Yes we need to build a million homes but we don't need £146 billion in public subsidy to do so

Some of the beautiful 'green belt' that CPRE want to save

It beggars belief really. The National Housing Federation along with Shelter, the CPRE and the Chartered Institute of Housing propose, as their solution to the housing crisis, a programme costing £146 billion over ten years to build 1.45 million homes - that's a public subsidy of over £100,000 per house. These self-serving institutions have not specified where they'll build these homes but you can bet your bottom dollar that, with the involvement of those NIMBYs-in-chief, CPRE, the homes won't be troubling the residents of nice leafy suburbs very much.

I'm guessing that the target for developing these homes will be all that brownfield land in inner cities - where else would we put all the poor people, eh? You know the former industrial land that requires millions in decontamination, the scraggy bits of wasteland inside industrial estates and other sites currently languishing in deriliction because nobody can develop them viably.

It's not that there's no case for new social housing but rather that these proposals, by including intermediate market solutions, will act to further screw up a housing market already made sclerotic and inefficient by the worst ravages of our strategic planning system.

There are two models for delivering homes in volume - the 1930s models and the 1950s model. This bunch of self-interested organisations want the latter approach - massive government investment - because it suits their business model and expands their power and influence in the housing market. Back in the 1950s, in a war ravaged nation with millions of destroyed and bomb-damaged homes, there was a justification for that government action. Right now there is no justification beyond the self-harm inflicted on our housing markets by government regulation and the planning system.

The involvement of the CPRE in these proposals tells us that the main aim isn't to solve the housing crisis but rather to preserve the green belts that represent 13% of England's land - mostly in the very places where people would like to settle down and raise a family. Rather than pleasant suburbs close to the countryside and linked by good public transport to city and town centres, we're going to get high rise blocks on constrained sites in inner cities, unpopular housing crammed into hard-to-access sites and maybe a couple of high profile whole estate developments that will merely repeat the mistakes of the 1970s by putting the least well off far away from the snug middle classes.

The housing crisis is, in large part, a crisis caused by the inability of the emerging young middle class - all those millennial professionals in good London jobs - to afford a home with a garden like the ones they were raised in. The only way to resolve this problem affordably is to significantly increase the supply of land in places where those millennial professionals want to live. And this is not in a shared ownership development in Lambeth.

It is perfectly possible - the 1930s prove this - to build the homes we need without extensive public subsidy. What's required is that we make major reforms to our planning system - returning green belt to it's original purpose of preventing ribbon development, doubling the supply of sites with potential for housing and scrapping 'community infrastructure levy' as it is simply a tax on building houses. If there's a case for spending £14 billion then its on providing the schools, railway stations, bus routes and road improvements those new homes will need.

For most rural - exurban really - places with 2,000 of more homes, a 20% increase in this supply will not destroy them or the countryside in which they nestle. Rather that increase will improve the chances of them keeping the post office, a good local store, the chemist, a couple of pubs and the local primary school. And with this provision safeguarded these places remain communities (especially if some of the new housing is social housing) rather than dormitories for the urban wealthy.

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Are the motives for taxation to blame for poverty?

Government needs revenue to do the things that governments do. And, without getting into the slightly loopy world of magic money tree beliefs, the only source for that money is the taxpayer. This, not the stuff about austerity or ridiculous arguments about 'punishing the poor', is why lower taxes are desirable. Only a relative few anarchistic folk actually believe that there shouldn't be any tax (or government for that matter) and this means we have to put up with politicians making decisions about who to tax and how much to tax them.

It's also true that in the UK's modern liberal democracy part of that taxation is intended to relieve poverty. And this is right and proper - the criticism of the very bad report by some law professor from New York wasn't that there's no poverty but rather that the chap seemed to think poverty was deliberately created by an evil government (I paraphrase his risible 20-odd page report). The report also ignored the self-evident fact that the reasons for poverty are not entirely external economic, fiscal or environmental forces acting on individuals. Simply using taxation for redistribution does not resolve the problem - P J O'Rourke, in 'All the Trouble in the World' pointed out that, when you add up the poverty (the gap between what people have and what we think they should have) and subtract from it the money spent by government on relieving that poverty, there is no poverty in the USA.

