At the moment we are being outmanoeuvred by the Tories on the PR front, as the Osborne distortion of employee ownership illustrates, and we are not differentiating ourselves in an increasingly right wing government. We need to issue two challenges, right now, in addition to the clamour around the Employee Share Ownership issue – especially with the TUC demonstration looming on Saturday, which I shall be attending (hopefully I will see other yellow rosettes there).
They are related. The first is the austerity measures translated into cost-cutting. Why does this continue to be accepted when two economics Nobel prize winners, Joe Stiglitz and Paul Krugman, and a former external member of the Bank of England, David Blanchflower, and now the IMF, are cautioning strongly against it? Who is the Treasury listening to? Why is Danny Alexander complicit in creating misery across the country instead of sorting out the bankers, who are still awful?
One theory could be that an austerity drive allows the Tories to exercise their prejudice against the public sector and downsize the civil service, which has already begun.
This is the second challenge, and we must make a stand against the culling of the civil service, which has been a (largely invisible) feature of the cuts. First of all, we have one of the best civil services in the world, despite so much meddling from successive governments, and, according to the latest Fabian Report: No Right Turn, there is an enduring public support for it.
Secondly, one of the great illusions of decisive management is to cut people in order to save money. As the West Coast Mainline fiasco has illustrated, it does just the opposite and costs shoot up while service quality drops; but that did not stop the right wingers from excoriating an understaffed and under-resourced Transport Department that has been cut by a third and not permitted to employ experts.
The civil service resource underpinning the Government Construction Strategy which will take at least 15% out of public sector projects, i.e billions, is being reduced by 20%. Why prejudice the chance of saving billions because some minister wants a pat on the back for saving a million or so? I was mortified to hear Vince Cable announce at a dinner in Harrogate recently that he was OK about the 20% cuts BIS must endure. What was he thinking? You are talking about real people’s lives here. Why create increasing insecurity in a great institution?
We must make a stand FOR the civil service, as given just half a chance they will deliver great value. I know, as I have worked among them for over twenty years.
If we do these two things we may, perhaps, begin to reverse the tide of public opinion and the likely flow of people from the party. If we don’t, we deserve to come a distant third in the next election.
* Dr John Carlisle is Chairman of Cooperation Works Ltd and The Deming Alliance, a Visiting Professor at Sheffield Business School, and a member of the Editorial Board, International Journal of Innovation Science, USA.
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26 Comments
“I know, as I have worked among them for over twenty years.”
Ah.
It’s rather disingenuous to claim that the IMF is “cautioning strongly against” austerity. What the IMF has said is that austerity has a knock-on effect, which we all knew, and that knock-on effect is greater than previously thought. That’s not the same as saying that the austerity measures are bad, or are worse than other alternatives. It’s also rather disingenuous to cherry-pick the experts opposed to austerity, when there are plenty supportive of it.
The author asks why Danny Alexander is not “sorting out the bankers, who are still awful?” The Coalition have done quite a lot to “sort out the bankers”, including the banking levy. What specific measures is the author unhappy with, and what would he prefer?
The author implies that all budget cuts to the civil service are cuts to personnel numbers, and will all lead to a worse service. I’m not sure he makes the case, other than the emotional plea that “You are talking about real people’s lives here”. Well, yes, that’s ultimately what politics is about. We’re talking about real people’s lives with pretty much everything we do, both in the short term and the long term.
This is an article which is high on rhetoric and short on evidence, argument and solutions. Much like the proposed TUC rally, which is why my yellow rosette will be staying firmly at home!
Just a few things:
1. Much of the cuts have fallen on capital expenditure, i.e. investments in infrastructure which would benefit the economy. We can all do with better transport links, for example: this kind of cutting is not just anti-Keynesian but also rather like saving money by denying your children textbooks.
2. The Civil Service will have to change given the constrained resources available to it – while I agree that Osborne has got the mix of spending cuts and tax rises wrong (and he’s taxing the wrong people IMHO) nevertheless, we are a poorer country than what we were, and the Civil Service is going to have to adapt to this.
Oh yes that will turn the party’s fortunes around…
Let’s stand up for well paid, superannuated, subsidised final salary bepensioned bureaucrats.
