Labour MP Stella Creasy is calling for a complete re-think of public services. She told the Guardian’s Patrick Wintour that the twin pressures of debt and demographics mean that the old days of ever-increasing budgets will not return, even with a Labour government.
The whole idea that we can somehow manage this through salami-slicing does not match either the challenges we face due to demography or the financial mess the country will be left in. What does my generation of politicians do? Do we say, well, we will try our best to limit the damage, or do we say there is a new world out there, and it requires radicalism.
She’s right about the salami-slicing. This graph from the Local Government Association neatly illustrates what will happen if budgets are cut without a re-think of services.
As the budgets decrease, age-related spending and those activities that someone, somewhere at some time has deemed to be essential, start to push out all the other services. Each year, they are cut until there isn’t enough left to do anything worthwhile. According to the LGA, the green area covers such things as housing, culture, recreation and sport. If things carry on as they are, then, it will be libraries, parks and leisure centres that close. So much for that Olympic sport legacy.
You could probably draw a similar graph for many public sector organisations. Eventually, the must-haves and the sacred cows will close down other services by default.
Far better, says Stella Creasy, to start again from scratch with a complete redesign of state services. Under her “zero-budget” proposal, nothing would be ring-fenced and everything would be up for grabs. Spending, she argues, should be redesigned around what needs to be delivered rather than the organisation delivering it. Budgets should be pooled and the delivery of services in the future may not be done by the organisations that deliver them now. (Total Place anyone?)
As I keep saying, we are unlikely to see a return to the level of public service provision we have been used to. The state as we know it has peaked. The task of this decade must be to design a state that can cope with the next one. If we don’t, a lot of things are just going to stop working. It is extremely unlikely that efficiency alone can preserve public services as they are. The most we can hope for is that, if we are clever, we can stop 20 percent spending cuts translating into 20 percent service cuts.
There is indeed “a new world out there”. It’s one where Britain will see weaker economic growth, where tax revenues will struggle to keep pace with rising costs, where most of the people reading this will be dead by the time public debt returns to its 2007 level and where public sector austerity will be permanent. We are nearing the end of the state as we knew it. If they have looked at the figures, most politicians must know this. It’s refreshing, at last, to see some of them being honest about it.
Flip Chart Fairy Tales 
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Have we really blown our many chances to enrich our lives at all age levels?
Are we nurturing communities and families to help children to enjoy reading for example? Have we given up on moral upbringing to serve others? Are we focused on enjoyable basic and advanced education to solve real problems instead of passing easier exams? Are we designing technology that helps our work to add value faster?
Do our youth not want to work to fulfill the needs of others? Will they invest in themselves so they can serve paying customers with products here and abroad? Will they save and invest to improve capitalism? Will their work earn our country, our communities, our families and ourselves at least triple the value of what we managed to earn?
Or did we rely too much on politicians who chose to condone rip-offs, ignore rampant house price inflation, breed dependency, buy votes and still discourage saving instead?
Whatever the demographics, young and old alike can still decide to follow or become the leaders (individuals, institutions, charities and companies) who show us how to love and serve others so the rewards can follow.
The graph shown above – and the thinking of Labour MP Stella Creasy – is fundamentally flawed, in that while the top line declines steadily, the other lines below it incline ever upwards. This reveals an assumption that future economic growth will inevitably decline and that future tax revenues will also inevitably decline. This is not a foregone conclusion. In the event of the UK economy achieving even slightly higher levels of growth than now, this means the possibility of tax revenue growth increases too. It may seem “smart” to want to shrink the state – but it ain’t clever. As we have seen with the Olympics, the private sector may be suitable for non-essential roles in our society but as even Defence Secretary Hammond now grudgingly concedes, there are times when only the state can get the results required. G4S were crap and the Army was great – learn the lesson !! Government budgets reflect political policy choices. I do not believe we should be squandering £72 billion (latest estimate) on a semi-indepedent nuclear missile system. It is all a matter of choice: we can either spend public money on public services which help to achieve a decent society or we can steadily drift back to Dickensian times. I know which I prefer !!
Not so, it assumes an economic growth of 2.5% which if anything is on the generous side. The top line declines because the income allocated to local government is going to fall for the duration of comprehensive spending review and predicted to fall annually for the foreseeable future.
The lines beneath it increase because demand is on an upward trajectory.
G4S were crap and the Army was great – learn the lesson !!
