Paul Cotterill reckons I’m wrong. (At least I’m in good company though.) All the people who are accusing the Labour Party of not being honest about tax rises are ignoring its programme for public sector reform, he says.
[W]hat apparently none of them have noticed – or perhaps preferred to ignore – is that Labour is seriously committed to public services reform, and has for the past few months been carefully working up a programme for government which will deliver both desirable and affordable public service outcomes over the long-term.
I should hope Labour does have a plan for public service reform because there is no way the public sector can carry on as it is.
The whole reason I started banging on about the country’s fiscal position in the first place was to demonstrate the need for reform of the state. Anyone in the public sector who thinks that, under a more sympathetic government, things will go back to how they were, is deluding themselves. Even with a growing economy, the squeeze on budgets will be a feature of public sector management for at least the rest of this decade and probably well into the next one too.
When Stella Creasy called for a redesign of the state I agreed. Hell, I’ve even referred to Ed Balls’s line-by-line spending review on a number of occasions with something that sounds close to approval.
As Jane Dudman noticed, soon after the Coalition came to power, this government had no coherent plan for reforming public services. It cut budgets and simply left service providers to get on with it. Only very late in the day did it even attempt to take an overview of the whole thing.
If Labour is planning to invest up front in a complete redesign of state provision, that’s great. It’s what the Coalition should have done four years ago. Actually, it’s what Labour should have done a decade ago. After all, it’s not as if we didn’t know these problems were coming.
No, my worry about Pauls’ piece is that he seems to be saying Labour’s reform programme will remove the need for tax increases and/or cuts to public services. The redesign of the state will achieve more with less – or maybe the same with less. This, of course, is just what the Coalition has been claiming for the past four years. If you can just make the public sector more efficient, then no-one needs to worry about service cuts or tax rises.
The trouble is, the amounts that would need to be saved are huge. According to the government’s plans, we are looking at something like a 28 percent decrease in per capita day-to-day public spending over a ten-year period. For unprotected departments that rises to more than 36 per cent. As I’ve said before, nothing about the productivity improvement record in either private or public sector services over the past fifteen years suggest that we can get anywhere near that. Furthermore, as Paul Johnson said, much of the low-hanging efficiency savings have already been picked and the strategies to cover the shortfall have run their course. For reasons I went into at length a while back (here, here and here) it is very difficult to make savings in the public sector. It’s also much more difficult to make savings on top of savings, as Giles’s blood loss analogy illustrates so well.
Even if it is the best public sector reform plan in history, it will take a long time for Labour’s plan to deliver savings. The programme discussed in Paul’s post contains some interesting ideas but is short on detail. It certainly doesn’t contain anything to bridge the massive gulf between reduced spending plans and the survival of public services.
Public service reform must be a priority for any incoming government. Continuous cost pressures and ever-shrinking real-terms budgets will be a feature of most public servants’ working lives for many years to come. It is very unlikely, though, that reform of public services can plug the gap identified by Giles, the IFS and others. Will Labour go into the election telling us that, through public sector reform, it can eliminate the deficit by 2020, keep taxes low and avoid service cuts? I’ll be ready with the rotten tomatoes if it does.