Quick boys man the barricades…
‘What do want? ‘A briefing paper with policy options!’ ‘When do we want it?’ ‘All in good time, minister.’
Z, I have with InterCity for five years until privatisation. The best top team ever knew. I taught on the Top Management Programme. I helped plan for a PES negotiation and worked on public sector projects for about 8 years. Is the “Ah” now addressed?
Dave Page, the austerity issue is that it is not stimulating demand, and demand is a core component in growth. I would be interested to know who the aye experts are, and how many have changed their minds. Cherry picking? It would be disingenuous to criticise the austerity policy then pick experts against it!!!!
The banks: are still not lending enough, which means they are not generating their own revenues either. There is still no split between retail and trading across the piece and regulation is not stiff enough. And then their is the Libor scandal that is testament to a lack of governance. So, I want all those implemented. And then I want performance bonuses banned – not just from the banks but everywhere. They do not help organisation performance and are ethically corrosive and divisive.
Public sector budget cuts are manpower cuts. 20% was a manpower figure. Proof of a worse service? Was the West Coast Mainline fiasco due to manpower cuts and a freeze on expert contracting not evidence enough for you?
(By the way, my name is John Carlisle. Where does this “author” come from?)
Christian: Why do you conflate investments with manpower cuts? It just does not make sense.
Dan: Just to your last sneer: A briefing paper etc. Who do think delivered the new schools on time, the highways on time, the prisons on time – and all to the right spec. Every one was led by a great team of civil servants, and would still be for the schools if Michael Gove had not foolishly dissolved the excellent Partnership for Schools organisation. Look at the facts.
Many of the cuts, as always, have fallen on local govt staff. It is where the Civil Service have passed cuts down the line. Sorry guys, a lot of people have lost their jobs, and many more will do so, esp in 2014.
Theres a traditional phrase “useful idiots” used to describe soft-lefties who can be manipulated by the far left. I am sorry its insulting but I cant honstly think of a non-insulting alternative. The best example is the way the far left have used brownites to attack blairites but its a phenomenon found throughout the labour movement.
The demo on saturday will be effectively a far left demo, led by unions they control, a few yellow rosettes will just help promote the idea that the libdems are split.
I think the Civil Service ought be downsized – the UK is one of the most centralised countries in the world with almost every government function, local or national, centred on London and Whitehall. Jobs which are not dependent on being physically located within London should be relocated to other parts of the country to save taxpayer’s money, give London(ers) room to breathe and to spread the economic benefits, with roles and responsibilities (and jobs) devolved to those Local Authorities that want those roles and responsibilities.
Hmm John … if all these great civil servants are so efficient why are their productivity levels are just 73% of the economy as a whole? So says the the Office of National Statistics (see table 2 page 9)
http://www.ons.gov.uk/ons/dcp171766_283259.pdf
Not really! Hard not to think that you’re just calling for protection for you and your own, when less well-off others are taking a serious hit. Good luck with the march, I hope it’s peaceful.
Hey, Dan. That’s what I was about to say!
It is a shame that people feel the need to rely on “clever man says” when.
The author cites two Nobel winners and one academic who also held a bureaucratic role in the UK financial system.
Even just going back to when Stiglitz won the prize there are 25 other winners (at least two are dead but more are alive pre 2001) I note it is not universally accepted among them what the solution is to the current crisis.
Blanchflower prediction:
Unemployment to top 4m
http://www.telegraph.co.uk/news/politics/georgeosborne/6224723/Tory-public-spending-cuts-could-push-unemployment-to-5-million.html
Reality:
Unemployment just above 2.5m
That is three minutes on Google. Not exactly hard to disprove.
The reason particular names (Particularly Krugman and Blanchflower) get so much press is that they are rent-a-quote types happy to make bold statements that reach far beyond where normal models would allow a reasonable person to predict.
The problem with Rent-a-Quote types is they make lots of bold predictions but are very rarely useful.
If you think you have legitimate arguments set them out, arguments and evidence.
* that should have said 23 other [Nobel Economics] winners, 25 in total.