The same goes for the UK - we spend over £100 billion every year on projects and programmes intended to alleviate poverty and for some reason this has failed to get rid of that poverty. It could be that £100 billion isn't enough (I doubt this) but it is more likely that, as with a great deal of what government does, that money is badly spent - we give money to people who don't need it (wealthy pensioners, for example) and take money away from those who probably do (homeless young men maybe). We behave like the operators of Victorian workhouses towards some groups (those unemployed young men again) punishing them for minor mistakes, disorganisation and oversight whilst we lavish money without question on others (middle class mums perhaps).

It seems to me that the problem here isn't simply that government is bad at spending money efficiently (it probably is) but more that the motive of the people levying the taxes and managing the handouts is about punishing wrong behaviour or choices not the effective collection of the cash needed to provide the services and support people require. It's like this:

The avowed point of the taxes, according to Macron, is not just to subsidize environmental programs, but to force people to "change habits" by making fossil fuels more expensive.

Now you might be nodding and saying "absolutely, climate change y'know" but the reality is that this is the same mindset as that which asks the benefit system to withdraw cash from some 30 year old recovering drug addict who forgets an appointment. It's a short journey from nudge to freezing in a tatty sleeping bag in a Manchester shop doorway. Government really does believe that its purpose is to shape us into better people - thinner, less drunk, without nicotine-stained fingers, quietly employed. In the civil servant's (and too many politician's) mind we should be Mr Potter's 'thrifty working class' living in homes kindly rented from grand organisations, municipalities and supposed charities. Look at the great and good of local government as they get all excited at the prospect of building more council houses to cram the poor into - a new generation dependent on the state for the roof over their head. It may be better than Potterville's slums but it's not inclusive, optimistic or aspirational.

It makes me angry that conservatives don't say this, choosing instead to treat most of the poor as Mr Doolittle - the undeserving poor to be controlled or managed rather than people who, given better incentives, will stop being 'undeserving' and become the sort of aspirational citizens government keeps telling us they want ! The motives for taxation - changing bad habits as often as raising revenue - are the problem and government needs to focus its efforts on actual social outcomes rather than on vain attempts to create the perfect man through fiat, order and direction.

Poverty is a scourge but, given the money we (supposedly) put towards its relief, it should not persist. That it continues isn't a failure of capitalism or the market, it is entirely the failure of government - bad policy, misplaced priority and the inevitable buying of votes by promising free stuff to people - wealthy pensioners, middle class mums, public school kids heading to university - who really don't need it. The sad truth is there's no votes in eliminating poverty, no incentive to get rid (what would the growing poverty industry of think tanks, 'campaigning' charities and consultants do?) of its curse, and every incentive to carry on blaming the poor for being poor rather than government for putting its efforts into looking like it cares rather than seeing less poverty as a measurable, achievable outcome from over £100 billion in public spending.

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"We weren't elected to make cuts!" The case for independent local government (and elected mayors)

My grandfather as Chairman of Penge UDC in its final year - 1964

A while ago I wrote asking what local councillors are for. The article was written in response to the idea of councillors being 'mini-mayors' in their wards and I concluded:

Much though I see merit in the mini-mayor idea, it is a reminder that the 2000 Local Government Act emasculated local councillors and created the situation where many ended up flapping around wondering what their role and purpose might be.

And I remain of the view that Blair and Prescott's wholesale changes to the governance of local authorities did untold damage to the idea of local representation. It is also striking that, despite the more recent Localism Act allowing councils of any size to return to the old committee system, this has only happened where political circumstances made it something one or other of the two big parties could sign up to.

As a consequence of the 2000 Act (which introduced a system designed for a directly elected mayor but, in most cases, applied without such a beast), we have a governance system at local level that excludes all but a tiny minority of councillors. Moreover, the system places leaders of councils in a special position - in effect treated as de facto executive mayors. I've witnessed this problem - and it is a problem - in discussions and debates about the creation of new sub-regional structures to harbour decentralised powers and cash from central government.

