8 July 2009

Over the last few weeks there appear to be an increased level in the number of stories about the private sector bearing the brunt of the recession whilst the public sector sails on regardless. It is an interesting concept and one which deserves significant time expended on it by the very best political brains for the good of the country.

Is it true? Looking at the facts it is clear that the cuts in jobs and expenditure is falling almost entirely on the private sector. Public sector employment has risen sharply over the last 10 years and shows little sign of contracting whilst the rise in unemployment can be attributed to private sector cutbacks. In general though it is fair to point out that the public sector often lags behind the private sector as it is difficult to implement change and is subject to political influence rather than economic reality.

We are entering a different climate, one which many people are too young to remember -austerity. The post war mentality of save, mend and make do lasted with us until the early 1980’s and then an era of spending has changed the way that we live. I still live by a mantra that if I cannot buy it with my own money then I do not buy it. It may be out of favour as a philosophy and yet I have no money worries and live within my means! In corporate life however we need to learn the value of money once again. Political spin where all spending is “investment” needs to be stopped. Capital programmes are investment but current spending is exactly that – spending.

If we do not cut public expenditure sharply then we will return to an era more akin to “Life on Mars” with record unemployment, industrial unrest and appalling public services. We hear that cuts in public spending means a cut in services. This is untrue. Looking at productivity levels in the public and private sector over recent years we see a gap of about 20% – indeed in recent years public sector productivity has fallen!

The cuts do not need to be across the whole spectrum but the increase in productivity does. Thus if a department such as Health is protected from cuts then that is in return for an increase in productivity. In this department alone the waste is enormous and simple business techniques could save billions of pounds which could result in more being done for the sick and vulnerable.

I would like to see ALL public authorities conducting an exercise whereby every service is investigated and is contracted out to the private, social or voluntary sector unless it can be proven that to do so would be more expensive or result in a worse service. Waste would soon be stripped out, creativity and dynamism would result and I believe that we would get a better service for a lower cost. Eventually this would lead to more jobs, lower taxes and an improved social structure.

So will this happen? Maybe, but slowly, as it appears that politicians believe that to articulate this would lose votes. I am not sure that is true but we need a strong leader prepared to do the right thing rather than the vote winning appeasement.

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