Nov 2010 10

A list of all the RDA-owned freehold land and property assets has been released by the Government. Laura Sandys MP submitted a Parliamentary Question to the House last Thursday and the list is now available online. Immediate eye-brow raisers are the Dog and Partridge pub in Dudley, as well as another boozer and a fish and chip shop in Scarborough. Another blog has also spotted a greyhound stadium in Portsmouth and an ice rink in Durham.

There are 379 properties in total. Have a look through the list and see what property your RDA owns. Would the property be put to better use in private hands? Does RDA ownership of any properties hinder other businesses from developing or growing? Who gets these properties when the RDAs wind down? If any strike you as particularly odd then write to your local councillor or MP here and let them know. Selling these assets would raise a lot of money and would stop these local leviathans calling the shots in England’s regions.

Nov 2010 05
Rightly shocked

Margaret Hodge is the new chair of the Public Accounts Committee and she has already concluded that government departments are incapable of eliminating waste. Her Committee has found that £35bn of efficiency savings ordered by Labour in 2007 were nowhere near achieved:

"Departments were in general unable to make real value-for-money savings of 3% a year following the 2007 Comprehensive Spending Review – and that was at a time of increasing budgets. Now that much more radical cost-cutting measures are required across government, my committee is gravely concerned about the ability of government to make efficiency improvements on the scale needed."

The PAC report itself gives some chapter and verse. To start with, none of the departments has come anywhere near its savings target. Halfway through the three year programme, declared savings came to just 31% of the target, with some key departments way short of even that:

Worse, nearly two-thirds of these supposedly achieved savings are not provable in any meaningful sense. They are products of wishful thinking and deckchair rearrangement.

As for relating the savings to departmental budgets:

"Departments were generally unable to reconcile their reported savings to either their financial accounts or to their spending agreements with the Treasury."

Shocking. Truly shocking.

Of course, for regular BOM readers it won't be shocking at all. For years we've been blogging the fantasy world of Gershon delusion and the Marx Brothers – the preposterous idea that Whitehall can achieve huge efficiency savings without saving any actual money, or making anything demonstrably more efficient (see many previous blogs eg here). But for poor Margaret Hodge it has all come as a nasty shock.

The real question is what should we do about it?

The left's answer - widely aired on the BBC yesterday - is that it means the coalition's spending cuts are unachievable without massive damage to our public services. Departments cannot do efficiency and to assume they can will consign schools and hospitals to a new dark age. Stop the cuts. QED.

In fairness to the PAC, their report (as opposed to the headlines based thereon) doesn't say that. Instead, they argue for more transparency on efficiency savings, with more explicit reporting of inputs and outputs so everyone can see whether important services are being cut. They also want the Treasury to take a much larger role in guiding and verifying the savings. Which all sounds kind of sensible in a marginal improvement kind of way.

But the real message from the report – the real message from Margaret – is much more radical.

The real message is that to make serious efficiency savings – the kind private business is constantly making – we need radical reform in the way our public services get delivered.

In particular – and we do apologise if we've said this a few times before – we must break up our big state monoplies in areas like health and education. We must have choice and competition across the public services.

Because the key reason that businesses like Tesco are so good at driving efficiency is not because they are inherently much smarter than public sector managers. It's because they face a completely different set of incentives. They know that they must deliver what their customers want or perish. And a large part of that delivery comprises value for money. If they get fat and inefficient, they can't deliver value and they lose their customers.

We have never believed we can make monopolistic public sector elephants dance. And whether she understands it or not, that is precisely what Margaret Hodge told us yesterday.

Margaret's message is that we must learn from her party's failure. To make cuts without destroying the delivery of public services, the coalition must tackle the underlying problem. They must break up the public sector and unleash the power of choice and competition.