Regardless of the political balance or make-up of local authorities, it is leaders that central government wishes to deal with, leaders that sit on decision-making panels, and leaders that define the position of the particular local authority. What we have is indistinguishable - except in its lack of democratic mandate, transparency and accountability - from a directly elected mayor.

At the same time as the granting of special position to leaders, councils have been faced with the necessity of reducing their spending. This has led to much hand-wringing while the prosaic job of getting savings made without doing too much damage to front line services was undertaken - largely successfully. it is this process of reducing local spending that often gets dubbed austerity. And has resulted in a further round of worries about the role of local councillors - along the lines of "we weren't elected to make cuts!"

Despite this, it is clear that austerity has led to a further undermining of the influence of most Councillors, who now find themselves open to range of practical and more wide-ranging challenges. There are now fewer Councillors- financial pressure is leading to a ‘Councillor cull’ as Councils are merged, if not statutorily, then for all practical purposes via sharing services. They have much less financial discretion, leaving doubts about whether even statutory services can be maintained. 95% of Councils in England are now sharing a total of 383 shared service arrangements, leading to a dilution of Councillor influence. ‘Backbench’ Councillors not involved in the strategic decision making find themselves increasingly in the dark re. the details of contractual arrangements which directly impact on their wards and which may be in place for 25 years.

Once again this suggests that the role and purpose of the local councillor is worthy of review. If you take the 'community leader' model of councillor where people are elected to champion a given place (and to act as a de facto gatekeeper to the local bureaucracy) then there's a good case for having a lot more councillors. There's quite a contrast between me representing 13,500 electors in Bingley Rural and the fortunate councillor for Tamarside in Torridge District with only 1300 or so voters. The problem is that, on this ratio, Bradford would have 300 councillors which is perhaps a few too many!

As you all know, I'm not a big fan of councillors as community leaders - the sort of view that Clive Betts MP, chairman of the local government select committee, holds:

Councillors are spending less time in council chambers and more time out and about in their communities. In future, they will increasingly need to be on the frontline, working with constituents and external organisations such as GPs, schools, police, local businesses and voluntary organisations to ensure their communities make the most of all the opportunities available to them.

This is the councillor as an agent of the state rather than as a representative of the people - turning our role around from decision-making to being part of implementing decisions made by others. This negation of the councillor's representative role is, in truth, the central failing of the system created under the 2000 Act. That Act sought to deny - in most circumstances - councillors their historic role of being the representatives of a given group of electors, charged with voting of their behalf. Today, your local councillor - unless you happen to live in the leader of a council's ward - no longer has that role when it comes to most decisions that affect where you live.

Understandably, leaders (and those who aspire to that role) make common cause with the councillors who like the community leadership role to resist reforms to the system that might allow for councillors to take on that historic representative role again. These leaders will point to places and times when the councillor does have a say - on the setting of the council tax, on planning decisions, on area committees. But they never mention the restraints on those decisions - the 'Section 151 Officers Report', the 'National Planning Policy Framework', or the council's own Constitution.

None of these things are the consequence of austerity (defined in this case as cuts to local council budgets) it's just that the need to reduce spending has led to difficult decisions being made. And for many local councillors the sudden realisation that they have precious little say over any of those decisions affecting their wards.

For all its flaws and failings, local government is almost always better managed and more effective than centrally-directed government. This is what Tim Worstall called Bjorn's Beer Effect:

You’re in a society of 10,000 people. You know the guy who raises the local tax money and allocates that local tax money. You also know where he has a beer on a Friday night. More importantly Bjorn knows that everyone knows he collects and spends the money: and also where he has a beer on a Friday. That money is going to be rather better spent than if it travels off possibly 3,000 miles into some faceless bureaucracy.

The point (and we in England need to recognise this) is that Bjorn, like his counterparts in France and Germany, is a directly-elected mayor. If UK local government is to realise the sort of autonomy and fiscal control that places eleswhere enjoy, it has to start by acknowledging its present governance is opaque, undemocratic and unaccountable. And it is the governance at fault not the quality of councillor or the complexity of the decisions that are being made. It's certainly nothing to do with austerity.

