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Thursday, December 16, 2010

Is the glass half full or half empty?

There is an interesting and thought-provoking article in Public Finance magazine this week on the tactics of the government in relation to public service cuts.

They point out that at every stage Ministers have lowered expectations in the hope of lessening the impact of their decisions. Their conclusion though is very telling:

A number of councils, seeing that their cuts are frontloaded, have begun publicising the kind of service reductions that could take place once next April’s budgets are set. Housing repairs might be halted, street lights switched off, entitlement to care curtailed and bins emptied less frequently. Charges might be increased for parking, licensing, social services and planning. As with the Spending Review, the media have generally reported the ‘worst’ end of any ranges of possible impact. While it is possible that some authorities will allow their streets to pile high with rubbish, it is extremely unlikely.

Most councils and other public service providers are faced with a dilemma. Should they work tirelessly to minimise the effects of the government’s centrally imposed cuts or should they make deliberately awkward service cuts and thus force the government to face the ­consequences of its deficit reduction policies?

In reality, few public bodies will do anything other than attempt to minimise the impact on the public. There will be plenty of (legitimate) political efforts to ensure the government is seen to be to blame. But overwhelmingly, services will be protected wherever possible.

However the extraordinary years from 2011 to 2015 affect the public sector, we can be sure that councils, hospitals, schools, police commissioners, fire chief officers, planners and GPs will all act to limit the impact on service users. Many providers will come up with revolutionary ways of cutting costs and re-casting services. Recruitment and pay freezes are already in place, as are halts to some capital programmes. Councils and other providers are rapidly exploring the possibilities of joint provision, possibly with joint departments and officers. Local authorities are forming procurement consortiums. Many service providers will bring in contractors in the hope of ­improving efficiency.

Finally, it is almost inevitable that some services will either be stopped or transferred to voluntary providers. Special constables, volunteer library and museum staff, parents and helpers of various kinds will be embraced so as to fill in the space left by full-time officials. Whether or not this move to voluntarism is called the ‘Big Society’, it will shift the boundaries ­between the state and the private sector.

Officials and politicians who must now face this upheaval will, in most cases, find it exhilarating and challenging – even if they oppose everything the government is doing.

Thus, not only is the likely ‘worst case scenario’ possibly being accidentally over-promoted, but those who provide services will be working flat out to minimise the effects on the weak and needy.

As a result, there must be a chance that the public will, by 2013 or 2014, feel that things are not as bad as expected. Most street lights will still be on, schools and hospitals will still be open and bins will still be emptied. ‘Localism’ might have ­allowed councils significantly greater freedom to use an array of local budgets to provide consistent and cheaper services.

The government might also be helped by the economy. If the forecasters are correct and overall growth in gross domestic product returns to its 2%–2.5% trend, there will be new private sector jobs to replace the lost government ones. It is also just possible that the impact of public sector job losses will prove to have been pessimistic. Most of the losses will be because of retirements and voluntary redundancy – very different from some of the media stories of ‘600,000 redundancies’.

Of course, things might prove to be as bad as the very worst forecasts and projections have suggested. There might be massive service cuts and many redundancies. Street protests and strikes might be the norm by 2012. The Cameron-­Osborne-Clegg government might be languishing in the polls and Labour might dominate the argument against the cuts. But early evidence (and it is still only six months into the Parliament) suggests that, on balance, the public understands the need for spending reductions and that they strongly support reforms to the benefit system.

The Labour Party has an awkward ­position in all this. Whether fair or not, it will be relentlessly blamed for the financial ‘mess’ it left the country in. Privately, many Labour MPs admire the decisiveness and vigour of the coalition and wish the previous government had had more gumption. There is also some private support within the Opposition for elements of welfare reform, for rationalising defence and for cutting the deficit. Worse still, it is possible that by ramping up the threat posed by every spending cut, they are making it easier for the ­Tories and LibDems by lowering the public’s longer-term expectations. It is clear why most Labour frontbenchers have been keeping quiet.

Thanks for sharing this Peter - thought provoking
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