Oct 2010 28

A belated non-job of the week this week, but we’re still finding needless positions being advertised by local authorities who’re currently tasked with making significant cutbacks.Nj20 

On the website ‘’  we found that Ballymena Borough Council are looking for a ‘Part-time Assistant Community Relations Officer’ on £19,621- 21,519 pro-rata to implement the authorities ‘Good Relations Strategy’, which just looks like more busybodying on the taxpayer whilst frontline services come under threat.

And notably, some of the vacant posts we’ve been finding are of the type identified by our recent Unnecessary Jobs paper – like the Climate Change Officer being offered between £20,198 – £26,276 per year to work at Gloucestershire County Council, where they will join two other such officers…

Similarly, this week’s non-job of the week came under fire in our recent report, but that hasn’t stopped Nottingham City Council (who actually failed to respond when we contacted them as part of our original research):

Equality and Diversity Consultant
 £25k – £35k pa

Ideally you have experience of the Equality Framework for local government, equality impact assessment and equality within procurement. You will be very strong on building relationships with colleagues and managers as well as external bodies, and able to support the internal staff networks for various groups. You should also be used to working under pressure and to tight deadlines and capable of operating in an autonomous environment”.

A brief description for a pretty lucrative role, but why is it some councils seem to manage without a team of equality bureaucrats advising on stifling red-tape? Authorities need to think innovatively, and try to meet their legal obligations without creating new positions or hiring costly consultants. Some save costs by merging roles or giving certain responsibilities to existing officers rather than building whole departments around their obligations. Given the pressure on budgets, that seems like an option all of local government should be considering…

Oct 2010 27

Last week we published our estimate of the Real National Debt, putting it at a very scary £7.9 trillion, or around £300,000 for every British family. Since then a number of people have dismissed our figure as misleading, and even accused us of scaremongering. So let's just run through the objections and see what we make of them.

1. Our nationalised banks have assets as well as liabilities

£2.6 trillion of our debt figure comprises the liabilities of our two big nationalised banks, RBS and Lloyds. The objection is that we have ignored their assets, and therefore hugely over-egged taxpayer exposure.

On one level, that's true. The banks do have huge assets to set against their liabilities, as is fully acknowledged in our research paper.

But the problem is that nobody – including the banks themselves – knows what those assets are actually worth. Whereas the liabilities are now hanging round taxpayers' necks in their entirety. The final outcome – in terms of our eventual net loss – is anyone's guess.

True, most loss estimates are much lower than the entire liability (as noted in our paper), but nobody actually knows. And given the events of the last two years, we believe it's prudent to understand our potential total liability.

Moreover, even if we were to set aside the entire liabilities of RBS and Lloyds as being in some sense temporary, our estimate of the Real National Debt would still stand at £5.3 trillion, or more than £200,000 for every family.

2. Governments have assets as well as liabilities

The second objection is that even this lower figure hugely overstates the debt, because the government itself also has huge assets.

Again, there is some truth in this. According to official estimates, the public sector as a whole has assets of getting on for £1 trillion (see this excellent ONS article for a summary of the official stats).

But we need to understand a couple of things about these assets. To start with, they mainly comprise specialised physical assets like motorways and hospitals. And such assets are not readily realisable (ie they are not liquid).

Moreover, even if HMG could sell them, much of their assumed value depends on having someone who wants to use a motorway or a hospital and is prepared to pay for the privilege. Their value purely as building plots or agricultural land would be very much less.

Consider who would pay to use a British hospital. Yes, you guessed it – British hospital patients. The hospital's value to a prospective purchaser largely depends on his being able to charge patients for its use, and patients being prepared to pay.

Except in Britain, as things stand, it's not the patient who pays, but the NHS. Or to put it another way, the government could almost certainly sell its hospitals to reduce the debt burden on taxpayers. But only at the cost of the NHS then having to pay a fee to use those very same hospitals. The net effect – the net burden on taxpayers – remains pretty much the same. The only real difference is that yet another chunk of government debt has been shuffled off balance sheet (cf PFI).