For a hundred years or so the UK - well, England really - had a local government system that worked pretty well. It had limited powers (although this being England it could always do things so long as they weren't expressly forbidden) but exercised those powers using the funds it raised locally. As a result things like water supplies, sewers, houses, museums, art galleries, parks and swimming pools were built and places - even the smallest of places - developed their own identity and sense of value.

All this changed over the years from the 1960s to today's position where local councils are lost, struggling to know whether they are a community-focused urban or rural district or a grand and powerful city region authority demanding of attention (and loads of cash from central government). We behave like the former and demand powers like the latter, we reject elected mayors in favour of powerful leaders pretending the two are somehow different, and we get together and demand loudly that Westminster gives us more attention.

If we want to make the case for decentralising our over-centralised state - 'devolution' as it's popularly called - we have to start with making the case for a system of governance better than the one imposed on us (but gleefully snatched up) by the 2000 Local Government Act. Mayors are part of that better system but so are stronger parish councils and a thorough debate about the role of the local councillor. Above all - and we know this - the great years of local government were when local councils didn't have to get either permission or cash from Whitehall to do what they felt was right.

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Roads are much more important than railways - public investment should reflect this fact. It doesn't.

A bit of Britain's most important transport network

No matter how desperate the banana republic, the international airport is always a shimmering palace of perfume and croissants. It is only when you get out onto the dirt roads that you realise where you are.

The government seems determined to take the same approach to our own transport system: all the money gets sucked into vanity projects while transport used by the rest of us remains creaking.

And the biggest vanity project of all is Britain's rail network. The truth of the matter is that most of the public seldom if ever use a train - they are expensive compared to buses, inconvenient and crowded. But more to the point we prefer - and will continue preferring - to use the car. Just 2.4 million people - overwhelmingly in London - commute to work by train or tram. This is just over 9% of commuter journeys and compares to the two-thirds of journeys to work on the roads (by car, bus or motor cycle - adding in walking and cycling gets us to eight out of ten commuter journeys on the roads). Nearly half the population (45% in 2009/10) simply didn't use a train at all for any reason.

Yet whenever we talk about transport investment, we talk about trains. Billions is promised for new railways like HS2, for ever shinier stations, and for the polishing of existing (and admittedly creaky) networks. The need for rail investment is always hogging the headlines while the scandal that is our underinvestment in looking after the network of roads and pavements that carries 90% of journeys barely gets a mention. In 2012 the government invested £7.5 billion in the road network split roughly 50/50 between the strategic network and local roads. This compares to around £13 billion spent on railways (split between subsidising fares to the tune of £3.8 billion and the rail investment programme).

So Ross Clark is right, government in the UK is starving the everyday transport network - our roads - of funding while promising ever shinier new rail infrastructure (best part of £20 million on a new entrance into Leeds station being a fine example). Here in Bradford we need around £11 million a year to sustain our road network but are only spending about £6 million each year. With the result that the standard of the roads deteriorates year on year - the government responds by bunging one off funding for fixing potholes at councils when what is really needed is an adequate capital budget that would allow the proper maintenance of the road over a 25 year cycle.

The problem is that building grand railway schemes is popular with rail users. And rail users are mostly in London where the decision-making is done:

In 2009/10, 59 per cent of all rail journeys started or finished in London. The South East and the East of England were the regions with the next highest number of journeys but 65 per cent of journeys in the South East and 75 per cent in the East of England were to or from London.

And those train users - even in London - are more likely to be in their twenties or thirties and more likely to be in well-paid professional employment. The profile of rail users doesn't reflect the national demographic profile but the very different profile of London commuters (and higher income London commuters at that).

