What public expenditure should be cut?
BBC’s Newsnight programme is appealing for viewers’ proposals on how best to cut public expenditure. Myself, I agree with the government that cutting public spending in the early stages of a massive recession would be insane (although HM Loyal Opposition doesn’t seem to grasp the reason for that view, the strongest reason currently on offer for not risking a Tory government next year). But sooner or later public expenditure clearly will need to be cut back, so I have offered this ten-course menu of cuts to Newsnight:
1. Scrap ID cards and the associated giant national database (obviously). They are intrusive, irrelevant to terrorism, won’t bother serious crooks, will intensify discriminatory stop-and-search, won’t be capable of storing reliable information, and will be open to every kind of abuse.
2. Don’t renew Trident. We don’t need nuclear weapons, nor rockets, submarines, ships, aircraft or hot-air balloons to deliver them. For the foreseeable future Britain can’t afford to pretend to be a world power. A cold douche of realism will be salutary.
3. Don’t build any more prisons — neither three Titans nor five smaller ones. Reduce the size of the prison population, don’t keep on building new homes for an even bigger one. Around half the prison population ought not to be there: it’s far cheaper to address their problems outside prison than in it.
4. Scrap the NHS giant computer system.
5. No more failed politicians, businessmen, actors, ministers’ nephews or other amateurs to be appointed as ambassadors or high commissioners. Career diplomats are much cheaper (and far more effective).
6. No more Private Finance Initiatives, Public-Private Partnerships, or other kinds of sleight-of-hand dodges to postpone public expenditure or keep it off the public accounts: in practice risk can’t be transferred to the private sector and the private sector is hugely more expensive.
7. Nationalise the failed banks — much cheaper than paying off their bad debts for them and then pouring money into them as bribes to induce them to do their job of lending.
8. Bring the quangos, hived-off agencies and most privatised bodies performing public services (such as privatised prisons) back under direct ministerial and departmental control. Not only will they work much more economically: you won’t need to pay their chief executives and other senior managers nearly so much when they are middle-ranking civil servants again.
9. Abolish, or severely limit, private medical practice by doctors etc. trained by the NHS at public expense. Consultants will deliver much more to the NHS, for no more money, if they don’t spend half their time in Harley Street treating Saudi princes while pretending that private practice only accounts for 3 per cent of their time.
10. Remove all British troops from Afghanistan within three months. Their presence entails unacceptable casualties, serves no discernible purpose, is irrelevant to the real problem of al-Qaeda terrorism (i.e. Pakistan), antagonises ordinary innocent Afghans, is set unattainable goals, and costs millions.
Actually all ten proposals are desirable in themselves, even if there were unlimited money available. Taken together they should free up enough resources to double overseas development aid, launch a huge programme of public building of houses, roads and other amenities as a job-creating fiscal stimulus, take a few million people out of income tax to get them spending again, and bribe the International Olympic Committee to give their damn games to someone else.
Brian
While we’re scrapping Trident let’s also get rid of those silly-large aircraft carriers we’re building for the US Navy (well, not really, but they’re probably only ever going to be useful for the sort of operations which would be run jointly with the US, anyway).
On the subject of Trident, though: Britain used to have other nuclear weapons. In particular, it had, I think, nuclear warheads for cruise missiles. Those were all disposed of. Was there a particular reason for this? My question is, if Britain decides to keep a nuclear capability is there an option for something much cheaper than Trident and perhaps something more appropriate to any supposed threats from the smaller nuclear powers or are there treaty obligations or anything which prevent that course.
Associated with this is the thought that it’s pretty easy to give up nuclear cruise missiles. You just get rid of the warheads – you’ve still got the submarines and even the missiles for conventional use. (Admittedly there might be a verification issue). On the other hand, a Trident submarine without nuclear missiles needs to be put on the shelf next to the chocolate teapot so, politically, it’s really difficult to swallow the sunk costs.
