Tuesday, October 20, 2009

Pol Makes A Good Point

So bad, it's fallen off the official chart

Today's horrific public borrowing figures underline the need for drastic action. So far in 2009-10, Brown's government has borrowed £77bn, which puts us well on course for busting through £200bn over the year as a whole (the budget forecast was £175bn).

Even setting aside Brown's much hyped capital spending programme, the current deficit year-to-date is £61.5bn - so big, it can no longer be accommodated on the official ONS chart (see above). And our net debt now stands at £825bn - which means the latest estimate of our real national debt we blogged yesterday already needs increasing by £20bn.

The dials are spinning, my friends, and unless someone grabs the controls soon, I'm very much afraid we're going down.

As luck would have it, the CBI has just published its "blueprint" for getting a grip. Like us, it wants spending cuts rather than tax increases, and says:

"...an extra £120bn will need to be taken out of current spending to achieve budget balance by 2015-16. Such savings cannot be achieved by tinkering at the edges, but will require radical public sector reform.

We have identified how the required savings might be achieved by re-engineering the ways in which public services are delivered. By introducing new technology and competition, eliminating waste and inefficiency, and tackling unaffordable pensions and pay head on, we can avoid crude cuts to frontline staff and the vital services on which we all depend."

Their £120bn spending reduction is a cumulative total spread over three years, and it breaks down like this:
  • £63bn from "radically re-designing the way public services are delivered, including making use of new and proven technologies, as well as increasing competition"

  • £27bn from "improving workforce management" - specifically, a two year pay freeze, tackling the sickie problem, and gripping public sector pensions

  • £30bn from more outsourcing to private sector suppliers

  • £16bn (mimimum) from "cutting waste from within government"

63+27+30+16... umm... that's 136 isn't it? Oh well, what's the odd £16bn in a crisis?

Anyway, Pol doesn't like it one little bit. Warning us to "beware the zealots selling miracle cures", she accuses the CBI of fiddling the figures and "licking its lips as it eyes up public services cuts". Anyone would think she was talking about the TaxPayers' Alliance again.

But wait... what's this? Polly actually goes on to make a very good point. Homing in on the CBI's enthusiasm for more outsourcing, she says:

"The CBI claims private contractors can process arrested people through custody suites more cheaply by freeing up police from paperwork, and that private civilian companies can provide basic logistics for the forces more efficiently than using trained soldiers, which sounds convincing.

Or at least it sounds convincing until you consider the forces' abysmal record for striking good contracts with commerce. That's just the problem. Weak public managers are often even worse at drawing up private finance initiative, public-private partnership or even bog-standard procurement deals with the private sector. The danger is that canny companies will run rings round civil servants with neither the knowledge not the greedy motivation to squeeze out every penny's worth."

Spot on Pol. As we've highlighted over and over again on BOM, whether because he's naive, or stupid, or lacks your greedy motivation, the Simple Shopper is absolutely pants at driving deals with the private sector. He cannot be trusted to do it. Which is a serious flaw in the CBI "blueprint".

So if outsourcing is out, what should we do instead?

Pol's solution is pretty well to keep everything in-house, and hope that the public sector can somehow get more efficient by rolling out best practice. Kind of idea.

Our solution is to go way beyond what the CBI suggests. We don't want yet more cack-handed outsourcing arrangements - everything from hospital cleaning to IT shows that the public sector cannot manage them. What we need instead is for government to divest itself of its intermediating role between customer and supplier.

We need... yes, you've heard it all before... choice and competition. We need the spending power put directly into the hands of customers, and we need competing suppliers. So school vouchers, competing social health insurers, directly elected sheriffs, fiscal decentralisation, etc etc. Except for the core functions of the state (law and war, and in this day and age, some minimum welfare safety net), we need to take our bungling Big Government out of the equation.

Such radical reform would not only solve the problem of Simple Shopper outsourcing, it is actually the only way of driving the efficiency savings that comprise the bulk of the CBI's £120bn. Disembodied managerialist efficiency drives just don't deliver such savings: we've had no end of failed attempts over the years, most recently the Gershon farce.

And just be clear about this - the money has run out. Spending cuts are unavoidable.

If we make the choice and competition leap, there's just a chance we can get through by driving out waste rather than hobbling our frontline services.

If we don't, we'll get cuts in frontline services. It's started already: the Crown Prosecution Service is going to save money by letting offenders off.

Your call.

1 comment:

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