So we have a transport system that provides just 2% of journeys, costs the taxpayer over £13 billion a year, has incredibly low levels of customer satisfaction, is unreliable and still requires some other form of transport for people to complete their journey. How exactly is this the transport system of the 21st century? And why does it suck up so much of the attention (and investment) while the much more important road system isn't provided with the cash to even maintain it to a safe standard let alone improve it?
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Local multipliers are something of a myth

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Trendy regional economic development folk like to tell you about "the multiplier effect" arguing that buying locally means that more money "stays in the local economy". We are told - mostly without any real evidence - that this multiplier effect is the magic formula for making poor communities less poor, that it explains how paying higher benefits improves local economics and is the reason why inefficient traditional high streets are better than supermarkets.

Here's an example of this mythmaking from New Start magazine:

Working with the Centre for Local Economic Strategies, Preston Council is researching how much of the procurement spend of institutions – including Preston College, the University of Central Lancashire and Preston Council itself – actually stays in the local region.

‘The findings so far suggest that each institution spends less locally than you’d expect’, Whyte says. ‘There’s scope for us to improve that by looking at how to maximise local spend and supply chains and if there are any gaps in the local market, think about what we could do to fill it.’

The Evergreen model fills those gaps through a network of co-ops supplying food, energy and laundry services to local institutions. Preston Council is considering emulating this approach and has undertaken a number of initiatives to boost and expand local coops, including setting up a Co-operative Guild network.

Sound great doesn't it? But what it covers up is a fundamental factor about local preference - it distorts the market and, in doing so, it raises prices. If local suppliers in Preston know that they won't be squeezed out by a supplier from distant Burnley or, god forbid, Skipton then there will be no need for them to keep prices under control.

Thus we witness the essential fallacy of the local multiplier - the gain made in keeping money circulating locally is taken up in higher prices. It is, at the local level, essentially protectionism - great for the businesses that benefit but awful for the consumers who don't. The money may be circulating for longer but the buyers are paying more than they would be if the system were a free market. There is no gain.

And this is before we start talking about the opportunity cost of public spending:

It is quite misleading to leave public policymakers with the notion that their spending is not at the expense of the private sector because it may be autonomous or have multiplier effects

There may well be a local multiplier but these strategies to promote it are not only ineffective but probably damaging to the local economy (and certainly an impost on consumers).  Apparently though, this is "new economics" and we should be excited:

Until recently experiments in local economics were small-scale and peripheral. But the failures of orthodox approaches are leading even the most successful local economies to find new ways to boost jobs and revitalise communities. With a paucity of ideas and support from central government local areas are now abandoning laissez faire for more interventionist approaches.

Welcome to the latest in a long line of failed and failing regeneration strategies!

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Austerity - everywhere but government

aus·ter·i·ty/ôˈsteritē/

Noun:

Sternness or severity of manner or attitude. Extreme plainness and simplicity of style or appearance.

Or as European voters would have it, a monstrous evil loaded upon them by bankers and their cronies in government. But what exactly are we speaking of here – what exactly do we mean by ‘austerity’?

I’m not here to present some sort of economic case as to the existence or otherwise of austerity, of a time when financial reality forces us to adopt – from necessity – that plainness and simplicity of style. The truth is that austerity for most of us is a fact but the austerity isn’t being driven by cuts in public spending – there are, in aggregate, precious few of those cuts. No, the circumstances forcing us to live an austere life are coming from the private sector and from the manner in which governments have responded to the unresponsiveness of the private economy.

Look around you, speak to a few of your neighbours, wander down the food aisles of the supermarket and, above all, spend an hour or two watching television advertisements. All will tell you of two things – the two things that are bringing that unwanted austerity upon us:

1. We have less money in our pockets – for some of us this is because we don’t have any work but for nearly everyone the amount has fallen because employers, struggling for business, aren’t raising wages, are reducing hours, cutting overtime and ending bonuses. Plus, of course, the government, fixed on its own cash flow problems has bunged up taxes
2. What money we have in our pockets doesn’t buy as much – that’s right folks, we’ve never had the deflation we were promised at the start of this crisis. The clever folk in the treasury told us that we needed to keep real interest rates negative because otherwise deflation would destroy value and wealth – we would be doomed. Some of us said this was rubbish and that the government wanted some inflation so as to reduce its (and the banks’) debt problems. And we were right – there’s now been at least four years of above trend inflation. That’s four years where savings have shrunk, four years of price rises. Plus, to cap it all, the government has put up taxes – VAT, excise duties, airport tax

Austerity isn’t a consequence of reduced government spending but of other government actions – taxes that are too high, interest rates that are too low, running the Royal Mint’s printing presses at full whack and failing to cut spending. Yes that’s right – failing to cut spending.