3. We are ignoring the government's future tax receipts

This objection says that we shouldn't get fixated on the government's liability to make future payments while ignoring its future receipts of tax revenues. Our analysis is one-sided and a grossly misleading statement of the true fiscal position.

But let's just remind ourselves what our Real National Debt calculation is actually looking at. It's looking at the government's commitment to make future payments in respect of loans or services it has received in the past. Which is the standard and essential definition of debt (see paper).

Thus for example, we include the government's £1.3 trillion accrued liability to make public sector pensions payments. That relates solely to the service and pension contributions of public sector employees in the past – the pension entitlement they have earned so far. What we are saying is that public employees have provided services and loans (their contributions) to the government that they expect to be repaid during their retirement. It is debt, pure and simple.

Similarly, we include the £2.7 trillion liability to make state pension payments. Again, that reflects the accrued liability in respect of National Insurance Contributions already made in the past against pensions to be paid by the government in the future. It is an undischarged loan to the government.

The Real National Debt adds together all these undischarged liabilities that have accrued over the past and tells us where we currently stand overall.

Yes, of course the government will have future tax revenues to draw on in order to meet its debt obligations. Of course. But the greater the debt obligation in respect of past service and loans, the less of those future tax revenues there'll be left over to pay for future services.

Even today, 28% of the government's tax revenues – more than one pound in every four – goes to service these past debts. Two years ago it was just 24%, and the proportion is growing fast (see this blog).

And that's the key point. The massive growth in these obligations from the past is placing a huge strain on the government's ability to fund services in the future. Sure, the government has revenue raising powers and can always raise future taxes. But that is precisely why taxpayers should be so concerned at the size of the Real National Debt. Unless we recognise and address the full range of government liabilities, taxpayers face a grim future of rising taxes alongside worse public services.

4. The government could always renege on its pension obligations

Since the government can legislate black is white (subject to EU directives), it could simply renege on its pension liabilities, both public sector and state. So things aren't nearly as bad as the TPA make out.

This is quite a popular objection to our calculation, and it must be said that governments across the world are currently embarked on just such schemes.

But we should understand it is no easy option. Quite apart from the moral question raised by robbing defenceless pensioners, events in France and Greece highlight the political difficulty of making substantial changes to existing entitlements. The losers are very obvious, and in the case of public sector workers, highly unionised. It takes strong stomachs to face down strike-bound public services and street riots.

Of course, it is easier to make changes to future entitlements – by for example gradually increasing the pension age – and our government must do that. Increasing life expectancy means that we must move the pension age up to at least 70 (as Lord Turner has suggested). But that doesn't help much with the existing accrued liability – the liability we include in our calculation.

And that liability is real, not merely some distant entry in an accounting ledger to be left for our grandchildren. It is here with us now, requiring ever greater payments with each year that passes. Two years ago, the cost of public sector and state pensions was £83bn, this year it's £95bn, and growing fast.


The TPA's calculation of the Real National Debt is designed to show the full extent of the liabilities now bearing down on taxpayers' shoulders. And those liabilities arise from loans and services supplied to government in the past: they are not related to services the government may or may not provide in the future.

Yes, there are assets on the other side of the balance sheet, but even on the most optimistic interpretation they cover well under half the debt.

And yes, there are future tax revenues to service the liabilities. But that servicing already consumes more than one-quarter of tax revenue and the proportion is growing. Taxes could certainly be raised, but that is the very reason taxpayers need to be concerned about the huge size of this debt.

As for reneging on the debt – especially the pension debt – that has been an option for desperate governments throughout the ages. But it is not the easy low-pain option often suggested.

Oct 2010 26

Maurice McTigue is a New Zealander, and was a member of that country's government as they tackled their own problems of bloated government. He has recently been talking about the experience, and his speech is well worth reading in full (HTP Peter Q). It is hugely encouraging for those of us who want the same here.

