Pubic Sector Cuts

[KDMINX]

What cuts would you make if you were DC?

I’d start with a 50% reduction in public sector wages over £50k

So a nurse on £30k would still get £30k
An HR manager on 150k would get £100k

 

[jeffbearcroft]

I'm sure cutting the pay of higher paid employees would save a fair amount of money (if someone can navigate the obvious breaches in contracts of employment) but in reality it would only be a fraction of the annual deficit of £150 billion.

There is a fair degree of political comment at the moment about public waste, unaffordable pensions and high pay etc but in reality, the public sector has to stop doing a lot of things it is currently doing to save the sort of money required.

Since 1997, public sector employment has risen by circa 800,000 (from 5.2 million to 6 million). A lot of jobs are going to have to go re-balance the economy. Very sad for the people involved but I really don't see a choice.

Whatever the reasons or whoever is to blame, the country is in a deep hole and drastic measures are required.

So I think the sooner the reality sinks in the better. The alternative is a Greek style meltdown at some point in the future.

Jeff Bearcroft

 

[Piqueperfumes]

Much of the public sector problems stem from successive governments introducing more initiativives for them to introduce without the money to do so (often). Education is a classic example - let it settle down, rather than keep changing it all the time. New initiatives cost money. Both central and local government are wasteful but its a drop in the ocean!

 

[Paul Norman]

I would review senior public sector pay, because it is often excessive, but that would not be a primary way of saving the kind of money we need to save.

The truth is, we need to be more radical than that to have any chance of bringing the budget into balance, never mind paying off the debt.

As stated above, we have to stop doing some things. But when you look into Whitehall departments, and into local authorities, there are whole departments there that did not exist 13 years ago.

I had a chat with a Finance Director of a local council fairly recently. This was a serious chat, and we were talking through the budget setting process. We agreed between us, that a total reduction in the county's budget of 25% could easily be achieved with no reduction in front line services, but that unless there was a huge change in motivation and function within councils no one had any incentive to do it.

Apart from a sense of public duty, I countered, as which point he smiled ruefully.

So, if we accepted that we had to reduce front line services as well as the above, savings of 35% seem available.

If you want a measure of what the previous government have done to us, making this level of saving would only just be enough. And it would have a big knock on effect on the economy, but not, as Brown frequently lied, a fatal one. In fact, in the long term, it would facilitate a reduction from the guelling high tax regime that the UK is saddled with.

Painful. But the alternative would be to carry on recklessly running up debts that we will never, ever be able to pay off.

I have made cost reductions of that percentage in large multi billion pound coorperations. You have to think radically. But it can be done.

 

[PerfectP]

If lots of public sector jobs go, then surely we're into a vicious cycle - more people claiming off the welfare state, which just puts more pressure on the public purse.
I agree that the current state of affairs is unsustainable, but the only way to get out of the mess we're in, is to kick start business in the UK.
More business, means more employment, which means more direct and indirect tax to go into the public coffers, allowing spending on the country and paying off our debt pile.
It's a difficult situation for the goverment and a definate poisoned chalice for the coalition. Not one I would want to be in, as an individual.

 

[KDMINX]

If lots of public sector jobs go, then surely we're into a vicious cycle - more people claiming off the welfare state, which just puts more pressure on the public purse.

Rubbish, an HR manager in the private sector earns £30-50k in the public sector they earn £100-150k there are a million public sector employees paid salaries disproportionate to their skills or the market rate.

 

[telemax]

If lots of public sector jobs go, then surely we're into a vicious cycle - more people claiming off the welfare state, which just puts more pressure on the public purse.
I agree that the current state of affairs is unsustainable, but the only way to get out of the mess we're in, is to kick start business in the UK.
More business, means more employment, which means more direct and indirect tax to go into the public coffers, allowing spending on the country and paying off our debt pile.
It's a difficult situation for the goverment and a definate poisoned chalice for the coalition. Not one I would want to be in, as an individual.

I agree. The last time we were exiting recession (under the Tory John Major Government) in the early to mid 90's, the only thing that really got us out of the deficit then was increasing tax receipts from more employment. People's memories are short, but it was indeed a large public spending boom that helped reduce unemployment (Way higher than it is now) And is arguably the main reason why the economy was so healthy in 1997 when the Conservatives lost power. The question is why do differently this time?

 

[KDMINX]

Thanks for your responses so far.