Brian writes: Ed, as usual you raise some interesting points. Personally, I can’t see the slightest justification for Britain to retain any nuclear weapons at all, even little ones. I simply can’t conceive of a plausible scenario in which we (alone) would even consider using such a weapon. In any case we wouldn’t be able to maintain our nuclear weapons, still less use one in anger, without US permission, so we might as well rely on American nuclear weapons anyway, to the extent that we need to rely on the things at all. Moreover reducing the number of nuclear-armed powers in the world, even by one, would be a plus.
Reluctance to do the sensible thing because of the amount of money already spent on the project to be scrapped is an excellent example of finding oneself in a hole and carrying on digging. It just makes the decision to scrap even more urgent.
I entirely agree with you that we should also abandon plans for enormous aircraft carriers. They are a symptom of government (and opposition) delusions about the kind of global military role that Britain can actually afford to play in the world. The number of occasions when British military intervention overseas (especially on a scale involving deployment of giant aircraft carriers) can be justified as both affordable and beneficial is realistically minuscule, with the important exception of contributing sometimes to UN-authorised peace-keeping when we can provide something that others can’t. It’s time to lay the ghost of Blair once and for all.
Brian,
The only one of your list that needs working on is bank nationalisation.
Which banks? Do you include building societies? If so, what about ones owned by non-UK companies? Even if you include only those banks where HMG holds shares Lloyds Banking Group and RBS, neither of these are Northern Wrecks. The cost of nationalisation of Lloyds- HMG 43%- would be substantial And that-our-43% shareholding would be wiped out. And what about Barclays? No government shareholding, but government assistance. How much do you think it would cost to buy Barclay’s shareholders out?
How much of your expenditure would be saved?
t
Brian writes: Oh, dear. Would it have to be so difficult and expensive? I seem to remember one of the media financial pundits writing that since several of these banks would have gone bust without the government’s taxpayer-funded rescue packages, it would be reasonable to value them at zero (or as close as makes no difference) if and when the time came to nationalise them as the only way to keep them functioning. It certainly looks to a total non-numerate like me as if it ought to save government money to take the government-dependent banks into public ownership and decide in the public interest how they should be run to help revive the economy, than to continue to pump money intravenously into them in the largely vain hope that the funds would be used for lending instead of salted away to build up the bank’s recapitalisation against a rainy day — and to resume payment of obscene salaries and bonuses to its senior managers. Recapitalisation is after all a form of insurance, and in principle the government doesn’t take out insurance against risk. But I suppose you’re right, and it wouldn’t work out that way.
One shouldn’t mix up the issue of the morality of deploying nuclear weapons with that of our ability to maintain an independent nuclear deterrent. The French have an independent nuclear deterrent. Why can’t we have one?
The two countries’ very divergent responses to the actively hostile American response during Suez set a pattern that continues to this day; poodlism for us, and a rather different ‘never again’ for them. However, I see no reason to believe that this is set in stone for all time.
Unless you believe that Europeans no longer require an ability to project military power, we need those aircraft carriers too.
Sentencing policy should determine prison capacity, not the other way around. We do have a problem in this country compared to our neighbours, and we need to find out why. Be that as it may, most Brits do still believe that there should be an element of punishment in our response to criminal behaviour.
On quangos, PFI and national ID databases, I couldn’t agree more, but the NHS does need a proper IT system. The real problem is that absolutely nobody in government or even the civil service is truly computer literate – a job in an IT department doesn’t usually lead to a career in Parliament, and a degree in computer science won’t get you fast-tracked, whereas a first in humanities from Oxford will.
Doctors ‘trained by the NHS’ are very seriously overworked as juniors. They’ve paid the debt you imply. True, consultants now consistently abuse the arrangements that allow them to divide their time between private and NHS patients. For that you can blame the system that put the administrative tea-boys in charge of the hospitals rather than the senior medical staff, who were once unstinting in their commitment.