First, he explains how they managed to cut public sector employment with none of the dire consequences predicted by the Big Government doomsters:

"When we started this process with the Department of Transportation, it had 5,600 employees. When we finished, it had 53. When we started with the Forest Service, it had 17,000 employees. When we finished, it had 17. When we applied it to the Ministry of Works, it had 28,000 employees. I used to be Minister of Works, and ended up being the only employee. In the latter case, most of what the department did was construction and engineering, and there are plenty of people who can do that without government involvement. And if you say to me, “But you killed all those jobs!”—well, that’s just not true. The government stopped employing people in those jobs, but the need for the jobs didn’t disappear. I visited some of the forestry workers some months after they’d lost their government jobs, and they were quite happy. They told me that they were now earning about three times what they used to earn—on top of which, they were surprised to learn that they could do about 60 percent more than they used to! The same lesson applies to the other jobs I mentioned."

McTigue goes on to talk about how they reformed the schools system. And given the epic struggle Mr Gove is currently having to push through his Free Schools reforms, it's worth quoting in full:

"We eliminated all of the Boards of Education in the country. Every single school came under the control of a board of trustees elected by the parents of the children at that school, and by nobody else. We gave schools a block of money based on the number of students that went to them, with no strings attached. At the same time, we told the parents that they had an absolute right to choose where their children would go to school. It is absolutely obnoxious to me that anybody would tell parents that they must send their children to a bad school. We converted 4,500 schools to this new system all on the same day.

But we went even further: We made it possible for privately owned schools to be funded in exactly the same way as publicly owned schools, giving parents the ability to spend their education dollars wherever they chose. Again, everybody predicted that there would be a major exodus of students from the public to the private schools, because the private schools showed an academic advantage of 14 to 15 percent. It didn’t happen, however, because the differential between schools disappeared in about 18-24 months. Why? Because all of a sudden teachers realized that if they lost their students, they would lose their funding; and if they lost their funding, they would lose their jobs. Eighty-five percent of our students went to public schools at the beginning of this process. That fell to only about 84 percent over the first year or so of our reforms. But three years later, 87 percent of the students were going to public schools. More importantly, we moved from being about 14 or 15 percent below our international peers to being about 14 or 15 percent above our international peers in terms of educational attainment."

Now that is radical. Not only did they go for a Big Bang reform, making all schools independent pretty well overnight, they also allowed parents to take their school vouchers and buy schooling in the private sector. Which is way beyond what Gove is contemplating.

And the result? New Zealand schools are now firmly established as top ten performers in the international attainment league tables, comfortably beating our schools right across the board.

As the supporters of Big Government here continue their Luddite war against public sector reform, we should take heart from New Zealand. By focusing on outputs rather than inputs, and by being bold, they achieved a huge improvement in efficiency without laying waste to anything.

Yes, it can be done.

Oct 2010 21

In the wake of our Unnecessary Jobs report we’ve had a flurry of nominees for ‘Non-job of the week’ sent in by supporters. Thanks to those of you who got in touch to highlight some of the positions you’ve spotted in local papers or on recruitment websites – it’s great to know you’re all keeping an eye out for profligacy and questioning the necessity of some of  the publically funded positions you come across.Nj19  

One supporter sent in an advert from Colchester University Hospital who’re hiring for Non-Executive Directors on a salary of £11,000pa for just four days per month, and another felt aggrieved that the public will be paying £30,851pa for an Exmoor Moorland Landscape Partnership Scheme Manager to “reconnect people with their moorland heritage”. It’s interesting that even though the notice for the latter stated that this job is paying paid for with lottery money, the tell-tale logos on the bottom indicated that there is moor to this project that meets the eye as the EU, DEFRA and the soon to be abolished South West RDA were all represented…

Another TPA-er was shocked – considering the financial climate – to find that Suffolk County Council have vacancies for both a Chief Press Officer on £44,066-£49,145pa AND some Communications Officers (plural!) on £22,958 – £26,276pa. Clearly Suffolk are keen to spin any cuts in services…

This week’s non-job however, comes from an unnamed local authority in London:

Carbon Reduction Officer
£18 – £20 per hour

We are currently recruiting for a well known Local Authority in London for a Carbon Reduction Officer. This is an excellent opportunity which has funding until March 2011.