I don't for one minute think that tackling the obscene public sector wage bill would be the whole solution. It's just what I would so first!

I get very annoyed at people who think it is wrong to make cuts now and who hold up "sacred cows" such as health and education. It is essential that we find ways to deliver these services for much less money.

Imagine you have a spendthrift friend. He's been living the highlife, beyond his means, for some time now and is saddled with debts and a large interest bill every month.

You would advise him to cut his spending, to cut it right back to the essentials and to cut it now. He can have the "nice-to-haves" later when the debt is smaller.

It's clear that we need a cultural shift within the public sector. The problem is that whilst DC clearly has the correct principles I don't think he has the balls!

 

[jeffbearcroft]

So are you suggesting that, rather than cut expenditure, what we need now is a boom in public spending?

If so, what level of annual deficit did you have in mind - currently annual public spending is circa £150 billion more than income.

I agree. The last time we were exiting recession (under the Tory John Major Government) in the early to mid 90's, the only thing that really got us out of the deficit then was increasing tax receipts from more employment. People's memories are short, but it was indeed a large public spending boom that helped reduce unemployment (Way higher than it is now) And is arguably the main reason why the economy was so healthy in 1997 when the Conservatives lost power. The question is why do differently this time?

 

[telemax]

So are you suggesting that, rather than cut expenditure, what we need now is a boom in public spending?

If so, what level of annual deficit did you have in mind - currently annual public spending is circa £150 billion more than income.

I'm not suggesting anything, I'm just repeating how these problems were overcome in the past.

 

[harry munker]

I'm sure cutting the pay of higher paid employees would save a fair amount of money (if someone can navigate the obvious breaches in contracts of employment) but in reality it would only be a fraction of the annual deficit of £150 billion.

There is a fair degree of political comment at the moment about public waste, unaffordable pensions and high pay etc but in reality, the public sector has to stop doing a lot of things it is currently doing to save the sort of money required.

Since 1997, public sector employment has risen by circa 800,000 (from 5.2 million to 6 million). A lot of jobs are going to have to go re-balance the economy. Very sad for the people involved but I really don't see a choice.

Whatever the reasons or whoever is to blame, the country is in a deep hole and drastic measures are required.

So I think the sooner the reality sinks in the better. The alternative is a Greek style meltdown at some point in the future.

Jeff Bearcroft

The last labour government

 

[telemax]

The last labour government

Unfortunately that old chestnut will only last for a couple of years

 

[harry munker]

If lots of public sector jobs go, then surely we're into a vicious cycle - more people claiming off the welfare state, which just puts more pressure on the public purse.
I agree that the current state of affairs is unsustainable, but the only way to get out of the mess we're in, is to kick start business in the UK.
More business, means more employment, which means more direct and indirect tax to go into the public coffers, allowing spending on the country and paying off our debt pile.
It's a difficult situation for the goverment and a definate poisoned chalice for the coalition. Not one I would want to be in, as an individual.

What just like that as if by magic...Businesses are there to supply a demand surely

 

[harry munker]

Unfortunately that old chestnut will only last for a couple of years

Hmm think its a little bit more than an old chestnut...Only a few weeks ago an outgoing finance minister in the treasury leaves a note for the incoming minister "sorry weve got not money left".

I would like to know where has the accountability been for all this.Sounds like gross misconduct that i,m sure any of us in our own jobs would probably face disciplinary action for.

 

[KDMINX]

The last labour government

Well that's obvious!

Standard theory is to run a surplus in the good times and a deficit in the bad times.

Brown and the rest of the Labour idiots thought the party would last forever, so they ran a big deficit in the good times to fund their extravagant spending spree. Then the bad times came and they were forced to run an enormous deficit.

Now there is no money left, we have an interest bill that is crippling and we need *BIG* cuts and tax rises to balance the books.

If DC does his job and cuts deep we can feel some pain now rather than huge pain later. But there will be pain, there’s no avoiding it. Labour drank the booze, we all have to suffer the hangover!

 

[leemason]

Back to the OP I think the first thing is to stop this silly ring-fencing of specific departments spending. You can't simply say that 60% of Government spending is out of bounds.

Anyway we have to make cuts that in the long term will last and make a real difference so here goes:

1. Move all major Government departments out of Central London and sell the buildings to the private sector. Yes there will be costs involved initially but re-locating to other areas will have three effects: To more fairly distribute economic activity to the rest or the UK where it is needed more, to reduce the stupid cost of property in London, & to operating departments in lower cost parts of the country.

