Inspectors On The Non-Job

Labour's huge and incompetent government inspectorates are worse than a waste of money - they are downright dangerous. Take today's scandal:

"Poor standards of care at an accident and emergency unit in one of the country's flagship hospitals may have contributed to the unnecessary deaths of over 400 patients, an official NHS investigation has concluded. Dirty equipment and an absence of leadership contributed to a death rate almost 40 per cent above the national average among emergency admissions to the 770-bed Basildon and Thurrock University Hospitals NHS Foundation Trust, inspectors said.

The unit had blood stains on the floor, dirty curtains, stinking mattresses and soiled equipment; nurses who failed to monitor, feed and give drugs to patients correctly; and a rate of pressure sores almost twice the national average. Instead of the national four-hour maximum waiting time for A&E, the trust was operating a 10-hour waiting time."

That's scandalous enough of course (especially as the description sounds all too reminiscent of various other NHS hospitals we could mention).

But the real scandal of Basildon and Thurrock Hospital is that it's literally just been rated by government inspectors as "Good", with a 13/14 mark for "Safety and cleanliness" (see here). And those inspectors - the Care Quality Commission - are the very same inspectors who've now discovered the hospital is in fact unsafe and filthy.

So WTF is going on?

On BBC R4 Today this morning, Evan Davis attempted to find out from the Commission's head, serial quangocrat Baroness Young (Environment Agency, BBC, etc etc). She made virtually no sense.

First, she said the scores on the Commission's website were out of date, even though the scores relate to 2008-09, ie the recent past. She reckoned they'd only published them because the Secretary of State had a duty to so. Then she said the Commission's inspection methods had changed and that they now involve... er... inspections. Then she said the Commission is brand new and can't be held responsible for the rubbish produced by the previous inspectorate - even though it's been published by the Commission on the Commission's website.

Obvious questions arise. If the scores on the website are useless, why should we punters believe them? What's the point of them? What should we believe? How do we know any hospitals are safe?

But when Davis tried to ask those follow-ups, the Baroness slipped into a kind of gibberish that Tyler cannot report because he simply couldn't follow it (like virtually all members of the modern commissariat, Young is immensely articulate without actually making any sense).

So there we have it - another large government inspectorate churning out screeds of rubbish that is much worse than useless.

And what does the Quality Care Commission cost us?

The Commission is another of Labour's superquangos, established in March 2009 as the amalgamation of three existing quangos - the Healthcare Commission, the Mental Health Act Commission, and the Commission for Social Care Inspection. Summing the 2007-08 spend of those three gives us a total annual spend for the new Commission of £214m (see latest TaxPayers' Alliance quango book). Let's call it £230m for this year.

The combined staff is 2700, which you might consider more than enough. But the Commission clearly wants more, and is currently advertising the following attractive new posts:

• Head of Learning - £75k pa
• Head of Culture and Performance - £75k pa
• Head of Change Management - £75k pa

Amazingly, they are not advertising for a Head of Tying Up Your Own Shoe Laces, but we get the general idea.

We've blogged these hopeless government inspectors many times (eg see here). They have a long and shameful history of rating killer organisations as perfectly safe and fit for purpose - Oftsed rated Haringey Social Services as good at the very moment Baby P was dying under their watch (see here).

Things are so bad, even the chief inspectors no longer have confidence in the ratings. Baroness Young clearly thinks her organisation's ratings are useless, and earlier in the week the head of Ofsted said the same thing about their school ratings.

In Ofsted's case, it turns out that when they rate a school as "satisfactory", what they really mean is that it is failing to provide its pupils with a proper education. Which right now means that a shocking one-in-three state schools is failing.

Ofsted's Annual Report also illustrates another key weakness with these inspectors - they keep changing their minds. So nearly one-in-five schools judged to be good at their previous inspection are now rated as no longer good - ie merely "satisfactory" or inadequate. Who can place any faith in ratings that slide around like that?

So what to do?