Let’s remind you that over three years Bradford Council will have cut over £100 million from its budget – that’s 25% of what we get in grant from government. And it’s true, jobs have gone, some unnecessary cuts have been imposed, a few facilities have closed but, in the main, the “cuts” have barely inconvenienced the majority of the City’s population.

And look a little further – those financial strictures haven’t been applied to the NHS where budgets have risen not fallen, we’re still spending millions each week maintaining an unwanted armed presence in Afghanistan and the merest of dents has been made in the welfare budget. In truth the government predicts that spending will rise by £50 billion between 2011 and 2015 – what sort of dire austerity is that?

Yet there is austerity – people are struggling out there, we may not have starvation but everywhere you’ll see faces telling you it’s tough. As I said, watch those adverts – not just the offers of loans or the debt scams but the everyday adverts. Look at the styling, consider the way we now see less of the flash, hedonistic and aspiration imagery and instead get and older, solid, calming language.

And that austerity is the fault of government – for they have created the inflation, they have increased the taxes, they have made the jobs more expensive. What they haven’t done is cut their own spending.

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The North/South divide reopens...

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From the latest Manpower Employment Outlook Survey:

...a distinct line can be drawn to demarcate the division, running from the River Humber in the North East down to the Bristol Channel. North of the line, employers predicted negative hiring intentions of -2 per cent, while south of the line - including all of the South East of England - they predicted positive hiring intentions of +6 per cent.

And the factor driving this problem?

“Despite politics largely being held in London, most public sector workers are based in the North of England and Wales. The continuing public sector cuts are therefore particularly damaging to these areas that do not have such a vibrant private sector economy such as the South East. Furthermore over 32% of businesses are based in London and South East England, therefore naturally there is more employment.” 

After several decades of seeing the relocation of public sector employment, the stark truth is revealed. There simply isn't enough private activity outside the South East. And all the local enterprise partnerships, regional strategies and green growth agendas won't make a jot of difference. When 60% of the economy is public spending, private enterprise and initiative is squeezed out - that is the problem.

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Openness? Transparency? Not in Bradford, we're a Labour Council

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Bradford's increasingly ridiculous Council Leader has proclaimed that we won't be - as many Councils have already done - put details of spending on-line "to protect business".

Coun Greenwood said Bradford Council would, for the time being, ignore the order from the Communities Secretary to publish details of every bill for expenditure of £500 or more. He told the district’s business professionals that the delay in publishing the details of invoices was to allow time for them all to be purged of any commercially-sensitive information.

He told the Bradford Professional Network the purging operation was intended to avoid giving firms outside the district information that could enable them to undercut suppliers to the Council.

I am aghast- not just at the temerity of not letting the public know how its Council is spending their cash but the reason. Seems decidedly anti-competitive!

Maybe Cllr Greenwood has something to hide?

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How to do it George!

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From former NZ Minister, Maurice McTigue:

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.

It's been done before. What's stopping you?

On abolishing income tax...

It was a dream I know but I retain a picture in my mind of ‘Surrallan’ (or Lord Sugar as is has grown into now) gruffly – for he is gruff – telling his aspirant apprentices; “your challenge for today is to abolish income tax.”

And what a challenge!

