TUC’s plan to ban business in public sector is outdated

Andrew Haldenby
ACROSS Europe, governments are trying to take the tough decisions to get their economies moving again. The Spanish constitution has been changed so every part of government has to balance its budget. Public sector salaries have been cut, and hours have been increased. Italian trade unions have just agreed a package of reforms, including spending cuts and performance-related pay in the public sector. The German economy is only performing so strongly because it made similar changes during its economic difficulties in the 1990s, from easier redundancy, to reduced jobless benefits, to sanctions against those who were able but unwilling to work.

These countries used to believe in a “social model” based on generous public sector wages, early retirement and high taxes. Now they have the opposite view. As the president of the European Central Bank said earlier this year: “There was a time when (people) used to say that the Europeans are so rich they can afford to pay everybody for not working. That’s gone.”

Gone, that is, except at today’s Trades Union Congress’s (TUC) annual congress. The congress motions inhabit a parallel universe in which the recession never happened and the UK has no growth or productivity problems. Even though public sector productivity has tanked in the last decade while it boomed in the private sector, the congress will call for a total ban on business from delivering public services.

This ignores the fact that, on average, the public sector is a worse employer than the private sector. Public sector employees work three hours per week less than their private sector counterparts; they earn over three pounds per hour more; they take two days more sickness absence per year and take longer holidays; they tend to receive pay increases according to their length of time in the job rather than good performance, which penalises young workers; and they are much less satisfied with their jobs and, in particular, with the quality of their management and leadership.

In contrast, some pioneering public service leaders, such as David Dalton, the chief executive of Salford Royal Hospital, are using business practices to modernise their workforces. Equally, some private companies, such as Circle at Hinchingbrooke, are transforming the quality and efficiency of services for patients. The TUC would stop all this progress in its tracks and reinforce an out-of-date working culture which isn’t good for staff, beneficiaries or taxpayers.

The coalition is slowly winning the police reform battle by showing that it is not about how many people are employed but how smartly and productively they work. In education, it is suggesting that teachers’ pay should be negotiated by schools, rather than nationally. But there is much to do in the NHS, which is the biggest public sector workforce (at 1.3m in England).

The call to ban businesses is anachronistic. Our unions would do well to take their heads out of the sand and look across the channel.

Andrew Haldenby is director of the independent think tank Reform.