First, abolish these massive inspectorates - they have expanded way beyond their original remit of making sure taxpayers' money was not being squandered, and they now do more harm than good (especially to the organisations they terrorise).

Second - yes it's that same old song - put power into the hands of the customers, and let the market decide who's doing a good job and who isn't. School vouchers and competing social health insurers are the only way we can seriously expect to achieve improvement.

Keep Right On To The - To The - To The

A very scratched record

Regular readers may recall the paper we wrote last year for the TaxPayers' Alliance calling for the abolition of the Barnett Formula (see here and here). We argued that Scotland should be granted full fiscal autonomy, with responsibility for raising its own tax revenues.

Since then we've had a weighty report from the Calman Commission that fell some way short of what we proposed. And yesterday we got the government's response, which fell even shorter.

The guts of the government's new proposal is that the Scots would be given wider authority to vary their local income tax rate (they already have authority to add up to 3p to the standard UK rate). In Scotland, the UK rate of income tax at both basic and higher rates would be reduced by 10p, and replaced with a Scottish income tax, decided by the Scottish Parliament. Scotland would lose an equivalent chunk of its block grant funding from London, but therefater  it would have the authority to vary its local income tax rate up or down.

So a step along the high road of fiscal autonomy?

Well, yes, but a very very small one.

To start with, the amount of revenue involved is only about 15% of the current block grant. Overall financing arrangements will remain hugely dominated by the Barnett Formula, which will remain in place, as is.

Second, the Scots will not be permitted to change the progressive structure of income tax: their Scottish local income tax will have to be at the same rate for all taxpayers right up the income scale. Which means for example, they will not be able to counteract the economic nonsense of the new 50p top rate (which as we know, will damage the economy and may actually reduce revenue - see this blog). Real fiscal autonomy would allow the Scots to make their own decisions on tax incidence and would allow them to compete with England.

Third, the Scots will have no incentive to build their tax base. The Barnett Formula grant will be reduced by Whitehall's calculation of what a 10p rate would raise in Scotland. Which means that if the Scots manage to grow their economy and their tax base, they will lose grant funding, one-for-one. This is the classic problem with such grants - they incentivise inefficiency rather than local enterprise and effort.

The real decisions on Scotland's fiscal autonomy still lie ahead.

But don't hold your breath. No London-based government has ever shown enthusiasm for surrendering meaningful tax power to Edinburgh. And since the collapse of their overblown banking system, the Scots have also taken a mighty step backwards.

It's going to be a very long road. And an increasingly stoney one for the English taxpayers who continue to fund much higher public spending in Scotland than they receive themselves:

How Many People Work For The Government?

How many people work for the government? According to the Major, the answer is none.

Personally, I think that's a tad harsh. But prompted by a comment on a recent BOM post, we've taken another look at how many are employed by the government.

We start with the official count published by the Office for National Statistics. It says that as of Q2 2009, public sector employment totalled 6.039 million, up from the 5.182 million Labour inherited in 1997 - an increase of 17%* (and see here for some interesting longer-term material).

However, big though it is, that total excludes a number of groups who are not counted as being employed in the public sector, but who depend on the public sector for the vast bulk of their earnings:

• Higher and further education - for arcane historical reasons, H&FE colleges are defined as being in the private sector, even though most of their funding comes from the taxpayer. When last sighted, they were employing some 530,000 staff.
• GPs - they are counted as part of the NHS by the Department of Health, but most are excluded from the ONS count because they're technically private contractors. There are currently some 40,000 of them in the UK.
• Network Rail - as we've blogged before, Network Rail is nationalised in all but name, but under an extraordinarily convoluted definitional fudge it's counted as part of the private sector. It currently employs 33,000.

Adding these groups back in takes the public sector employment total up to 6.7 million.

And then of course, there are all the people whose jobs have been privatised over the years, but who still work pretty well exclusively for the public sector - ie hospital cleaners, dustmen, IT staff, etc etc. How many? We have no idea, but our guess is at least another quarter million, taking our public sector employment total up to around 7 million.