Income tax raised (net of tax credits) £134bn in 2009/10 – which is about a third of HMRC revenue. However, it is only about 20% of total government spending for the same year. So, were we to maintain borrowing at the levels of 2009/10, a 20% reduction in public spending would be sufficient to remove the need for an income tax? And there are several ways to reduce government spending:

We can ‘marketise’ the area of spending – in simpler terms shift all or most of the spending from fiat spending (where the government gives a grant and the service is free) to consumer discretionary spending. It is possible to require consumers to purchase the product – as we do, for example, with third party motor insurance – but most people would buy the product or service. We have successfully shifted most utilities to private provision – and there aren’t many people who don’t buy water and electricity are there? This model could apply to such services as refuse collection where the service (as is the case with utilities) is delivered directly to individual households.
We can deliver services more efficiently – we can all given a few minutes identify examples of ‘waste’ within public services (and I guess within a large private organisation). Much attention has been given to this activity since it does not constitute a “cut”, avoids restructures or legislative change and gives the impression of success – but as we has seen with “Gershon” savings the results are largely fictional! The problem is that ‘waste’ within the public sector reflects (along with high levels of total remuneration) what would, in a well-run private business, be profit. The best driver (other than a real market) of efficiency is outsourcing.
We can deliver services more effectively – this is similar to ‘marketisation’ (we could call it an ‘artificial market approach’) in that is uses consumer choice models to drive effectiveness in supply. This is more likely to achieve better outcomes – especially in terms of customer service – since the consumer is in control of the spending decision. We are seeing this model emerging (too slowly) in education and the NHS has blown hot and cold on this approach for a long while. Senior producers (doctors, headteachers, etc.) will resist such a model as it removes their ability to capture monopoly profit in the form of inflated earnings.
We can stop doing something – let’s indulge the campaigners and call these changes “cuts”. The problem with this is that, in most cases, public services are doing something because the decision-makers (in theory if not often in practice) have made a positive decision to undertake that activity. We have ‘diversity outreach workers’ and ‘five-a-day co-ordinators’ because politicians have voted the cash for these activities to take place – even if (as I sometimes feel) we really haven’t the faintest hope of really knowing what we’re voting for!

To eliminate income tax we need to identify – on top of the currently announced reductions needed to reduce the deficit – savings amounting to around 20% of revenue spending (so it wouldn’t include, for example, not replacing Trident). It strikes me that, using the four approaches outlines above this should be achievable. It should surely be possible for anyone on or below average earnings to no longer be robbed blind by a venal government!

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Fixing the Finances: we know what to do - get on with it please

The consistently interesting Burning our Money reports on Sir Stuart Rose's observation on the public finances:

"It's very simple, we're skint"

And in the body of an informative post the cure is set out:

1. Public spending must be cut by around 15% (ie £100bn pa)
2. Taxes on enterprise and employment must be slashed - we have to earn our way back to prosperity

Simple. Can we now stop agonising about it and get on with doing what needs to be done?

Bradford Hospitals spend £2 million on corporate affairs - scope for savings in the NHS?

A few weeks back I received an e-mail from the Corporate Affairs Department of the Bradford Teaching Hospitals NHS Foundation Trust inviting me to join the Chair and others in celebrating 60 years of the NHS in Bradford. Now in times past I would have cheerfully sent my apologies and said nothing else. But this time I felt that this was a waste of money - certainly it would contribute nothing to improving health care or treatment for Bradfordians. Now as it happens the celebration in question was not put on at great expense but the response from the Trust Chair (£55,000 for a part-time job), former top copper David Richardson expressed surprise that I hadn't simply gone along with the planned jolly Indeed I had the gall to question its value and purpose!

Slightly irritated by this response I asked a few questions about the "Corporate Affairs" function at the Trust and about the remuneration of the Board (as a Foundation Trust there are in fact two boards - the expensive real one and a playtime Board of Governors for members of the foundation). The most significant fact is that all this bureaucracy costs the taxpayer over £2 million each year plus a Board of Directors costing nearly £800,000! It does seem to me that if the NHS is looking to make some savings, the operation and management of NHS Trusts - "corporate affairs" - might prove a fruitful area.

In Bradford simply reducing the number of non-executive directors from eight to four would save around £50,000 each year - cash that could go on paying nurses, providing treatments and contributing to the welfare of Bradford people. But here's a better idea - use councillors for the non-executives. Cheaper and, if we don't like the decisions there a democratic process for accountability - now that would be a radical step!