Brian writes: Thank you for these thought-provoking comments. On the question of the UK nuclear deterrent, I really wouldn’t argue the case for getting rid of it primarily on moral grounds: it seems to me a gross waste of money and also an incitement to British governments to delude themselves about Britain’s role in the world. Why squander millions, or billions, on a deterrent which adds nothing to the US deterrent and in a situation where there’s no-one to deter and where it’s impossible to conceive of a scenario in which any sane government would contemplate using it? I’m not convinced that we need one just because the French have got one. Would we be less secure without it than Germany, Italy, Spain, Poland, Canada, Australia…?
I can see a case for a joint European military capacity, possibly even including aircraft carriers, controlled, funded, manned and deployed by an EU strategic authority, probably as a sub-set of NATO. But I can’t see any argument for Britain on its own spending huge amounts of money on such massively expensive toys, nor can I envisage a future situation in which we would or could deploy them other than as part of a European force, probably under both NATO and UN auspices.
On prisons, I agree that sentencing policy is part of the problem of our grotesquely overcrowded prisons. Almost every prisons expert agrees that around half of all the people now in prison ought not to be there, and that we should stop sending to prison in the first place people whose problems are best addressed more effectively (and cheaply) in the community, in varying ways. The fact that we lock up a higher proportion of our population than almost any other civilised country apart from the US surely suggests that we’re doing something terribly wrong? Simply building more and more prisons for an ever-expanding prison population which is already far too large (and unnecessarily large) is either simple-minded, or — more likely — craven pandering to the most ignorant and mean-minded of the tabloids.
On the NHS computer system, of course a functioning IT system is essential, but it should be a large web of semi-independent (but mutually compatible) linked networks, not a single monster system, as the NHS has repeatedly been warned. There are in fact numerous computer-literate people in the civil service: the trouble is that they frequently aren’t the ones who are actively involved in IT decisions from day to day; those who are involved often have little idea about what they really want and need (and how a good IT system can supply it); and at senior management levels, in both the public and private sectors, decisions are often taken on bad advice by top managers who wouldn’t recognise a computer if they tripped over one in the street. Another problem is that IT consultants who win public sector contracts are often the cheapest rather than the best or most suitable, officials often being scared to advocate spending more public money than appears to their bosses to be necessary by choosing consultants who aren’t always the cheapest available.
I don’t know how you stop the abuse of the NHS by consultants who do more private practice than their contracts permit. It seems beyond doubt that, as you say, hospital administrators who are not clinicians are often not up to the job; but I’m not convinced that handing administration to (or back to) the consultants would necessarily be any better. Doctors, however good as clinicians, are no more likely to be good managers than good teachers, good lawyers or indeed good MPs (who often fail miserably when they become ministers and find themselves having to run a big department of state).
These are all complex and many-sided issues on which many more than one view may be valid. All the more reason to discuss them!
Prime Minister Gordon Brown has no idea of what is involved by cutting expenditure while maintaining or even improving the service provided
In recent Telegraph article by Roger Bootle the comment was made “Over and above this there could be scope for cuts in particular areas where waste could be identified….”
Having had over 25 years of hands on installation of waste reduction methods and system in all manner of concerns, private & public, I suggest to you that as a minimum there is 12-15% of waste of resources in all public services which do not have an ongoing waste identification, and reduction system incorporating feedback from the “coalface” upwards on a weekly basis. Coupled with prompt action by management to correct. Waste is like whiskers, without shaving they grow !
the 12-15% cost saving can usually be achieved within 12-15 months of new systems installation, plus staff training. There after further considerable cost reductions often accrue.
I have a small slide show which I could send you “on disk” covering the above subject
As was said by Gen Craufurd in 1810, “Successful operations involve doing everything that is necessary and nothing that is not”
THIS IS WHAT MR CAMERON AND THE CONSERVATIVES ARE ABOUT
Brian writes: Opposition parties, especially those on the right in politics, are always on about ‘waste’ of taxpayers’ money. And when they get back into office, they find that identifying and eliminating waste is much, much harder than it looked. Anyway, one man’s waste is another man’s lifeline. Most of those with experience of both the public and private sectors testify that there’s far more reckless waste in large parts of the latter; it just doesn’t come under public scrutiny and is easier to conceal. But I have no doubt that ‘Ferrand’ is right in saying that “what Mr Cameron and the Conservatives are about” is persuading us that once in power they will perform the alchemist’s trick of savagely cutting government expenditure (to make room, among other things, for cuts in taxes on the rich) while simultaneously spending more on public services.