Z – I am not and never have been a civil servant. That is why I said “among them”. I ran my own business for years that allowed me to work with civil services in the UK, Holland , and South Africa. I have at least comparative data.
Dan, do you think that civil service productivity may just be the kind of half-thought through projects like the PFI, Scottish Parliament, reorganisations that don’t work, including physical relocations, etc. And don’t mention Council tax!
Psi I was at the Oxford lecture in 2008 when Stiglitz warned both of the dangers of de-regulation and the banking collapse. So there is some cred. there.
It is disturbing that some so easily take to demonising lazily stereotyped caricatires of unionists or civil servants rather than a more considered analysis of the difficulties facing us.
That said, one of the very few things the Thatcher government did back in the early 1980s that I agreed with was bringing the unions back within the rule of law (although I didn’t agree with the spiteful motivation) because no-one and no group should be above the law. The unions are now a shadow of their former selves and it’s unaccountable crony capitalists that are above the law; it’s now they who hold all the aces. In military terms they hold both the highground and the interior lines of communication making an assult on their position incredibly difficult, all the more so when some parrot cronyist memes.
In this brave new world one of the few forces that exist to represent ordinary people against the depredations of rabid marketeers are unions. Some no doubt are loopily left wing but so what? It’s a free society and it’s up to us to make a more convincing case.
@ Dave Page – “What the IMF has said is that austerity has a knock-on effect, which we all knew, and that knock-on effect is greater than previously thought. That’s not the same as saying that the austerity measures are bad, or are worse than other alternatives”.
The damage to Osbornomics from the IMF’s latest report is far greater than this implies. The IMF used to believe that the fiscal multiplier was around 0.5 – that is to say that half of every pound spend by the government was wasted. This was, of course, the justification for Osborne’s austerity plan although it doesn’t explain why he found it necessary to target government spending with a blunderbuss when there are obvious targets where some careful pruning would yield big savings – abolishing PFI schemes for instance – with commensurate beneficial increases in the multiplier.
Earlier this month the IMF announced a revision to its estimate of the multiplier to between 0.9 and 1.7 – i.e. every pound spent leads to between a 10 pence loss and a 70 pence return. This wide range, not attributed to countries, has all the hallmarks of a face-saving formula by the IMF. I wonder how long they had to look to find somewhere a case that justified them including an estimate below 1.0 and so preserve a fig-leaf of respectability? The actual figure for Britain is almost certainly comfortably above breakeven which means that Osborne’s whole strategy is deeply misconceived – to the point of pointing in the wrong direction. The TUC has estimated that if the actual multiplier is in the middle of the IMF range at 1.3 then the damage to the economy so far is £76 billion.
http://anotherangryvoice.blogspot.com.es/2012/10/obr-imf-george-osborne-budget.html
@ John carlisle “Who do think delivered the new schools on time, the highways on time, the prisons on time – and all to the right spec. ” surely you arent claiming the fantastically wasteful BFS programme as a success?
The key error in your idea here is the assumption that all government spending is average – that because on average X pence out of every pound is wasted, that must apply to every pound spent.
In reality, the yield varies wildly between different spending areas, and the objective is to cut spending on things which show little or no return, and redirect the money to beneficial projects. Which happens to be what the government is doing. Money spent on gold-plating the compensation packages for civil service bureaucrats is largely wasted, while pumping money into the NHS and schools is beneficial.
We keep seeing this nonsense. Despite the fact that the Tories have told the media to tell you that we’re engaging in cost-cutting austerity, the reality is that the government is spending more than any time before Labour nearly bankrupted us, and continues to engage in large amounts of deficit-funded stimulus spending. We are, in short, doing exactly what Krugman says we should be doing.
@ John Carlisle
Read again, I didn’t say that the two nobel winners and the one bureaucrat have always been wrong. Krugman was critical of the Bush government’s deficit spenging during a boom before the crash and Blanchflower also raised the issue of the ability of the transmision mechanisms to pass the bursting of the property bubble across the atlantic earlier than Mervin King.
That doesn’t change the fundamentals. Just because you can find 2 Nobel winners arguing with your point of view (and in this Stiglitz is more credible as he is willing to accept more uncertainty then the other two) does not make your case right.
