Adam Lent has written a frankly ridiculous blog for the TUC:
"I’ve just done a Sky News debate with Matthew Elliott of the Taxpayers’ Alliance. He suggested a new way of cutting public spending which breaches a whole new frontier in economic illiteracy (even for the TPA).
His brilliant idea: the public sector should follow the example of some manufacturing firms and put all staff on a four day week! By my calculations that would remove just over £30 billion from the economy in the particularly fragile area of household demand and cut about £7 billion from the Treasury’s income tax revenue (and this doesn’t include further tax lost due to reduced VAT and corporation tax resulting from the obvious decline in spending)."
Leaving aside transfer payments like pensions and benefits, paying staff is a huge part of public spending. With massive deficits, there need to be cuts in public spending in order to balance the books without imposing a massive tax hike that would impoverish ordinary taxpayers or cripple the economy. You can't do that on a sufficient scale without cutting staffing costs and, while part of that should take the form of a cut in pay, there also need to be cuts in the amount of labour the public sector is buying; the number of full-time equivalent staff. We set out some areas where we think cuts could be made in our report (PDF) with the Institute of Directors.
Delivering those staffing cuts can be done in two ways. The first is simply to make people redundant. That will sometimes be necessary but has certain financial (redundancy pay) and social (potential unemployment) costs. For that reason, the second mechanism, reducing the number of hours certain staff work, is an option that should be considered in some cases. Matthew just pointed that out. Trying to misrepresent such a quite reasonable point as a proposal for a blanket four day week across the public sector, which the TPA have never advocated, is ridiculous.
We never thought that everyone would agree with the proposals contained in our report. But, we expected that opposition from the unions might at least have some substance behind it. Instead, all we're getting is this kind of superficial nonsense.
As we pointed out in our response to Polly Toynbee's article yesterday, they appear to have got the numbers wrong in their own research on the costs of public sector pensions as well. If the unions want to have any credibility in the debate over how we best respond to the fiscal crisis, they need to up their game.