The biggest problem facing the country as a whole is Pensions Revision particularly in the non productive public sector.If we do nothing average people in the private sector will end up with pensions worth a quarter of the public sector average person ,the difference in relative contributions having to be paid for by the private sector productive persons -this surely will lead to social division -especially if most public sector persons retire at 60 and the private sector person has to work on to support them until around 70.The public sector persons will be the main people going on foreign holidays and sitting in cafe’s while their private sector servants serve them.The private sector persons lack of spending power will also lead to further recessions in the future and increase their dependence on the State which has not enough financial resources to support them, especially if the big tax payers and the younger tax producing workforce desert the uk for greener grass countries.
Any Government you might think would therefore revise public sector pensions to correct this potential scenario. The Conservatives have said this should start with MPs and then pubic sector employees if their Unions could only see the light, but moving to comparative reduced payout pension schemes as private sector persons are now having to look forward to may be beyond them and the future decline of Britain assured.
So my suggestion is to cut taxpayers contributions to public sector pensions ,or substantially revise its basis, in order to cut down State expenditure and help solve the long term problems retaining the present system will bring about.
Brian writes: John, many people in Britain will agree with you: public sector pensions are (predictably) a fashionable target for the Murdoch press and the rest of the populist tabloids, the Tories, the LibDems, and other riders on the bandwagon. People tend to think of public sector ‘persons’, as you call them, as senior Whitehall civil servants like Sir Humphrey, whereas the overwhelming majority are of course people such as nurses, teachers, postmen, soldiers and policemen — plus a quite small band of junior civil servants earning nothing like the salary or pension of Sir Humphrey. There is much envy of public service pensions, partly because of the widespread misapprehension that they are non-contributory. The fact that they are index-linked is also a source of anger and jealousy, despite the fact that for many years index-linking has been worth far less to pensioners than a link to average earnings would have been — in other words, for years public service pensioners have been losing out compared with the average of those still in work. Your reference to ‘tax-payers’ disguises the reality that in this context the tax-payers are the employers, and have the same obligations towards their employees as any other employers, including paying their share of pension contributions — which, because public service pensions are not funded out of investments, come in the form of direct payments from the Exchequer, and always have done.
I suggest that you might usefully look at the cogent points in a recent letter to the Guardian at http://bit.ly/1QEl7M.
I also note the give-away reference in your comment to “the non productive public sector”, a familiar and unwarranted smear from Thatcher days. Society’s wealth, in the form of services as well as tangible goods, is produced just as much by nurses, teachers and civil servants, and any other public service workers that you care to mention, as it is by train drivers, hairdressers and indeed workers on production lines turning out pins or boilers: and rather more so than anything useful produced by hedge fund managers awarding themselves salaries, bonuses and pensions beyond the wildest dreams of even Sir Humphrey, let alone your average primary school teacher.
All that said, of course the level of public service pensions must be, and invariably is, kept under constant review to ensure that it compares reasonably with pensions of comparable employees in the private sector, and that — subject to the fulfilment of the basic obligations of the state to its own employees — they are ‘affordable’, although ‘affordable’ is a rather fluid concept.
While I accept some of your points relating to ‘greater issues’ and ‘non productive public sector’ this does not detract from my basic point that social division and uk demise will ensue if nothing is done.Can i refer you to the following article : http://www.timesonline.co.uk/tol/money/pensions/article65977 dated 29 june 2009 to put the case that public sector pensions are not ‘affordable’ to the nation and need to be on your list of necessary cuts in government expenditure
Brian writes: I’m afraid this link doesn’t seem to work, and without more information I’m afraid I can’t identify the article.
reference should read http://www.timesonline.co.uk/tol/money/pensions/article65977 dated 29 june 2009
Brian writes: I’m afraid this link doesn’t seem to work either, and without more information I’m afraid I can’t identify the article.