So, of the 28.9 million people currently in employment (see here), around one-quarter of them are employed by the government (aka the taxpayer).

And of course, there's another huge group of people who while not employed by the government, are still dependent on taxpayers for their incomes.

To start with, there are now 5.8 million people of working age who are entirely dependent on welfare (see here), including 1.4m on Job Seeker's Allowance, 2.6m on incapacity benefits, and 0.7m on lone parent benefits. Actually those figures relate to May, and with increased unemployment, the overall total is now probably 6 million.

Adding them in as well, gives us an overall total of 13 million people dependent on taxpayers for their incomes.

And remember, these are people of working age. If we add in the 12.5 million older people now drawing state pensions, we get to a grand total of 25.5 million - 25.5 million people who are dependent on the taxpayer for most or all of their incomes.

Which is somewhat alarming.

Because on our calculation, we've only got 22 million people who are generating income from sources other than the taxpayer (ie 28.9m in employment less the 7m employed by the public sector). So each one of them has to earn the income to support him/herself plus 1.2 other adults... kind of idea.

Does that sound like it's sustainable?

Or is it time to dust off those dog-eared copies of Bacon and Eltis? (Britain’s economic problem: too few producers by Bacon and Eltis (1976) is not online, but for quick flavour, see here - section 3.1).


*Footnote - although the ONS public sector employment numbers exclude college lecturers and GPs etc, they do now include the 235,000 staff employed by our nationalised banks - ie RBS, Lloyds, Northern Rock, and Bradford & Bingley.

Climategate

Warmism is not our specialist subject, but we really can't let the scandal of Climategate pass without comment.

As you will know, emails and other material "liberated" from the publicly funded Climatic Research Institute at the University of East Anglia, show quite clearly that warmist "scientists" have been manipulating data on climate change in order to con the public into believing their religion. Their very expensive religion.

The emails talk explicity of data manipulation "tricks", "hiding the decline" observed in actual temperature records, and suppressing dissident views (you can access the complete set here, but be warned - there are shedloads). It's all straight out of the Manual of Stalinist Tractor Statistics. The emails also contain requests to other warmist "scientists" to destroy embarrassing records that might be subject to public disclosure under freedom of information laws (an inconvenience such people didn't suffer in the USSR).

The significance of this hasn't yet been properly reflected in the mainstream media here in the UK (although Monbiot does admit it's "a major blow"). Certainly the coverage on yesterday's Newsnight tried to sweep it aside as some kind of handbags spat between a bunch of science beardies. Which was hardly surprising given that the BBC's stated editorial policy is to downplay the views of disbelievers in warmism (see this blog).

But although the UK msm is fully warmist, and its eco correspondents little more than propagandists for the cause, these days we all have other sources for our news. And the full story is emerging on the web. The ever excellent Watt's Up With That, has a good collection of posts and links on the scandal, including these two vids:

1) The punchy 5 min version from Fox News:



2) The longer 10 min version from Dr Tim Ball:



So to summarise, the so-called "settled science" of climate change is controlled by around 40 groupthink academics who "peer review" each other's papers, and exclude papers produced by dissidents. They have cobbled together a bunch of highly questionable data to support their claims, and refuse to release it to independent third parties in case their cobbling is exposed.

And who funds these charlatans?

Yes, that's right - you and I. It's you and I, and other British taxpayers, who fund the operations supplying the world climate change lobby with the bulk of their "scientific" input. As that pompous twerp Miliband Jnr keeps boasting, the UK is a world leader in fabricated warmist propaganda the established science of climate change.

Cost? As we've blogged before, exact figures are hard to come by because they are suppressed. But when last sighted, the Climatic Research Institute at the University of East Anglia had £3m of research grant funding, virtually all of it from taxpayers.

