocal relationship. Yes, the taxation of the private sector pays for the public sector, but the public sector is all that ensures our countries are civilised, regulated and managed. Markets don’t have morals. The public sector enables the private sector’s existence by supplying graduates, skills, and infrastructure which the private sector can’t be trusted to build without profiteering. PFI is a case in point.
Along the lines Duncan argues, who is going to care for the elderly disabled person when there is no profit in it? Even if that person has contributed to the private sector all his/her life, there is no guarantee that their pension will even be delivered. How many pensions have been lost to market failure in the last 10 years? I want a larger private sector in Wales, but there are some aspects of life it cannot and should not be involved in. As recent history proves, if there is profit in cutting corners and undermining safety in all kinds of services that have been privatised or marketised, you can expect that to happen, not all the time, but enough times to make privatisation a very bad prospect for vital services.
Finally, the centre-right insists on attacking the public sector even when the economy does well. New Labour’s attack on the civil service compensation scheme, was drawn up before the global economic crisis and before the recession, as where their controversial plans for welfare reform.
Given that the Assembly will have less money in the next two terms perhaps Comrade Luke could outline where the Assembly should start cutting. To keep on chanting the mantra ‘the banks are to blame’ is not much use to those politicians who have the task of actually deciding how a diminishing pot of money will be spent. The simple fact is that the deficit cannot be reduced without real pain. Marx quite rightly argued that if you wanted to change the world you had to look at it as it is. Unfortunately too many on the Left, by living in a fantasy world are conceding the argument to those on the right who are quite happy to cut the public sector for ideological reasons.
Some of us still remember the 1980s when some very intelligent individuals thought that the revolution would occur if you sold a certain of newspaper, collected petitions and chanted ‘nationalise the top 200 companies’. In reality, of course, the real revolution occurred because the antics of the infantile Left allowed the Tories 18 years of government. Unlike some of the contributors to this blog, I have lived through a period of public sector cuts and even had to take decisions which implemented those cuts. It isn’t easy and made much much harder the longer the decisions are postponed. I’m afraid that not every penny spent by the public sector in Wales provides value to ordinary citizens. I find it extraordinary that anyone can argue that no money can be saved from the health service budget in Wales. Despite all the money thrown at health, productivity is falling. This didn’t matter when public spending was rising although it did mean that services didn’t improve to the extend they should have. But as Prof Colin Talbot quite rightly argues: “When budgets are being squeezed, the results of fantasy efficiency games will prove painful – services will undoubtedly get worse. It might suit the politicians, and they are all at it – to claim that they are just making ‘efficiency savings’ while ‘protecting ther frontline’. We will soon realise just how much flannel that is. So the first time round it was farcical, this time it will be tragic.
Finally before anyone continues to criticise the plans that Neath and Port Talbot Council have put out for consultation for the future of residential care in the borough could I suggest that they first read the report that is on the internet and which went to the local authority’s cabinet in January of this year. It’s easy to criticise, much harder to find a solution which will improve a service at a time of public sector cutbacks.
Worth reminding ourselves who are keen on this discussion of the recent Wales Audit Office Report and new Auditor General:
“Public services are facing their biggest challenge for at least a generation. The figures in this report show that public services in Wales face significant reductions in their budgets in the coming years. Although the exact scale remains unclear, a real terms reduction of around £0.5 billion a year seems likely and significantly
sharper reductions are not unthinkable. My message is that while public services will experience considerable pain, they need to ensure that their response is strategic, systemic and based on sound analysis.”
But public services need to move beyond being alert and start to take action now. Public services are
going to have to deal with major change very soon. Our experience suggests that public services tend to
change incrementally over time. But if they carry on with business as usual, they will simply run out of
money. Change will come one way or another. The challenge will be getting those changes right with
good planning and timely decision making.
Public services need to start preparing themselves for the coming changes immediately. That means
looking at different ways of delivering services with a focus on new and innovative ways of working in
order to maintain and improve outcomes for citizens. It also means using evidence to identify priorities
and refocusing resources away from non-priority areas. Just focusing on costs is not going to be enough.
Arbitrary, top-slicing of budgets could make the impact of reduced income very much more detrimental
than it needs to be, because it takes no account of the priority of services and the impact on those who
need public services the most.The lessons from our work over the past five years show that public services will need to base their responses around:
* a sustainable strategic approach that is well thought through, based on sound analysis of
evidence, links financial and delivery planning and sets out a robust approach to measuring
progress towards outcomes;
*an approach to collaboration that is focused on delivering shared outcomes from a citizen
perspective;
* a mature approach to risk that balances the need for robust governance and management with
the need for public services to take calculated and well-managed risks in order to change and
improve services;
* getting the best from the many people who work in public services, including flexible and smarter
ways of working; and
* a more comprehensive and radical approach to efficiency that focuses on innovation and
improving outcomes rather than just cost-cutting.”