2. Move Parliament outside London (somewhere North of Manchester). Again this is have many positive effects. Where Parliament/Government move many other allied activities will move as well, again lower cost operation and accomodation, redistribution of economic activity, etc. It will also mean that PM's will need less in the way of expenses to pay for weekday flats or hotels as a flat in Carlisle is a lot cheap that one in Westminster or Chelsea!

Another spinoff will be that some people will not want to move and can be made redundant without replacing them therefore slimming down public sector jobs in the process.

 

[KDMINX]

Back to the OP I think the first thing is to stop this silly ring-fencing of specific departments spending. You can't simply say that 60% of Government spending is out of bounds.

I aggree!!

 

[telemax]

Hmm think its a little bit more than an old chestnut...

If said cuts come to pass and bite joe average hard, along with some hefty tax increases and we get pushed into a double dip then it's going to become harder and harder to blame the last lot over the next couple of years. Thats all I'm saying.

 

[telemax]

Thanks for your responses so far.

I get very annoyed at people who think it is wrong to make cuts now and who hold up “sacred cows” such as health and education. It is essential that we find ways to deliver these services for much less money.

That works until you need an operation and they tell you there's a one year waiting list

 

[directmarketingadvice]

Back to the OP I think the first thing is to stop this silly ring-fencing of specific departments spending. You can't simply say that 60% of Government spending is out of bounds.

Agree.

1. Move all major Government departments out of Central London and sell the buildings to the private sector. Yes there will be costs involved initially but re-locating to other areas will have three effects: To more fairly distribute economic activity to the rest or the UK where it is needed more, to reduce the stupid cost of property in London, & to operating departments in lower cost parts of the country.

Agree. And would have the extra benefit of putting some distance between the politicians and the civil service.

2. Move Parliament outside London (somewhere North of Manchester). Again this is have many positive effects. Where Parliament/Government move many other allied activities will move as well, again lower cost operation and accomodation, redistribution of economic activity, etc. It will also mean that PM's will need less in the way of expenses to pay for weekday flats or hotels as a flat in Carlisle is a lot cheap that one in Westminster or Chelsea!

I get the logic, but I think Parliament needs to be in the capital.

Steve

 

[AndyPhelps]

The very first thing I would do, would be to pull out of Afghanistan and Iraq, that is where most of the money went.

 

[KDMINX]

I get the logic, but I think Parliament needs to be in the capital.

A lot of countries have their "administrative capital" away from the "corporate capital" (the US, Australia etc.).

I agree that a lot of what goes on in central London could be done cheaper up north, somewhere like Milton Keynes.

I don't think I'd move the whole shebang though.

 

[KDMINX]

The very first thing I would do, would be to pull out of Afghanistan and Iraq, that is where most of the money went.

It's a different argument but you can't defend on the goal line. You need to take a global view to UK security.

 

[jeffbearcroft]

Ok thanks for that.

Just as background, I am not aware of anyone that thinks the country should be increasing public spending now - that includes all 3 main political parties, the governor of the bank of england, every economic analyst and the overseas institutions that lend money to the UK.

I really think that if a boom in public spending were the answer to our current problems, someone would have thought of that already. But there is a deafening silence on that score.

But I am happy to keep an open mind on it if someone can produce hard evidence such a policy would work in the current economic environment.

Regards

Jeff Bearcroft

I'm not suggesting anything, I'm just repeating how these problems were overcome in the past.

 

[telemax]

It's a different argument but you can't defend on the goal line. You need to take a global view to UK security.

I live 3 miles from Brize Norton, they are out circling the planes around all day Thursday and Friday at a cost of £10k per hour, even the people working on the base think it's a waste of money, right in the heart of Dave Cameron's constituency. That would be a good place to start cutting I reckon.

 

[Dawg]

Are they not introducing a 'Star Chamber' where ministers have to defend their budgets, which means that nothing is ring fenced?

Or is this PR puffery, and it's same old, same old?

As an aside it's interesting that the unions, historically there to defend labour against rogue employers, is now defending it's members against everybody else, (or a democratically elected government anyway):

"Unions, meanwhile, have warned of a "chilling attack" on the public sector..." BBC

 

[KDMINX]

"Unions, meanwhile, have warned of a "chilling attack" on the public sector..." BBC

The BBC is sickening in its “leftie liberal” agenda!