We don't have specific figures for the Met Office's notorious Hadley Centre (East Anglia's close working partner and cobbler-in-chief to the ludicrous Stern Report). But we do know that the Met Office costs us over £180m pa, of which £21m is for "climate research".

In any case, these research grants are the least of the costs. The real costs are measured in terms of the massive ecclesiastical bureaucracies spawned by warmism, and the even bigger tithes inflicted via green taxes and regulatory commandments.

But at least we all know the truth now: the "inescapable facts" of warmism are nothing more than a bunch of dodgy data manufactured by the high priests. The same high priests who have a direct financial interest in convincing us that they're right.

PS Farming News - according to Tyler's farming correspondent, the global threat posed by farting livestock could be dealt with very easily - by fixing a naked flame in the close vicinity of each animal's gaseous orifice. According to him, the methane would then turn into nothing more noxious than H₂O. Tyler advised him to apply for a research grant asap.

Yes We Can

Do we really need to go through all that again?

Tyler has lost count of the times he's heard supposedly well informed people say something like "no government has ever succeeded in cutting public expenditure" (eg see here). Of course, it's completely untrue - even UK governments have sometimes managed it. But the myth persists.

Unfortunately, it's a myth that could prove highly damaging to us over the next few years. Because by suggesting we can't expect to correct our huge fiscal deficit through spending cuts, it nudges our politicos even further towards the perceived easier option of tax rises. Which is precisely what M Portillo suggested over the weekend (although see this excellent riposte from Andrew Lilico).

Now PolicyExchange has published an extremely timely paper looking in detail at twelve historic examples where governments have tackled big fiscal deficits. Written by Andrew Lilico, Ed Holmes, and Hiba Sameen, it stresses that each case has its own particular features. But the succesful programmes do share some important common themes.

It's well worth reading the paper for yourself, but the points that jumped out at Tyler are:

• Fiscal consolidations can promote growth and recovery – particularly by enabling a looser monetary policy than would otherwise have been the case. Provided that spending cuts dominate over tax rises, tightening appears to be more likely to promote recovery than impede it (partly through lower bond yields - eg Sweden and Finland in the 1990s)
• Fiscal correction should be biased towards spending cuts. Successful consolidations have typically placed around 80% of the burden on spending cuts; 20% on tax rises (cf Labour's fiscal tightening following the 1967 devaluation which loaded too much on tax rises and proved unsustainable)
• Persistance: initial failure does not mean it can't be done (eg Canada had three failed attempts before succeeding)
  

It is an extraordinarily thorough paper, and just for future reference, here is the summary table listing the twelve cases examined, and showing how much spending was cut in each one (click on image to enlarge):
 

As we can see, all 12 involved real spending reductions, disproving the assertion we began with. The 1920s Geddes Axe (see this blog) was by far the most severe, but the 1976 IMF 4% cut was also pretty chunky.

The bottom line is that substantial spending cuts are always possible. Never easy, but always possible. And in terms of going for growth they are infinitely preferable to tax rises.

But what is needed more than anything else is will - the will to do it. And that's where right now we still seem to be some way off the pace.

The historic experience surveyed in this paper reminds us that the politicians rarely lead the public in this respect. There needs to be a palpable sense of crisis, of the the kind we oldies can recall from the 1970s. It was the emergency summons to the IMF that forced the policy action, but the sense of crisis had been brewing for much longer.

And for those who don't remember, the PolicyExchange paper helpfully provides a series of splendid quotes from the time:

• ‘Good-bye Great Britain. It was nice knowing you.’  Headline of Wall Street Journal article advising readers to withdraw from sterling investments, 29th April 1975.
• ‘England ist kein entwickeltes Land mehr.’ [‘England is no longer a developed country’] West German Chancellor Helmut Schmidt.
• ‘RIGSBY:This country gets more like the boiler room of the Titanic every day: confused orders from the bridge, water swirling around our ankles. The only difference is they had a band.’  Eric Chappell, Rising Damp, popular TV sitcom, 1977 (pic).

