Opinion: What’s a “fair” cut?

What difference does it make having Lib Dems in power? How are Lib Dems actually making cuts “fairer”? One example is what we have done in Bristol, when we reviewed redundancy terms. The statutory redundancy payout is a week’s salary – up to a cap of £380 per week – per year worked. Bristol Council had a much more generous scheme: twice the weekly salary, with no cap.

This sounds great until you look at the effects of this a bit more closely: at the bottom of the officer pay-scale the Bristol scheme was about twice as generous as the statutory scheme, but at the top of the officer pay scale it was about 10 (yes, ten) times more generous than the statutory scheme. In other words it benefited the “rich” vastly more than it benefited the “poor”. (You’ve got to be a bit suspicious of the vested interests that created a scheme like this in the first place.)

Associated with this was a problem of public perception: in recent years, rapidly increasing top-tier officer salaries had often carried severance payments into six-figure sums. Public anger at their taxes being used for “golden goodbyes” for top managers made redundant was palpable.

With savings needing to be made from redundancy costs, the Lib Dem solution was to bring all of these strands together in a way that would a) protect low and middle earners from any changes, b) eliminate “golden goodbyes” and c) free up cash that could be diverted back into protecting front-line services and front-line jobs.

The answer we settled on in Bristol was to bring in a new cap on redundancy pay at £700 per week. This would mean that people earning under £700 per week wouldn’t be touched and that the maximum redundancy payout would now be a still generous £42,000. In fact, this policy change only affects the top 10% of earners in Bristol Council, but because of the huge amount of money those top managers were costing to lay off, it would save 30% on the redundancy bill. All those savings can go back into protecting public services, which as we know are most heavily used by the poor.

This is how to cut fairly – you take more from those who have been doing well and will get by adequately, and you leave those who haven’t and wont. Something you would expect Labour to back? To my surprise Bristol Labour were hostile to this and voted against it – claiming it was “an attack on workers”.

It would seem that they were so intent on opposing absolutely everything Lib Dems do that they would rather top managers got massive pay-offs than see that pay-off money be better used to protect services. That’s a shame, but it didn’t top us introducing the new system.

Cllr Mark Wright is Cabinet member for Efficiency and Value for Money on Bristol City Council

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10 Comments

  • Liberal Eye 1st Oct '10 - 4:08pm

    We should be looking to make the necessary national savings from just this sort of imaginative solution done on the merits of specific situations; the overall potential is easily big enough. Trying to make cuts top-down as the Coalition is doing is a recipe for disaster.

  • Well done!

  • The problem is that the softer the redundancy package the more it costs, irrespective of how it is distibuted. The result is the less spent on the poorest people in Bristol, those whom the Council is there to support. the treouble is the unnecssary ideologically driven small state big society lib dem/Tory cuts. How can you honestly argue proudly about a small detail when the big picture is that the balance is 80% hitting the poorest and 20% made up of tax increases, ie the richer. And I still dont know why everything has to balance within one parliament. What happened to Keynes? and look what is happening in Ireland

  • I would favour reducing the pace of deficit reduction a little, but I would strongly oppose slowing it significantly. I’d be a little more hawkish than Darling, but not dramatically so.

    George, What about the split between tax and cuts? Why have the lib dems changed that formula to more cuts. Labour was a third, two thirds, halving the deficit. Not altogether convinced of that either

    alan: The “lib dem/Tory cuts” you refer to will see the UK state sized at 41% of GDP – the same as it was in 2005. Do you honestly think that the Labour Party was running a “small state” in 2005, or are you just parroting their propaganda?

    Cllr, I fear that it is you that is spouting their propaganda. I am told it is increasingly likely that Picklies will go for the discrtionaly grants such as those that fund refuges for women escaping domestic homicide, the mentally, ill, the homeless etc etc. If you deoubt this councillor find out what is happening to programmes such the Supporting People programme in your area.

  • Sorry my last post made no sense with the quotes, I will try again

    “I would favour reducing the pace of deficit reduction a little, but I would strongly oppose slowing it significantly. I’d be a little more hawkish than Darling, but not dramatically so”.

    From George Kendall, What about the split between tax and cuts? Why have the lib dems changed that formula to more cuts. Labour was a third, two thirds, halving the deficit. Not altogether convinced of that either

    From Cllr Mark Wright “alan: The “lib dem/Tory cuts” you refer to will see the UK state sized at 41% of GDP – the same as it was in 2005. Do you honestly think that the Labour Party was running a “small state” in 2005, or are you just parroting their propaganda?”

    Cllr, I fear that it is you that is spouting their propaganda. I am told it is increasingly likely that Picklies will go for the discrtionaly grants such as those that fund refuges for women escaping domestic homicide, the mentally, ill, the homeless etc etc. If you deoubt this councillor find out what is happening to programmes such the Supporting People programme in your area.

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