A massive increase in spending and taxes: "Labour has spent four trillion pounds over the last nine years. Spending in real terms will, by 2008, have risen by 40%. The share of the nation’s income consumed by the state has risen by a staggering 5 percentage points to 42% of GDP… And, of course, taxes have risen dramatically to pay for that spending and are to set to rise still further – making our economy steadily less competitive in a more and more competitive world."
Little trend improvement that could justify the spending splurge: George Osborne concedes that things have improved in Britain’s schools and hospitals but have they improved in rough proportion to the extra spending? He concludes ‘no’ and points to the fact that there has been no marked shifts in the already existing trends in performance improvement.
Conflicting targets: The Shadow Chancellor blames Labour’s targets culture for much of the wastefulness: "A staggering 700 Public Service Agreement targets were imposed by the Chancellor, far too many to be monitored and all too often in conflict with each other. Each target then spawned dozens more micro-targets within departments. But having so many targets is effectively the same as having no targets at all… The Home Office alone has now had over 100 different targets imposed on it by the Treasury. When John Reid says it is “not fit for purpose” it is not clear if the government knows what that purpose should be."
No credible monitoring of the targets: "The assessments of whether a target has been met are laughable. The Treasury has apparently “met early” the target of improving the cost-effectiveness of public services, even though public sector productivity has slumped, and is “on course” to increase the productivity of the whole economy, even though whole-economy productivity growth has slumped. It comes as no surprise that the judge in both cases was the Treasury itself. The Home Office is “ahead” of its target for “improvement in the level of public confidence in criminal justice system”. That will be news to the public."
Targets have distorted behaviour: "Waiting time targets have led to clinicians processing the easier operations first or moving people and on trolleys from one part of an A&E department to another to avoid missing targets."
The increase in public sector employment has largely been administrative: "The state is by far the largest employer in the country – and is getting larger. In 1997 5.2 million people worked for the government; today 5.9 million do. The independent thinktank, Reform, estimates that only a quarter of this total increase has been in frontline service delivery posts – the rest have been additional administrative staff."
Gordon Brown is surrendering to public sector unions: "Drawn up by senior members of the government and the public sector unions at Warwick University in July 2004, the [Warwick Agreement] secured the political support of the unions in the run up to the election in return for major concessions. These included an extension of protection for striking workers, funding for a union academy, government support for the EU Agency Workers Directive and – perhaps most significantly – a commitment that the bulk of NHS services would be directly provided."
The Tories will not surrender: "The next Conservative Government does not regard the deal done on public sector pensions, for example, as binding. We will focus first on the interests of the users of public services and the taxpayers who pay for them."
The central challenge in public service reform: "How do you provide incentives to improve in what is in effect a monopoly?"
Funded by the taxpayer but not necessarily run by the public sector: "The British people are very attached to taxpayer funded health care and education that is free at the point of use. So am I. As Nigel Lawson put it: the NHS is the closest thing the British people have to a national religion. But it also means understanding that not every doctor or nurse has to be employed by the government. Labour has set an arbitrary limit of 15% of the amount of NHS care that can be provided by independent providers. I don’t believe that such an arbitrary limit should exist at all."
Regulation of public services like the police that cannot be independently provided: "The key to improving performance there is to beef up the independent regulation through, for example, elected police authorities."
There must be consequences for failure-to-deliver: "You have to expose people to consequences of failure and the rewards of success. That does not happen enough in the public sector… No one is held accountable because no one cares. The Minister has probably moved to another department. The civil servants are thinking about the next announcement."
The role of the Treasury: "The Treasury should focus on its primary responsibility of exercising a tight rein on public expenditure. It will need to do that if we are to achieve our goal of sharing the proceeds of growth so that the share of national income consumed by government falls over an economic cycle."