Those who forget the lessons of history are of course condemned to repeat them. But do we really have to sit through the entire back catalogue of 1970s sitcoms before we act?

PS This paper has a lot of nice charts - well worth a persusal. One of my favourites is this one which neatly summarises something we've blogged many times on BOM - the inverse relationship between longterm GDP growth and the share of public spending in GDP:

Now, what could be clearer than that?

Going For Growth

Time to get serious

When it comes to the economic growth, the fundamental difference between socialists and free marketeers is that socialists believe you can buy growth with taxpayers' money.

So today we heard Gordo's Chief Secretary to the Treasury - the person whose very job is to rein in public spending - once again telling us that cutting public spending to tackle the fiscal deficit would undermine the prospects for growth.

Why's that wrong?

At the risk of boring you, let's just remind ourselves.

It's wrong because public spending droppeth not as the gentle rain from heaven: by an unfortunate freak of nature, it all has to be paid for. And the payment can only come from one place - whether it's taxes today or taxes tomorrow, taxpayers end up paying.

And what taxpayers have to pay in tax, they cannot spend on other things. And when workers have to pay more tax on the fruits of their labours, they labour rather less, producing fewer of those other things in the first place. And when investors have to pay more tax on their profits, they invest rather less. And when taxpayers have to pay too much tax, they up sticks and leave altogether.

Now, this might not matter too much if our current fiscal deficit was simply the result of a short-term cyclical downturn. But it isn't. It's primarily the result of this clothead government spending far too much money through the good times (the OECD says that of their forecast 14% UK government deficit next year, around three-quarters is structural, not cyclical).

Government borrowing?

Well, yes, in the short-term, sure. Why not.

But in the longer term (ie the other side of the next election), our creditors have made clear they expect to see some serious belt-tightening. They are simply not prepared to go on financing one pound in every four HMG spends, as is. Unless HMG mends its ways pronto, we will find ourselves facing penal interest rates, a international investors' strike, and a collapse of the currency. None of which would be awfully good GDPwise.

Which leaves just two options.

The first is inflation: the classic cop-out for a bankrupt government, and almost certainly Labour's unspoken gameplan - just like it was back in the 70s.

Unfortunately, inflation is most unlikely to stimulate GDP growth. It impoverishes savers, cranks up uncertainty, almost always gets out of hand, and has all kinds of other nasty effects beloved of economic theorists but far too tedious to set out here.

So if inflation is out, we're left with just one coherent long-term plan - cut public spending, as recommended so many many times before.

Which is why Cam's interview with Marr this am was moderately encouraging.

He told us there'd be a Tory budget within 50 days of an election victory - good - and unlike the plain Age of Austerity message he and George delivered at last month's Tory Conference, this morning he emphasised that his budget would "go for growth".

As many people noted at the time, growth was the vital ingredient missing last month. And cutting spending against the background of a growing economy is going to be a whole heap easier than cutting in the teeth of an ongoing recession.

So how do we actually go for growth?

All together now - CUT TAXES. Especially those on enterprise and employment.

And no, it won't be easy: with a fiscal deficit around 14% of GDP, there is no money for anything. But cutting taxes really is the only known way in which government's can stimulate sustainable long-term growth (see many previous blogs).

PS Just so we know, cutting Corporation Tax by one percentage point would cost £1bn next year.

Earning Your Pharmacist An Honest Crust

May I tick your boxes?

As we may have mentioned before, Tyler is a major league drug user. And not all of them are for recreational purposes: he routinely ingests an amusing cocktail of prescription drugs to keep a lid on his wayward immune system.

So the other day he's visiting his local chemist to pick up the latest crateful, when he's accosted by the pharmacist (see here for previous pharmaceutical encounters). Would Tyler care to enter her consultation room for a quick word?

Consultation room?

"Yes, yes, it's a bit more private in there."

Private? Why private? Is she going to break bad news? Has there been some horrible mix-up? Has Tyler inadvertantly been taking those drugs they use to chemically castrate elephants? No wonder he's been feeling a little lacklustre of late.

