The tragedy is that the public sector doesn’t have to compete for paying customers – its resources are extracted forcibly via the tax system. The incentive structure is thus very different: top managers need to meet their budgets – but how they do it does not matter as much. In fact, if they cut vital services, the resulting outcry can actually end up boosting their resources over time. It is a very different game to that faced by the private sector. Ministers have discovered, to their horror, that they have even less control over the public sector than they feared in their worst nightmares. There are few levers that they can pull to ensure that change takes place; the bureaucracy is desperate to put its own interests first.
The result is a looming disaster for the coalition. Take cuts: yesterday, London Ambulance said that it would be cutting 560 frontline positions over the next five years, which is very bad news. Yet at the same time local councils are still recruiting politically correct non-jobs. One recent investigation revealed that “walking coordinators", “obesity strategy officers”, and “active” workers are still being recruited. One council has just hired an “age friendly communities” manager, a walking and cycling officer, a “community conservation”officer and an “Energy Island” administrator. Meanwhile, many bureaucrats prefer to shut services such as libraries rather than seek the help of more efficient private providers to keep them going at a much cheaper cost. Earlier this year, Library Systems and Services, a US company, offered to run libraries for 35 per cent less than councils are spending. Book borrowing would remain free, while add-on services, such as coffee shops, IT and book stores would be used to generate revenues. Others have suggested purchasing second hand books. Yet many councils aren’t interested.
The coalition should legislate to force local authorities to seek to put services out to tender – or even to privatise them completely – before they shut them. An independent consultancy should be hired to analyse all the staffing of all government departments – and to make a list of non-essential jobs. The government should legislate to cut these as a priority, to protect nurses and teachers. Unless radical action is taken, and fast, the wrong cuts will be made – with disastrous consequences for consumers as well as for the coalition.
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