What was the lesson, exactly? That we should keep a large body of men and women under military discipline so that, every 70 years or so, they can sort out the security that this sort of event?
The armed forces are a superb logistical team. But there are reasons for this which do not seem to be generally applicable – not unless we all want to live in barracks and follow orders from bosses on pain of being thrown in ‘glass houses’.
The point is that outfits like G4S are not equipped to take on important short-scale situations. Their personnel has neither the training nor the character to be able to do a proper job of ensuring the safety and security of athletes, officials and spectators at Olympic events. A real revelation has been the role of the volunteers or Game Makers. They have voluntarily contributed to the Games experience in a hugely significant way. It is better to have non-paid but eager volunteers within an event of a short time scale than it is to have low paid unenthusiatic employees of the type which G4S found themselves reduced to having to recruit. After many years, I have come to the conclusion that you only ever get what you pay for. If you try to get public services on the cheap, you normally end up with cheap rubbish – as happened with G4S on this occasion. Ultimately, it is a question of our own quality standards. Do we want low grade cheap public services or – as an allegedly civilised modern day society – do we want fully funded decent public services? Should our society’s “pie” be allocated disproportinately to the rich or should the pie be spread around such that it benefits all in our society? Societal wealth is common wealth – it belongs to us all, not just a privileged few.
Interesting thoughts raised by this post.
I recall that in my grandparents’ day, community action often meant action by the community e.g. householders would take a broom and sweep the path in front of their doorstep and take care to keep it clean and tidy; I remember clearing snow when I was a schoolboy.
I also recall a distant relative who’d spent time in Sweden explaining how his neighbourhood organised a rota for litter picking and all able-bodied residents were expected to take there turn.
These may appear to be trivial examples, but so many members of the public leave it to others or to the ‘state’ to perform even the most basic of tasks which immediately makes them more costly because of the bureaucracy attached.
Whilst I’m not advocating turning the clocks back completely, I think there’s a lot to be said for encouraging citizens to take a more active role in society and rethinking what we all expect from the state vs. what we can do for the state.
Not easy as I know from my own roles as a volunteer, often the same set of faces within a community who get things done!
Flatten the wage and pension structure across government, make redundancy easy across the piece. There will be no shortage of adequate applicants for the forseeable future – so cut the price. It will take a while to flush the system so new contracts need to start now. With any luck good people will go elsewhere where they might actually do some good.
New markets are needed. Perhaps cheap-and-cheerful missiles, RPVs etc would find a ready market, provided we stick to good commercial non-principles. The pharmaceutical industry could also benefit from a similar ‘creative’ boost to it’s markets and product line. In time-honoured tradition we could play both sides – at a good profit.
Very sceptical re volunteerism. I am pretty sure the model would be ‘sign on with this agency, take their courses and certification at your expense and then do as you are told’. Led by highly paid and slippery managers such an outfit would be guaranteed to deter all but the psychopathic or desperate.
As I keep saying, we are unlikely to see a return to the level of public service provision we have been used to. The state as we know it has peaked.
…and you keep being absolutely wrong, and never addressing the counter-proposition. Stop the flow – the flood, the torrent – of value to offshore secrecy jurisdictions and there is cash a-plenty for all the welfare state we need. This is a simple political project should all the G8 (or better, G20) act in concert, absolutely doable, and absolutely envisageable, given your (and Ms Creasy’s) alternative future is so bloody awful.
The inequality in distribution of income at the top end in USA is now worse than 16th century England! Now that is socially unsustainable in the medium run.
Local authorities need to place an emphasis on innovation and entrepreneurialism. There is no reason why the local Council cannot be the provider of choice e.g energy services: choosing to invest in renewable and low carbon energy and supplying it at a guaranteed price to local consumers. The inherent profits (that is reasonable rather than exploitative profits) could help to cross subsidise services.
Andrew is right. All our utilities – power, water, sewage, etc. – came into existence as publicly-owned services. Privatisation of these services has been a doisaster for the vast majority ion our society. Only the wealthy have benefited in any way; for every one else, it has simply meant way-above-inflation price increases. Nationalise the public utilities !! Try that on for size, Stella Creasy.
We elected politicians to privatize because the considerable capital required to modernize these vital parts of our infrastructure was not otherwise forthcoming from taxpayers…
…renationalizing would either be theft or prohibitively expensive for taxpayers.
Better to have the investors and users pay and receive the benefits without subsidy from the general taxpayer if at all possible…
…or should we add the buy-back fund to our children’s debts.