I wonder if the advice is heeded. Welcome to the real World WAO and as most of us have worked in the private and private sector I agree with the author. Superfical comments will not convince the voter or those who look on disbelief as the rhetoric continues and when we cannot afford services that the public deserve.
Roy,
I only wish that the public sector was capable of reacting swiftly on the suggestions you have made but sadly, this is not the case. WAG spent £100 million from reserves last year to give councils a year’s grace, but few if any have woken up to the wave of cuts coming their way. While some councils have the ability and financial flexibility to cope to an extent, many Welsh councils are facing financial meltdown, due to their inability to cope with sudden change. Of course the London politicians are aware of this, but it is not the message they want to portray during an election campaign.
Jeff is correct about the potential savings in the NHS. Just because it suits some politicians to talk about protecting certain areas of the public sector, the reality is that if they can save money without cutting primary care, then they should do so. If there is wasted spending anywhere in the public sector then it should be re-directed, wherever it may be. I would however warn against rushing to privatise and outsource as a short term solution. Priavte firms will indded provide a service and charge less, but what they do not mention is that they charge say 75% of the cost for 50% of the service. I have seen cases where the service has been slashed and the private sector staff are paid on minimum wages and have no training. The council saves money, the contractor makes a fortune and the vulnerable ‘client’ gets an inferior service. When you are poor, unwell and isolated, who is to know?
Interesting…approx. 70% of public sector workers (at least in local government and the NHS) are women…yet all the comments on this story are by men.
Perhaps we’re too busy delivering the services to have time to comment? (sent on my extra Easter day off)
Would be good to see an article on WalesHome.org covering the lack of women commentators/authors?
Hi Katie
It wouldn’t be right to suggest that WalesHome.org lacks women contributors. Around 40% of our contributors are female – not quite parity but not bad, either.
I think I’d also take issue that the defining feature of the comments to this column was the fact that it is (apparently) male dominated. I’d suggest that few those leaving comments work at the coalface of public service delivery. I’d like to see more comments and indeed columns by people who do, regardless of sex, and indeed from a wider spread of backgrounds and occupations. We try to widen the platform all the time, but we’d be kidding ourselves if we imagined we had achieved that sort of reach yet.
The Auditor General and Head of WAO was quoted above the post, is a currently held by a woman and was highly respected for her view in the discussion.
Wales Home is known for providing a wide, diverse view – welcomed by most.
Ignoring the comment about men Welshkatie has raised an interesting point about the effect of cutbacks on female employment given the number of women who work in the public sector. The figure is about 73% compared to 41% in the private sector and 49% in the economy as a whole. In some areas of the UK over 30% of the employed workforce are women who work in the public sector. Redundancies amongst these female workers will have a devastating effect not only on family incomes but also on demand in the local economy. In a number of families it could mean the difference between being able to continue to pay the mortgage particularly as interest rates start to rise again and losing the family home.
There is also the interest point of whether or not female managers/politicians in the public sector will have different priorities to their male colleagues when it comes to the cuts agenda. There is one Welsh authority where the senior management team is dominated by women and it will be very interesting to see the approach adopted by this authority in the next few years.
Having paid today an additional £45 today to take the ferry from Calais with my family because SeaFrance was on strike (and now faces bankruptcy because the union would not adopt new workrules and forego a €100 bonus to help a company that lost €40 million last year and €13 this year), I look at bloated, unresponsive tone-deaf unions and wonder are they really willing to kill the company (or public sector) to make their point?
I took the train yesterday in NL across the country (same distance as Cardiff to Paddington) for £30 and I bought the ticket the day of my departure and arrived in less than two hours despite changing trains three times! When BA cabin crew went out on strike twice because they would not make their pursers actually work on the flight and reduce costs in an airline that lost £440 million pounds, I have to ask, are the lunatics running this asylum?
The 70% public sector get their annual raises and bloated pensions while the rest of the private sector suffer from their strikes? That will not curry much sympathy in most private sector households. I just watched the NUMMI plant (Toyota/GM joint venture that opened in CA in 1984) close and GM (even after bankruptcy) lose $4.3 billion dollars. Why? Because the unions will not lift a finger to make the system work better. They will not lift a finger in the public sector here to remember the first word in their title is ‘public’ and they serve us, not we their paperwork.
Maybe when that changes and council managers are paid living wages instead of mid-six figure luxurious packages for no results, Mr O’Shea might garner some sympathy.
Denis,
So it’s always the fault of the unions/employees and never the fault of anyone else? How very broad minded of you.
Where did you get our ’70% public sector’ figure from and and what annual rise are you talking about? My pay is being cut this year.
Spend a week working in the public sector in a job that no-one else will do, on the minimum wage, being slagged off by politicians. Then please feel freee to re-write your thoughts.
Denis, it really isn’t that black and white.