Huge swathes of the private sector are on short time, have taken a pay cut, or are banking hours. It’s time the public sector took some of the pain. As for 2 years salary plus redundancy for people doing “non-jobs” that just sickens me.

As for the unions, they are still fighting battles left over from the ‘70s

 

[jeffbearcroft]

Yes, politicians will always want to point the finger (opposition parties, bankers, the public sector, non domiciled residents etc) but in reality, the first thing to do is to fix the problem which is a massive budget deficit.

We all need to accept a painful re-adjustment in our standard of living because the country has been living beyond its means for too long.

We also need to be a bit more grown up about this and recognise that we can only get out of this mess by working together not looking to blame others.

Jeff Bearcroft

If said cuts come to pass and bite joe average hard, along with some hefty tax increases and we get pushed into a double dip then it's going to become harder and harder to blame the last lot over the next couple of years. Thats all I'm saying.

 

[KDMINX]

http://news.bbc.co.uk/1/hi/business/10264721.stm

 

If lots of public sector jobs go, then surely we're into a vicious cycle - more people claiming off the welfare state, which just puts more pressure on the public purse.
I agree that the current state of affairs is unsustainable, but the only way to get out of the mess we're in, is to kick start business in the UK.
More business, means more employment, which means more direct and indirect tax to go into the public coffers, allowing spending on the country and paying off our debt pile.
It's a difficult situation for the goverment and a definate poisoned chalice for the coalition. Not one I would want to be in, as an individual.

It is even more complex than that - the decelerator effect starts the moment people fear for their jobs and incomes; less secure in income, sso don't go to restaurant / spend on clothes = less money in retail sector etc etc.

Additionally, anyone sub-contracting to Government will be reviewing their sitiuation, considering lay-offs, putting off capital expenditure.

Then there is the big and immmediate negative cashflow effect of redundancy payouts, consultations, legal fees, unfair dismissal claims, industrial action.

This is all well ahead of the increase in benefits and unemployment figures which will reduce market confidence in the Euro.

That being said, The problem has been created, and has to be resolved, so big cuts are still the long-term answer...

 

[the king]

I notice the usual partisan comments - but ' must admit nowhere near as vociferous as I might have expected. A similar take on the election results; aside from the Clegg effect during the 'chats' (another opportunity that didn't materialise) I would have expected a Conservative landslide - that's not to say I'm not realistically pleased with what turned out.

Where however was the honesty during the campaign? People know that debt is at catastrophic levels yet despite that this was the one subject that dare not speak its name!

It can be argued that such position arose as a result of the last government's policies; there is also a good deal of truth that not only is the problem global but is not as bad as it might have been (!) if GB hadn't saved the world.

My take however is -

lack of experience and/or balls by those employed to regulate;
​

'twas deemed not nice to say 'no' to banks etc. so they were allowed either by omission or commission to screw-up not only their investment subsidiaries but also payments and safekeeping operations. We came pretty close to systemic failure - literally within hours!

Now the banks have your money - with which to pay their bonuses - the 'market' (cf 'the banks'!) now wonders whether certain sovereign states are up to the money. As with everything there is some degree of truth in that assertion; not everyone was happy regarding EU accession etc. - however... there has been a not-so-subtle movement in risk: banks are now relatively OK - most making substantial profits - what do they care whether shareholders are called Rockefeller, Morgan or HM Treasury?

But do notice however the not-so-subtle transfer of liability, it's now whole countries (plural) that face going down the Swanny - while banks relocate or offer consultancy.

So, to move on - the dichotomy again:

cut spending to pay back debt - or - not, in expectation of stimulus?
​

Thanks to the policies of the last government we now have a better infrastructure than we otherwise would but at the cost of a far larger public sector, coupled with 'deals' to the private sector (PPP schemes etc.) which to the outsider always defied rationality.

The knee-jerk reaction of slashing public sector numbers and/or pay is fraught with issues - these people allegedly have rights too!

Relocation to save money may well work but the benefits tend to be no where near initial expectation and accrue only over the long-term.

Encouraging a consumer-led boom also doesn't bear thinking about; despite current interest rates most people allegedly have little disposable income, the boom will again be funded by credit even though the only reason we hear so little about personal debt these days is that it's paled into relative insignificance.

At the same time public services are under pressure; yet another Dispatches last night about social services not being able to deliver - both for their clients and their employees...