I don’t think we ever elected politicans to privatise our public utilities. What the Tories did was to flog off our publicly owned utilities at rock bottom prices; prices so low that only a fool or a person of principle would refuse to participate in this act of daylight robbery which is now being paid for by the future generations Needs2Cash says he is concerned about. Basically, a bunch of Tory spivs effectively stood on street corners offering free money to anyone who would take it. The real cost was having further Conserative governments elected who – through stupidity or sheer callousness – effectively destroyed Britain’s manufacturing base.
We have recently witnessed the current and previous government handing over trillions of pounds of free or dirt cheap money to banks and other financial institutions, many of whom have been involved in criminal conspiracies and mis-selling activities designed to rip off the poor, hungry and homeless. The latest “news” that they have been manipulating food commodity markets surely comes as no surprise and the fact that these institutions are almost certainly responsible for the deaths of untold numbers of people who have not been able to get food to sustain themselves. Please: let’s have no lectures from right wing ideologues any more. Their morality and even probity have been sunk without trace recently. Let’s remember: we were told in 1945 that Britain’s post-war debt made it impossible for us to have a national health service and a national welfare service. Clearly, these claims were untrue – as are the spurious claims being made by people like Needs2Cash. Of course we can re-nationalise our national utilities and we will all benefit in the long run from much lower and more realistic prices. No more rip-off Britain.
Removing taxpayer subsidies from unsustainable industry must continue so extinct jobs are not supported by wasting other people’s money. Work that adds value to any input, especially if it is exported, surely is the objective?
From The Guardian of 6 Jan 2012:
“Perceived wisdom is also that manufacturing disappeared under Thatcher.
If so, it was something that had already started. In 1970, manufacturing accounted for 20.57% of UK GDP. By 1979 that was down to 17.62% of GDP. By the time she left office, that decline had continued – albeit at a slightly slower pace, down to 15.18%. Now it is much lower, according to the ONS – down to 9.86% in 2010.”
Globalization and subsidy removal means that the industries remaining in advanced economies add value to inputs other that metal. This classic definition of manufacturing has changed as it is realized that work may add value to many other different types of input (including data and information) to result in products people need.
Many of us would like to earn a living by adding value with our hands and backs as well our brains. But that work has gone to other countries that also need to develop their economies thereby raising living standards and reducing inequality between countries.
Some mother and fathers realized that our new industries would require numeracy and literacy skills. Accordingly, they read to their children and engaged their children in developing these skills for the new economy and taught them to ride bikes made in China.
Most of us leave home to seek work where the work is. Others choose to stay home deprived of the opportunity to add value through their brain and muscle power at work.
Here is a rather more balanced report from 2004 on successive governments of different colors continuing privatization that first appeared in the Conservative Party manifesto of 1983: http://newsvote.bbc.co.uk/mpapps/pagetools/print/news.bbc.co.uk/1/hi/business/4061613.stm
Enjoy, especially the last paragraph.
Needs2Cash says above ‘Removing taxpayer subsidies from unsustainable industry must continue so extinct jobs are not supported by wasting other people’s money.’
I could not agree more.
Does that mean we get our billions, if not trillions, back from the UK financial sector? Are not they – and the most well-off in Britain – the principal beneficiaries of public subsidies given to banks?
It is these public subsidies (including QE) that have created a UK government deficit problem.
I agree. Even though banking is not extinct, taxpayers should not have bailed out the banks.
We should have done as they did in Iceland and support the depositors instead and allow the banks to go bust.
Unfortunately, Gordon “Prudence” Brown thought differently.
Actually, politicians from ALL parties are equally complicit in robbing the ordinary people of this country. The continuation of quantitative easing has robbed people who have saved and moderated their expenditures from achieving reasonable returns on their savings and the rates currently being paid on pension schemes are utterly scandalous. All this makes an utter mockery of all the strictures we have always been subjected to – about living within one’s means, putting something aside for a rainy day, etc. As a retired college lecturer and state pensioner, I have definitely noticed my financial state of affairs suffering – and all to bail out the banks and pay the bankers criminally insane bonus levels. To quote a former politician from a somewhat different context: ‘those whom the “gods” seek to destroy, they first of all drive mad’. We are all afflicted by a system of madness and greed – Mad Men, indeed !!!!! I don’t know how it can be changed, other than at our each and every individual level. Keep your money to yourself and don’t let the idiots in the City get any of it. Starve them out of existence, I say.