A chancellor who cared at all would not cap public sector pay
|
Version 0 of 1. Cuts are one thing and chancellor George Osborne signalled no mercy or let up on austerity. But it’s also the way he tells ’em – it’s how the state is cut and squeezed. This budget statement was almost callous in the way it refused even to look at how effectively the state is to be shrunk. Take pay and people. The budget endorsed the Office for Budgetary Responsibility projection of 800,000 fewer public sector jobs across the UK by 2018 compared with five years ago. Related: Public service staff face four more years of pay pain If there are going to be fewer people, those who remain surely need to be more effective. But effectiveness depends on motivation and incentives. This government evidently continues to think public sector staff are overpaid. It glibly says that capping public sector pay at 1% for a further four years is OK. After all, staff still enjoy generous pensions. What does that imply for recruiting the brilliant people that are going to be needed to keep the show on the road while the wagons are being downsized and battered? It’s not “tough” to please the Daily Mail by cutting pay; what really is tough is trying to think through how and where financial incentives are necessary to ensure councils and health trusts, let alone Whitehall departments, can attract the best and the brightest – for it is in conditions of austerity that the public sector needs to be at its cleverest. As for “transformation” (that much-vaunted but rarely defined aim) or the “cross-cutting reforms” extolled by the Treasury, they will depend on people, and staff must be paid. So a chancellor who cared even a little might have insisted on keeping a lid on the overall pay bill while ensuring necessary flexibility, and junking the puerile doctrine that no one should get paid more than the prime minister. The government says it will modernise pay along with terms and conditions. But will it pursue reform in the spirit of improvement, abandoning, for example, the simplistic comparisons made in the budget documentation between public and private sectors for a more nuanced and perceptive understanding of what public sector staff are trying to do in the fiscal squeeze, and the local and regional implications of shrinkage? The spending review due in the autumn is supposed to “prioritise growth-promoting expenditure and spending on public services for those who need them the most”. Osborne and colleagues don’t seem to realise that spending well is a difficult business. Freezing or (depending on inflation) cutting the pay of those who manage it is no way to secure effective decision-making. Related: Budget 2015: the verdict from our columnists | The panel Pay is an example of how the government can’t or won’t join up its thinking. There are plenty of others. The Institute of Fiscal Studies hoped the budget would see coherent thinking about tax reliefs, following the lead given by the Commons Public Accounts Committee. Hopes dashed. Or take the welfare cuts. The Treasury seems uninterested in the indirect and unintended consequences of measures. The cap on welfare benefits paid to households, the cuts in tax credits and housing benefit and the resulting fall in the household income of many poor households will have effects over the years on health and wellbeing and – possibly – on demand for healthcare, not to mention the impact on the criminal justice system. Even if the government doesn’t care much, surely good governance demands that it at least tries to understand effects, especially if it includes downstream increases in spending. Of course it’s not straightforward. Being poor doesn’t automatically make you more likely to come to the attention of the police, courts and prisons. But there is good evidence that your lifetime health is going to be worse and the likelihood of your children doing badly at school and ending up costing the system more is significant. It would be reassuring to know that the Treasury had carried out some sort of impact assessment or anticipatory evaluation of demand for services in the round and how changing welfare will inevitably have consequences for local authorities, police and the NHS. But that does imply ministers care about the shape of the system, even when it’s smaller. Perhaps they don’t. Talk to us on Twitter via @Guardianpublic and sign up for your free weekly Guardian Public Leaders newsletter with news and analysis sent direct to you every Thursday. |