In the same vain not being able to quote over 25 Nobel winners does not make a case wrong.
My point is “clever man says” is a rubbish argument. Please address why you believe cuts to the civil service a re economically bad. (I still will probably disagree with you but at least it will be about the respective cases).
Probably the most influential living economist is Gary Becker but his support for an argument would not make it right, The effectiveness of economic policies is not some kind of democratic decision, What is effective is what works not what most people (even if your sample of people are experts) think will work.
Paul Barker – we may not like the idea of split being put about, but you only have to see the evidence with your own eyes. Others outside see it much more clearly! Your perpetual wish to reinterpret events (election results etc) to accord with your Panglossian view, ultimately does little to help the party’s plight.
@ Andrew Suffield
Right in general, however the government cut infrastructure first and dragged their feet with the other cuts.
PSI One of the myths of Thatcherite and post Thatcher consensus economic thinking is not just “private good, public bad”, but deriving from that the idea that private sector jobs are the ones which will create growth, not public sector ones, a view put forward by Thatcher herself and her acolytes, and is echoed now by George Osborne. Following World War 2, the prime motivator of getting the economy on its feet again was the legions of public employees in the Civil Service, local government, and the nationalised industries, the private sector could only follow on the back of that. So, there IS an element of democratic decision about economic policy, and I am surprised to hear you, as presumably a Lib Dem arguing against that. There is no alternative (about the economy and employment )was always the prime Thatcherite argument, and still is. When we finally wake up and realise that, maybe the party will start to get somewhere again!
That’s just because of how it works – a wasteful infrastructure project that has not started yet should be cut as fast as possible, because it gets harder and more expensive the longer you leave it, while cuts to wasteful jobs need careful planning and advance notice in order to ensure they are done fairly and with a minimum of harm to those affected. If you start the process for all these things at the same time, then the infrastructure ones will happen first because they take less time.
We had a bunch of wasteful infrastructure projects because Labour was quite free with the cash bribes in the run up to the election. Alistair Darling’s approach seems to have been “spending is good, any spending, I don’t care what you spend it on”.
Psi
“Please address why you believe cuts to the civil service a re economically bad. (I still will probably disagree with you but at least it will be about the respective cases).”
Disagree with this then:
The influential Public Accounts Committee praised an HM Revenue and Customs crackdown which has brought in an extra £4.32 billion in five years – 11 times what it cost.
But it said the decision to axe 3,300 posts at the same time appeared to have undermined its effectiveness and urged caution over further reductions, which meant £1.1 billion less unpaid tax was recouped than could have been.
Understand this:
The UK Civil Service employment comprises less than 2% of UK employment, and now stands at its lowest level since the Second World War. The Civil Service pay bill represents 2% of managed expenditure, with more than half of civil servants paid £25,000 or less…and while the number of civil servants has fallen, the expenditure they manage has increased.
Over 70% of civil servants working in an operational role. And this is my point : they are not just policy writers. If they go who will do the jobs? Well, in the NHS they will be farmed out to the private providers. Now who wants that among the LibDems!?
Andrew
Cost Cutting:
In a way you help make my point. Cutting costs (usually jobs) leads to increased total costs as my example of HMRC indicates. Also our civil service is at its lowest since World War Two, so why cut it further instead of creating greater efficiency and value from the work? Too much like hard work for their political leaders to think deeply about good service. Much easier just to count costs.
In Sheffield our council has been asked to find another £50 million in savings, after having already found over £120 million. They are at their wits end.
Just a final point: define a wasteful job. I will tell you one: a regulator. And another, the proposed annual appraisal of doctors. The latter will yield no useful data, will damage doctors’ confidence and will cost an absolute fortune.
One which costs more to pay somebody to do than the value of the service they perform. A lot of the paper-shuffling bureaucracy falls into this category, even today. We have this bureaucracy not because it’s useful, but because some politician in the past wanted to “address the issue” and was never called to account for whether the system they created ended up costing more than the thing it was trying to prevent.
That’s why. One way to create greater efficiency and value is to cut the roles which are doing wasteful tasks, and reallocate their funding to the parts of the civil service which are actually useful. More doctors, less forms.