Your role will be to assist in reducing the councils carbon emissions through implementing a programme of energy and water saving measures.

The duties of the post will be to:

1. Gather and collate energy and water consumption data in order to manage consumption and cost.
2. Develop a carbon reduction strategy
3. Liaise with both internal and external clients on energy and carbon reduction
4. Promote and provide carbon and energy reporting services to client departments.

This is an excellent opportunity for a candidate who is knowledgeable in this area as you will be responsible on creating an action plan for the borough”.

This is just money in exchange for duplicating and regurgitating the enormous amount of literature, advice and information that’s already out there in terms of cutting down on energy use and…well…common sense. If councils can save the planet and some much-needed cash by cutting down on energy/water consumption then they should be doing it anyway without having to hire some jobsworth on £20 per hour to tell them to. And surely there isn’t an ongoing need for this sort of post anyway – once authorities have been advised exactly where they’re going wrong and how they can make savings the role is redundant?

And more to the point, can local authorities really afford this PC box-ticking/green PR with the axe poised to swing? 

Oct 2010 20

The spending review cuts Whitehall's annual support for local councils by 26% in real inflation adjusted terms. And that's just the headline shown in the report – once account is taken of the new social care responsibilities they've picked up, the like-for-like funding cut is almost certainly even bigger. The cost of their loan funding has also been increased.

So it should surprise nobody if councils up and down Britain start screaming foul.

But as the Taxpayers Alliance has consistently pointed out, in most councils there is a significant margin of waste. And the best councils have already shown how better management can extract huge savings without undermining service standards.

At a recent TPA seminar (reported by the BBC here), the leaders of three flagship councils highlighted some key steps councils can take to drive increased efficiency. They include:

  • Be more transparent – expose all spending to full scrutiny
  • Don't compromise on quality – better to cut functions than accept second-rate services
  • Outsource ruthlessly
  • Pinch ideas from other councils
  • Don't run arts centres – aka "stick to the knitting"

In these tough fiscal times, taxpayers everywhere should expect their local councils to learn from the best. And with the flexibility they have now been given over 80 previously ringfenced grants, councils should find it much easier to do what makes most sense locally, rather than what has been dictated from Whitehall.

What would not be acceptable would be councils failing to make these savings and instead racking up Council Tax.

Oct 2010 13

Who’d have thought at this stage in the game, with the axe poised to swing, we’d still be seeing costly non-jobs advertised by local government? A report we released this week outlined the overall cost to the taxpayer of just four unnecessary council positions – Climate Change Officers, Diversity Officers,Nj18  Political Advisors and European Officers – which stands at no less than £41m per year. Just think of what that total would be if we cast our net further and included the numerous roles the TPA spots each Wednesday!

This week, on the Guardian Jobs website, Manchester City Council are advertising for an External Relations Manager on a salary of £35,430 to £38,961 to advise on marketing campaigns (good to see they have their priorities in order – image first, services last), and Hull City Council are hiring for no fewer than three Community Sports Development Officers (£17, 802–£19, 621) as part of their preachy “Hearty Lives Hull” programme which aims to kick people into physical activity and leaves many of us asking – is this really the job of local government?

This week’s non-job however alarms us all the more because it’s a new position, created by Oxford City Council – a local authority who are trying to save more than £1m a year:

Arts Development Director

This is a new senior executive position, working closely with the newly appointed Board of Trustees to ensure that Arts at The Old Fire Station thrives artistically and financially. Reporting to the Board, the Arts Development Director is responsible for ensuring effective development and communications, both internally and externally.”

