No one telling the truth on public sector reform

NIPSA has once again jumped the gun by saying that public sector reform “could cost 6,000 jobs”, a quote the media were only too happy to run with one slow weekend news day. One of the reasons for the traditional media’s decline is its willingness just to report statements without even a hint of challenge – the obvious challenge here being that there is no public sector reform!

It is true that the Head of the Civil Service has been tasked to bring forward a paper on “slimmed-down government”, reported two weeks ago (more reliable journalists talk correctly of a voluntary redundancy scheme to reduce the public sector workforce by more than double the NIPSA figure). Not reported in the summer, but something which happened, was the panel of six (three from outside Northern Ireland) to make recommendations on improving public sector performance. But none of this work has actually even come close to completion, so frankly we have no idea what the outcome will be – for jobs or anything else.

The only thing we can be sure of is that both processes will result in an outcome which is theoretically sound but politically nigh impossible. Implicit in NIPSA’s intervention was an opening bid that it would not accept job losses (a line the SDLP, utterly laughably, has also previously stated) – yet even the loss of 13000 jobs would only return us to the level of public sector employment which existed at the end of the Troubles (a period during which, for understandable reasons, the public sector became vastly inflated by any remotely reasonable peace-time standards).

Politically impossible, that is, unless someone is prepared to point to the truth. No one in politics fancying their electoral chances will do so – I tried once myself and it didn’t go so well! No, voters across the Western World have settled on a preference for low taxes and high public spending – an obvious nonsense but one which they determine can always wait another five years before anyone needs to do anything about it (while introducing lots of bogeymen – from bankers to immigrants – to fill the intervening time).

Even though I have no intention of standing for election, I’ll stick to just one reality. Health Minister Jim Wells’ suggestion that Health (and Care) costs are currently rising 6% every year is likely accurate – in fact, that is more or less the case in real terms in every comparable jurisdiction across Western Europe and North America. Here’s the thing – that means, in a decade, that Health costs will likely rise over 60%!

The Health Department’s budget is 41% of Northern Ireland Departments’ current expenditure; it includes some emergency service provision, but even without that it accounts for over a third of current expenditure, which currently comes to around £10 billion. This means, within a decade, in real terms Health and Care spending is due to rise from around £3.5 million to around £5.5 billion – taking a full £2 billion (over 30%) from all other devolved departments (and thus from all other devolved services – schools, social housing, policing, infrastructure etc.)

Assuming we don’t want to lose that 30% off public service provision in the next decade, there are two principal ways we can deal with this problem.

Firstly, we can raise revenue – for example, doubling the regional rate would mean we could retain current Justice spending with a bit left over for fire and rescue; introducing water charges and tolling roads while re-negotiating capital spending limits based on that may enable infrastructure to be built and maintained for next to nothing (user pays), cutting any losses there; re-introducing prescription charges, raising tuition fees, removing rates caps and so on would add a few more quid at the edges. All of this would, however, at best recover a few hundred million – we are still well short.

Secondly, we can reform public services…

  • a single NI Executive Treasury rather than every Department having a full finance department (with separate grant systems etc);
  • competitive tendering to deliver public services, including some currently delivered internally, driving up efficiency and driving down costs;
  • removal of at least two Executive Departments (frankly six, including Justice, would probably do – causing not just savings but also more streamlined cooperation);
  • removal of at least two Civil Service (and comparison) grades;
  • a streamlined planning system – no more meetings with three different agencies and two or three departments on every case;
  • no more local Council “mission creep” – Councils don’t need “European Officers” and Councillors don’t need to discuss Gaza;
  • full and complete integration of teacher training, and subsequently of course the schools they are teaching in.

Here’s the truth – even that gets us nothing near the £2 billion we need by this time next decade… and that’s without welfare, which is a completely separate funding stream…

(By the way, the answer to this is not to “stop foreign wars”. Defence costs NI around £55 million, barely half this year’s shortfall alone – less, in fact, then the A5 dual carriageway has cost in preparation costs without a metre if it being built! So let’s stop the irresponsible fantasies and move on to reality!)

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