"Mr Tyler, we've noticed that you've never had a medicines use review." The keen young pharmacist brandishes the form she's holding. "If I just run though this with you, we can make sure you're getting the right medication."

"But I already have an annual review with my GP, and I'm also under a consultant."

"Ah yes, but they look at your body - we look at your medicines. We can advise you on them."

"Hmm... well, OK."

"Fantastic! Now, these first pills, how do you take them?"

"I... er... swallow them."

"Fantastic!" She ticks a box. "And how often do you take them?"

"Well, once a day, like it says on the instructions."

"Fantastic!" She ticks another box. "And do you have any side effects?"

"No... otherwise I'd have gone back to my consultant."

"Fantastic!" Another box ticked.

I could go on, but you get the idea. By the end of my 3 minutes, she must have ticked a dozen boxes. And what advice did she have for me?

"Well, you seem to be taking all your medicines correctly, and there's nothing I can suggest in terms of lifestyle to help your condition."

So no advice.

Fantastic.

But what was really going on?

The pharmacist was earning herself - or at least her company - £28 from the NHS. Which for 5 minutes work isn't bad (£336 per hour). That's what she gets paid for conducting a Medicines Use Review (MUR) under a scheme set up by the NHS to make sure patients comply - yes, that is the word they use - with the instructions they've been given.

You can sort of understand how the commissars dreamed up the scheme. After all, they spend well over £8bn pa on prescription drugs in England alone, and that bill has doubled in ten years. The last thing they want is for we punters not to be taking them properly.

But is 5 minutes with Sharon ticking boxes in her consultation cupboard really going to help?

Seems unlikely. In fact from what Tyler saw, it looked more like money for old rope.

And what does the whole exercise cost us?

According to the official stats, the number of MURs is soaring. Between 2006-07 and 2007-08 MURs roughly doubled to over a million. Which at 28 quid a pop comes in at around £30m - a considerable sum in these straightened times. Especially when you remember that pharmacies in England and Wales already earn getting on for £1bn pa from the NHS just for dispensing fees (ie not including the cost of the drugs):

Which is presumably why the commissars have imposed a limit on how many MURs an individual pharmacy can conduct - 400 pa.

But how does that work exactly? Who decides which punters are going to get MURRED? Sharon told Tyler she could tell immediately he didn't really need a MUR because he wasn't a batty old lady. But she went ahead and did it anyway.

And come to that, isn't the whole shebang open to massive fraud? How can the commissars possibly tell that the MUR has actually taken place? Tyler signed nothing, and Sharon retained the tickbox form.

Oh, guess what - the whole shebang is open to massive fraud. And it turns out there is a massive fraud investigation underway. The NHS's own Counter Fraud Service (oh yes, the NHS needs one of its very own) is on the case, and has already discovered that the payment system was set up by a particularly unworldly four year old:

"Pharmacists declare to NHS Prescription Services how many MURs they have performed during the month when they send their monthly FP10s for processing, and they are paid £28 for each one. They do not submit MUR forms or disclose patient names in support of their declarations, although they do send GPs lists of patients whom they declare have received MURs."

There is no procedure for checking that the claims marry up with what the GPs have been told. Still less is there a procedure for checking whether the MURs have actually taken place. Fraud is almost certainly rife.

Needless to say, the pharmacists are squawking. It seems they don't want to be investigated, and they reckon the case cannot proceed because of "patient confidentiality concerns". So the entire investigation is now on hold while m'learned friend is consulted - no doubt at further considerable taxpayer expense.

Now, just imagine you're a pharmacist. You'd probably be knocking off as many of these £28 "consultations" as you could possibly manage, before the opportunity disappears. You'd also be ticking patient boxes like fury to get some kosher records on file ahead of Inspector Knacker's forthcoming visit.

Let's hope they still have time to make sure Tyler doesn't get any more of those elephant pills.