Bit of a short and sweet job description, but ultimately a questionable arts post at a time when council taxpayers are facing reductions in frontline service provision. No-one is questioning the enjoyment given by the arts, but we need to ask if government should be prioritising projects like this when things like social care, education and policing are truly in the firing line.

Oct 2010 13
Time to break out the port?

Lord Browne's report on university finance cuts straight through to the key issues. His recommendations manage to combine proper funding for the unis, with affordability, with competitive pressure, with… well, to coin a phrase, fairness for all (especially taxpayers). So hurrah.

We've blogged the shambolic state of the higher education sector many times (see all previous blogs gathered here). In summary:

  • Taxpayers now spend £12bn pa on higher education, up around 50% in real terms since 1997; the students themselves spend a whole lot more.
  • There are 2.3m students, or 4% of the entire population (including 27,000 doing that old favourite, the degree in media studies).
  • Labour's 50% participation target was never more than "aspirational" – ie entirely arbitrary (admitted to the Public Accounts Committee by the Chief Executive of the Higher Education Funding Council for England – see this blog).
  • The average HE participation rate across the OECD is 35%: ours is already 40% and heading for 50%
  • Courses have been dumbed down and grading standards slashed – the proportion gaining first class degrees nearly doubled under Labour ( see this blog)
  • Thousands of graduates now do non-graduate jobs, and that number is growing rapidly – their  low-value degrees have simply not equipped them to do anything else (according to HESA, 75% – yes, 75% – of 2002-3 graduates were still in non-traditional graduate jobs four years after graduation; what's more, 26% weren't in full-time jobs of any kind; and see this blog)
  • The average financial return to a degree is plummeting – according to PWC, the gross return to an Arts degree is now only about £30,000, and that takes no account of the costs of study and the earnings foregone – net net an average Arts degree almost certainly reduces lifetime wealth.

Now, it's on that last point – the financial return to a degree – that Labour misled us most egregiously. Back in 2008 we attended a meeting of the Public Accounts Committee (under its previous esteemed chairman), where Blair's claim that a degree was worth an average £400,000 was brutally exposed for the fabrication it was. And the Browne Report now gives us some chapter and verse on just how the number was cooked up (see Report footnote 11).

Apparently, the £400,000 referred not to the value of a degree per se, but to the value of a degree plus all other education beyond the average, which would certainly include A Levels. That is a gross deception, especially when you remember that all reputable research in this area has always and correctly calculated the value of a degree as being the difference between what you earn with A Levels alone and what you earn with a degree (and your correspondent does actually know about this, having researched the area for the old Department of Education back in the 70s).

Browne wisely takes his estimate of a degree's value not from HMG or the unis but from the OECD. And they reckon that the lifetime value to a male graduate in the UK is currently running at just over $200,000, or about £120,000 (note that the OECD's calcs are published in purchasing power parity dolllars). Here's Browne's summary chart (click on image to enlarge):

So there is a financial return overall, which is not to be sniffed at (although note that the return for female grads is estimated by the OECD to be 25% lower). However, there are some very important points to note here:

  1. These estimates are based on the lifetime earnings of previous graduates, the ones who got their degrees long before the explosion in graduate numbers and dumbed down degrees. The average return looking forward is almost certainly going to be lower.
  2. Brown quotes only the returns to the grads themselves. As taxpayers, what we need to know about are the returns to us. What do we get out of the muti-billion subsidy we currently provide?

And even though the report doesn't spell it out, that second point lies at the heart of the Browne reforms. In future, our unis will be funded much more by the fees they can earn from their students, and those fees will be financed not by taxpayers but by the students themseleves, via higher student loans.

Which is exactly as it should be. Because not only are the students the principal beneficiaries of their degrees, but by forcing students to think seriously about the value of a degree, we will force the suppliers to deliver that value far more effectively than any number of quango funding councils.

