Tuesday, April 18, 2006

Magic Beans


Well, they did it again. They swapped the cow for a few more of those magic beans.

This time it's GP contracts, with your average GP now as rich as Lord Levy while we patients must learn not to get sick at the weekend. All "negotiated" by those best-when-we're-boldest spinners of fairy tales up at the palace. As Niall Dickson of the King's Fund says:

"For the average person going to their GP the very idea that their doctor might be earning between £200,000 and £250,000 would be really astonishing. And by international standards that would put them way up at the top of the league even among developed countries."

The general consensus is that the BMA saw our naive ill-informed government ambling towards them with the cash cow, and slipped them the beans. And why on earth shouldn't they? After all, that's the job of any trade union. But as we've blogged before, following the normal cyclical pattern in public sector pay, the Docs should enjoy it while they can- the next seven years will be very lean indeed. Which means of course, their morale will slump further (for details see the excellent Doc Crippen) , and we taxpayers will have the worst of both worlds- GPs who are expensive, but demotivated at the same time.

Brilliant. We taxpayers would have done a whole lot better had the government never intermediated itself between us and our GPs. Had we been the ones setting GPs pay directly, via the operation of the marketplace. Just like we do with our beans from Tescos or Sainsburys.

Which neatly illustrates a much broader point about government spending.

GPs are generally not employed directly by the public sector: they are private contractors whose services are "procured" on our behalf by government. It is government that negotiates the contract, and we taxpayers just have to live with the result. And overall, such procurement spending accounts for no less than one-third of all government expenditure. This is the government not as underperforming producer, but as naive ill-informed customer.

To get public sector procurement into perspective, consider this. Tesco, Britain's biggest retailer, spends about £30bn pa on procurement among its suppliers. Which makes it Britain's biggest private sector customer, and taken very seriously indeed by Norfolk turkey kings and Chinese jeans manufacturers alike.

But Tesco is nothing compared to the public sector. This year the public sector will spend on your behalf some £170bn among its chosen suppliers. Or around £7,000 for every household in Britain.

Where does it all go? Who gets it? How do they get picked? And how often are we swapping cash cows for magic beans?

Over the next few months we'll be trying to answer these questions, and assessing how much we're paying over the odds. It won't be easy, because the government doesn't provide us with the info we need in one easily accessible place...almost like they don't want us to know.

But some of the big ticket supply industries we do know about are:

So do we think the government spends our money with these suppliers any better than it did with the GPs? Don't get your hopes up.

PS Commissar Hewitt was interviewed about the GPs this am on R4 Today. Mr Naughty was at his waffly innumerate worst, and she was able to brush him aside quite easily. As so often, instead of pursuing the hard financial questions, he fell back on the BBC store of all-purpose leftie Victorian literary images- suffering orphan children denied medical care and cast out into the winter snows etc etc. Still she didn't upset him half as much as that guy from the BNP yesterday, who accused him of being a liberal: "you have no idea what my political views are" was his ludicrous riposte.

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