What's left of 'society' after that bloody woman is in ever-increasing crisis; in one way it's not only monetary, yet in another it is all attributable to money - specifically the institutionalisation of greed. Understandable at some levels (MPs were due allowances not expenses), unbelievable at others (are people really worth their bonus, whilst for others state benefits are realistically a more viable option than employment - even if there was any?)

It's society that needs to change, not encumbering the 3rd sector with responsibilities it can't itself meet - although I am tempted to proffer my two-pennyworth:

Parliament​

 

[Homshaw]

I think we are in real problems at the moment

We can't go on with one in every four pound of spending being borrowed but cuts of the magnitude required must choke the level of economic activity.

Hard times ahead.

 

[Gord]

Everyone agrees (I hope) that jobs have to go from the public sector and be created in the private sector.
Cutting the public sector today ( or rather 12 months ago , as should have been the case if it were not for attempting to hide the problem & hold onto power ) , means that we are not so far down the Swanny and we still have the financial clout to throw billions at private sector investment and incentives, as required, to help dig us out of the hole.
Maintaining public sector jobs 'for the sake of the economy' is an ongoing cost or overhead.Pulling the cash out and putting it in the private sector is an investment which is flexible.
It's not rocket science.

Public sector should be given the choice of 10% pay cut across the board* or 500-800,000 job losses, simple as. Presumably, the 'socialist values' of sharing the pain will overcome the mansion dwelling union leaders on this one, and common sense will prevail.( But I won't hold my breath)

*Obviously you cut higher earners more and lowest earners less or not at all.

 

[leemason]

A lot of countries have their "administrative capital" away from the "corporate capital" (the US, Australia etc.).

I agree that a lot of what goes on in central London could be done cheaper up north, somewhere like Milton Keynes.

I don’t think I’d move the whole shebang though.

I think that's a good point. Surely we should be looking for Government that does a good job a least cost and especially these days it makes no sense to have hugh Government building in one of the most expensive locations in the World.

We have to think radically if we are to solve our current problems. If not it's going to take us the next 20 years (minimum) to pay off the debts we are currently massing. David Cameron now says that we will have a public debt of £1.4trillion pounds within 5 years. Just cutting around the edges won't do it.

 

[KDMINX]

I think the Major change in the public sector needs to be a shift from “is this service needed?” or “is this service good?”

To

“Does this service offer value for money?”

The highways agency “officers” in their 4x4s that are dressed up to look as close to police cars as possible. I can’t see how they offer value for money!

 

[leemason]

I think the Major change in the public sector needs to be a shift from “is this service needed?” or “is this service good?”

To

“Does this service offer value for money?”

The highways agency “officers” in their 4x4s that are dressed up to look as close to police cars as possible. I can’t see how they offer value for money!

We seem to have an awful lot of "para-Police" services in different guises. I think most of them could go...

We should also cut the number of CCTV surveillance run by local authorities as these millions of cameras must surely cost a fortune to run and monitor properly.

 

I think the Major change in the public sector needs to be a shift from “is this service needed?” or “is this service good?”

To

“Does this service offer value for money?”

The highways agency “officers” in their 4x4s that are dressed up to look as close to police cars as possible. I can’t see how they offer value for money!

Theoretically yes; except that Public Sector manage to repeatedly mistake 'value for money' with 'cheap quote'.

Their tendering processes have beeen the focus of much attention, but still lack any sense of commerciality, focussing far more on PC and statisticcal criteria.

 

[leemason]

Public sector institutions have for far too long been run based on political dogma. PFI is an ideal example. Gordon decided that this is the way to go despite the evidence that it was not appropriate for many projects.

This caused ridiculous situations like Oxfordshire NHS trust being forced into a contract for cataract operations that they did not need and could not use. They had to pay a private sector provider for operations that they did not want because it was part of an NHS wide contract.

 

[Lorro2]

This is all the usual mindless pub bore bar ranting. Essentially most of you are clueless and I wouldn't employ you to wash my socks. Firstly we must axe the welfare state to all but the most needy. Living on benefits has become a lifestyle choice for great swathes of the country. What about all the waste in the private sector that has to be dealt with using public funding.

 

This is all the usual mindless pub bore bar ranting. Essentially most of you are clueless and I wouldn't employ you to wash my socks. Firstly we must axe the welfare state to all but the most needy. Living on benefits has become a lifestyle choice for great swathes of the country. What about all the waste in the private sector that has to be dealt with using public funding.

Phew! That's that dealt with then.....