Saturday, February 17, 2007

Running On Empty

Big Government is bad enough when it's flush with cash, but it's ten times worse once the cash runs out. As it has now.

In any normal sense of course, the money hasn't run out: the government is still spending well over 40% of our income. But government spending works on growth, and without it, the real cracks soon start to show.
Because with capped spending, the easy options are gone. Henceforth, choices must involve grasping painful nettles, including the elimination of entire programmes. Obviously, the private sector has to do that all the time - eg Daimler's highly embarrassing decision to ditch Chrysler. But politicos have never been known for having the stomach for such heroics.

So instead they impose arbitrary across-the-board spending freezes, announce policy initiatives without funding, and issue streams of orders to economise on paperclips etc. The hope is that somehow, something will turn up.

Thus, four current stories:

Belgian Navy According to Admiral Sir Jonathan Band, the First Sea Lord, unless the Navy gets its new aircraft carriers and another £1bn pa asap, we will lose our first division capability and will be reduced to the status of Belgium. Yes, we know all about whinging Sea Lords and their boys' toys, but anyone who's read Lewis Page's book will recognise MOD's inability to grip the underlying issues, and the failure of our politicos to make the tough choices. As usual, although the demands clearly outstrip the available funding, it's our servicemen who are somehow meant to square the circle.

Unfunded prison expansion As we know, Doc Reid has announced the building of 8,000 new prison places. But although Gordo has given the go-ahead for the £1.7bn PFI capital spend, he isn't providing any funds to pay the running costs, around £350m pa. Somehow, the hopeless hulking Home Office will have to find the money from within its existing budget, and that will be on top of its required £240m Gershon savings. Watch out for cuts in policing.

Wasted nurses With 20,000 deficit driven NHS job cuts, many newly (and expensively) trained medical staff are leaving to work abroad. According to the Nursing and Midwifery Council, a total of 7,772 nurses and midwives left Britain during the last financial year, compared with 3,400 in 1997-98. That's in spite of the fact that we will soon need them to replace the 180,000 nurses who are due to retire over the next ten years.

Lightbulbs In a classic of the paperclips genre, Epsom and St Helier Hospital in Carshalton, Surrey- having already asked workers to empty their own bins, scrapped water coolers and cut the size of patient meals- is removing every other lightbulb to save electricity. But they're not alone: staff at the Royal Blackburn and Burnley General hospitals have been instructed not to use electric fans to cool wards because they cost too much to run.

All four stories reflect the same inability to grip underlying budget issues. Instead of taking bold decisons to prioritise, and to scrap entire programmes, the pain is simply spread around haphazardly across the whole piece.

It's set to get a lot worse.

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