Poor students being put off? Well, at the margin you might worry about that. But as Browne was pointing out all yesterday, a university education will still be free at the point of use. And there will be no credit check on first time students applying for a loan. What's more, graduates who earn less than £21 grand pa (indexed against average earnings), will not have to pay back anything.

Education is about more than cold hard cash? Well, yes, it is. And we are big fans of the so-called "non-pecuniary benefits". But by the time we get to degree level (ie assuming we've already taught everyone at least the 3Rs and a bit of shared science and culture), most of those wider benefits again accrue to the individual.

So we think the Browne reforms are a major step in the right direction. Congratulations to him and his team. And congratulations to Mr Cable for having the sense to accept reality.

Oct 2010 12

You’re being ripped off, my friend

Regular BOM readers will be all too familiar with the Simple Shopper and his staggering ability to burn our cash (see previous blogs gathered here). But Mr Cameron’s procurement guru Sir Philip Green has clearly been stunned by what he’s discovered about the Shopper’s operations:

“The process is shocking. There’s no reporting, there’s no accountability… You could not be in business if you operated like this. It would be impossible.”

Sir Philip’s report is refreshingly brief and punchy – very unlike the telephone directory reports we get from officialdom. Among the real shockers he highlights:

  • £2bn pa spent on landline telephony, where the Shopper is overpaying by an astonishing £600 – £700m every single year
  • 400,000 hotel rooms booked every year in central London alone – Green estimates £50m pa could be saved by teleconferencing
  • £800 laptops bought for £2000 each
  • £20m lost on failure to break expensive central London lease – government property costs £25bn pa, but has not been managed on a commercial basis (especially taking opportunities to break expensive leases)
  • Failure to exploit HMG’s AAA credit rating – a commercial operation with such a rating would insist its suppliers extend lengthy credit facilities (aka paying invoices later).

Green declines to give a figure for the total possible savings, but with the total procurement spend getting on for £200bn pa, we’re clearly talking tens of billions annually. Savings that would go a very long way to closing our fiscal gap.

So why hasn’t it been done already? After all, governments overpaying on procurement has been a problem for centuries (see this blog for what Charles II’s Clerk to the Navy Board – a certain Mr Pepys – had to say about it). And Gordon Brown used to bang on all the time about his procurement reforms.

Sir Philip suggests it’s because government buying is too fragmented – scores of different departments and quangos buying their own paperclips and not capitalising on their combined buying power. What we need is centralised buying in the hands of hard-nosed professionals such as… well, such as Sir Philip.

An excellent idea. Entirely logical.

Except… hang on a minute… isn’t centralised buying precisely what was supposed to have happened under Gordon Brown’s reforms? Didn’t he set up the Office for Government Commerce under the direction of hard-nosed (and expensive) professionals, specifically to wring better prices out of suppliers by exploiting scale?

Well, yes he did. And yes, it flopped.

You see, what Sir Philip has failed to understand is that once you set foot in Whitehall, you aren’t in Kansas any more. You no longer have people around you who are driven by the cost imperative. Instead, you have people who are driven more by the need to defend territory, and to keep the politicians off their backs.

Just what that means in practice was neatly illustrated by one of those politicians responding to Green’s report. Labour’s Margaret Hodge is the new chairman of the Public Accounts Committee – the grand-daddy of Parliamentary watchdogs and the very body set up by Gladstone to ensure taxpayers get value from public spending. And her kneejerk response to Green was to say he doesn’t know what he’s talking about – government is much more complex than running Topshop. Even in the Public Accounts Committee, politics ultimately trumps saving taxpayers’ money.

The fundamental problem here is that government does not do cost efficiency – never has and almost certainly never will. And the reason is very simple – unlike Topshop, the “customers” of government have no choice. Yes, of course they can replace the non-execs every so often, but they cannot simply take their business to another shop just along the High Street.

So government isn’t under the same pressure as Topshop to deliver value for money. Not the same pressure to screw their suppliers down to the last penny. Which is why even where you have centralised buying – as for example in defence equipment – because the competitive pressure isn’t there, you never get the cost saving the private sector takes as a matter of course.

