For those of you new to this blog: hello, and I hope you appreciate something different here.  The first difference may be that, although I am a committed Liberal Democrat, employee at CentreForum, 100+ poster at their blog Freethink, etc – I am not a tribal politician.  The issues are debated on their merits: I like some Conservative policies, some Labour, though clearly neither  enough.

And a good thing too.   Who needs blinkered opinion? Not that such a thing exists in the blogosphere, I’m sure.

To prove it, this post is about John Redwood MP, one of the brightest and most uncompromising Tories.  I spoke alongside him, and Simon Griffiths and Steve Freer at the Conservative Conference a couple of weeks ago.  It was my second-only time before a Conservative audience (the first is blogged here).  While the first had the modest aim of solving poverty despite a fiscal crunch, the second merely intended to achieve Public Services: 10% cheaper, 10% better?

No problems.  Next week, no doubt Global Warming will be fixed while the participants consume a well-deserved dish of french pastries.

I furiously jotted down notes the night before.

(I got no help from other think tanks.  Demos has helpfully told us all that the secret to being more efficient is being more effective.  It feels like pre-Crunch daydreaming.  Reform call for slashing 10% off doctor’s salaries.  Sure, look forward to that strike.  But at least it as an attempt: amazingly, there is very little out there on the issue that will dominate politics till 2020 at least.  Vince’s paper is still the best.)

My natural position is scepticism: if someone thinks it is obvious how to do public services on no cash (hi Mark), they are probably simplifying just a little.  But the punters deserved some substance for schlepping through the rain to hear an unknown like me, so, in no particular order:

  • I questioned the premise.  Not because it was impossible, but in my experience good ideas come from below. You don’t put a bunch of self-important Directors (= politicians) on the job: you listen to the staff, appropriately incentivized.
  • I point out that this has never happenned before. As my chart from A Balancing Act suggests, not even Mrs Thatcher actually cut public spending.  It is really difficult.  There are contractural reasons why spending cuts need to be afforded.  Redundancy payments for starters.
  • There are some win-wins.  Prisons – why pay to educate people in crime – at £50k per year per head?? Why so many short jail terms? More prevention, less treatment in health too. Welfare is a popular one here: less welfare good . ..  is it?
  • Localism Everyone’s favourite liberal idea.  More on that later.

John Redwood went first. His major point was: in the private sector, no-one would blink at this target.  It happens all the time.  He gave examples from his experience; error rates of 150 per 100,000 being brought down to 10, say (in the car parts industry).  You might argue that manufacturing allows a certain perfectibility that services don’t – but in the benefits system, the error rate is thousands per 100,000.  It is surely not that much in insurance, say.

More anecdotes from his time at the Department of Wales – ridiculous duplicated jobs at the top, people buying their stationary centrally despite it costing more than popping down to WH Smiths (this is straight out of Yes Minister), his strong view (on the blog) that 450,000 civil service staff were too many in 1995, and 750,000 certainly too many now.  Consultants duplicating permanent staff jobs.   And  a really interesting though obvious point about capital spending: even though we all believe “capital good, current bad”, capital commits you to future current, so if a LA is rejoicing on getting some recession-dosh to build a new school, they need to look forward to their future current budget which may not afford to run it . . .

He also argued that public sector job cuts should occur through wastage, not forced redundancy: which is one area where the public sector might be pleased it was not subject to private sector discipline. In response to another’s question about hospitals, he said that giant hospitals are proof of diseconomies of scale, and that he would support more smaller outfits, closer to the patient.

JR got some serious kickback.  But not very much from me (I was next): I thought his points were theoretically sound, just that they evaded entirely the political fights.  The fact that Mrs T was not able to do this – and she was quite happy to have 60% of the population against her – makes one wonder how a future Conservative administration will pull it off.  I did point out that in Sweden, Canada and other countries that had managed this, long preparation and consensus had helped: and that the chance to achieve this had been seriously delayed by Gordon Brown’s obfuscation last June (see endless past posts).  I expected a mighty cheer for this, but got none.

The kickback mainly came from those who argued that JR was somehow making a moral point: private good, public bad, because private gets on with efficiency improvements naturally, public waits for a crisis.   I think this simplified his view, and he bridled at the accusation.  Private sector agents do not have as many mixed motives: you are, ultimately, about building a big profitable company.  You may build happiness and Loyalty in your client base, but for the ultimate reason that it pays to. (disclosure: when put in charge of sales at IG, I really pushed this idea.  It worked).

Do we want nurses and social workers to feel this way – to be endlessly experimenting, under pressure, into finding ways of doing things ever  more efficiently?  It takes no genius to see the problems with this approach. This may be why JR restricted himself to debates about administrators when talking about cuts.  No-one sees administrators in any other light than efficiency.  There is never any point to having one extra.

Like the Poverty event, I was again surprised by the un-Tory like attitude of the crowd.  There may be headbanging Eurosceptic hangers and floggers out there – of course – but they don’t tend to come to these sorts of event.

Most of the genuine Conservatives (i.e. not lobbyists or journalists) were local councillors, I reckon.  This may explain the unease at the whole topic; these people administer services, and know what it is like to be criticized for failing to do it well.  They find the top-down way that budgets are deciding inimical to long-term planning.  Everyone, on paper, agrees that it makes more sense to pursue subsidiarity to its logical conclusion.  But when I asked a particularly lucid councillor about whether she would prefer to have 3x the level of council tax and all the responsibility herself, I’m not sure I got a positive answer.

More localism is clearly necessary.  Our culture and system are as centralised as any other major state (the ippr ask which is cause and which effect). But I wonder whether this is an issue that moves cyclically: more power is devolved, bad practises and inefficiencies gradually proliferate, the government is called upon to Do Something, it all reverses . . .

Way too long for a blogpost, sorry.  I enjoyed JR.  I don’t agree with his economics views, but he is clearly brighter than 90% of MP’s and worth listening to.   Better than listening to a thick Tory, anyhow.


4 thoughts on “Conservative conference: John Redwood on public spending Cuts

  1. I agree with pretty well all you have said on managing public spending. I do take issue with the idea of letting natural wastage take care of staffing numbers. Almost all the turnover in the public sector is at the lower end of the scale where the numbers are but also where the service is delivered. You fail to replace social carers and you fail to deliver care services or you spend more in the use of agency temps to cover; fail to replace the folk on refuse collection and you don’t meet targets, It goes on. In the Council where I worked, we did an analysis of staffing growth; the largest single cause was central government directives, followed quite closely by compliance with audits, statutory returns and the like. Left to our own devices, numbers would have been managed down steadily because the Council ran on a presumption of reduced expenditure; new employment was only in respect of compliance or external funding.

    1. Yes but natural wastage/recruitment freezes do not remove the ‘right’ employees – turnover of senior staff across the public sector is very low and these are the expensive employees who also commission spend. The only way to get these out of the system is redundancy/early retirement and this costs as you indicated.

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