Of course government must do whatever it can to cut procurement costs, and Sir Philip’s report is a valuable contribution. But we should recognise that the only sure cure for all the billions government wastes in its procurement programmes is to stop government procuring stuff altogether.

In other words we need to downsize government drastically, and to break its monopoly hold on our public services.

Sep 2010 22

Although, as we’ve previously mentioned, there are definitely fewer non-jobs cropping up on the usual recruitment websites it seems they are still coming to the attention of TPA supporters via local newspapers and the likes. Nj17

Staffordshire County Council are currently advertising for a Deputy Chief Executive on £134k, despite the fact that Eric Pickles, amongst others, has questioned whether council Chief Executives end up duplicating much of the work of the council leader (in which case, do they really need a deputy?). Within the recruitment pages of the Hereford Times ‘The Rural Media Company’ are hiring a Young People’s Filmmaker (£18-£22k) using Lottery money, and Reading Borough Council are the latest local authority keen to boost their green credentials regardless of the squeeze on public  finances, offering a salary range of £31,754 – £34,549 for an “Energy Management Officer”.

This week though, Westminster City Council bring us our non-job:

Assistant Media Officer
Target salary £22,920 – £24,156 pa with potential future progression based on performance up to £31,935 pa

Policy & Support
Assistant Media Officer
Target salary £22,920 – £24,156 pa with potential future progression based on performance up to £31,935 pa
Fixed term contract for one year
Targeting public relations in the heart of London
We’re looking for an Assistant Media Officer to join our award-winning communications team and to provide 24/7 media relations support for one of the best councils in the country.
Of graduate calibre, you should already be working in the media, on a local newspaper for example, or in a hard-hitting news driven public relations environment and looking for your next move.
We build strong relationships with journalists across print, broadcast and digital media, run effective campaigns and are regarded as credible advisors. Everyone who joins us also enjoys excellent professional development.
This role is politically restricted.
For an informal discussion, please contact Oliver Finegold or Charles Begley on 020 7641 2259.
Benefits: – Generous annual leave – Interest free season ticket loan – Excellent pension scheme – Staff discount card.
If you would like to apply for this position, please download an application pack from quoting ref: 4078.

If this is the assistant’s salary, what are others in this department commanding? Excellent pension scheme?  Not if you’re a taxpayer! Just why is this authority prioritising press and ‘reputation management’ at a time of cuts? Or have I just answered my own question?

It’s the usual argument here, but it’s an important one to make – when frontline services, the things that residents truly value, are under threat the council shouldn’t be charging those same residents for PR. Here at the TPA we’d definately say – cut spin before services

Sep 2010 22

Yesterday's public sector borrowing stats gave us a sharp reminder just why we need to get on with those spending cuts.

Net borrowing for August was actually up on last year, and year-to-date is only marginally below last year – despite the increase in VAT and throttling back on public investment.

Looking at the detail, the scariest single number is that for debt interest payments. Year-to-date they have increased by £8.1bn, a staggering 73%. Looking at the rolling 12 month total, they are now running at £39bn pa, up by £12bn pa from a year ago (see chart above).

The most recent official forecast for debt interest came with the Emergency Budget in June. It reckoned debt interest this year (2010-11) will be £43bn, and we're currently running a bit ahead of that.

The problem is that even assuming the Comprehensive Spending Review manages to deliver Mr Osborne's forecast cuts, debt interest is still forecast to rise to nearly £70bn by 2015-16. Which will be nearly £3000 pa for every single household.

And that is why there must be no backsliding. So far, the gilt market has been impressed by the coalition's resolve, and has actually cut the interest rate on government debt by about 0.6% since May. But disappointment on delivering those cuts could very easily reverse that, setting in motion the Doomsday Machine we've blogged so often (ie the situation where the government has to borrow more and more just to pay for increases in debt interest).

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