Cutting spending – Part 2 by John Redwood MP

Last night BBC’s Newsnight created a TV Star Chamber to examine three areas of public spending. Two of the areas they raised are large and central to the task of reducing spending. They asked a panel of 3 including myself to evaluate a 5% cut in all public sector pay, and a five year freeze on benefit levels.

I rejected both their specific proposals, but agree the two large areas of public sector pay and benefit bills need to be reduced. I have tabled some questions to get the exact figures, but roughly the state is supporting around 24 million adults – 6 million direct employees, 6 million unemployed on various benefits and 12 million pensioners receiving state pension and in some cases top up benefit. It’s too many.

The task is to get more of the unenmployed into private sector jobs, and to transfer some of the public sector employees into private sector jobs. We need to release the entrepreneurial energies of some public officials and find new ways of delivering some state supported public services which could be privately financed.

I did not favour an EU style 5% across the board pay cut. The public sector pay freeze proposed for this year amounts to a real cut, with price inflation in the UK currently running at 5.3%. I would not myself wish to expalin to low paid care assistants or public sector cleaners why they would have to face a 5% cut. I would be quite happy to see the 5% cut taken by MInisters extended to other better paid state employees, and to see pay cuts negotiated within services or departments with the employees as part of a package to cut the overall costs of their area of work. The private sector found it was possible in the depth of the private sector crash in 2008-9 to agree lower pay in return for no redundancies where the money was running out.

The government has pledged to undertake major reform of the benefits system. Again, I would not wish to explain to a severely disabled person they had to face five years of no increase in benefit. They don’t get that much to start with, and present inflation would make that cruel. I would be happy to defend welfare reform where someone who is offered a job is told their benefit will be removed whether they take the job or not. I do wish to see more positive and successful programmes to get the workshy or the ill equipped into employment. Curbing new immigration will also help with this. There should be more control over the levels of housing subsidy.

All final salary public sector pension schemes should be closed to new members, as most private sector schemes have been. There should also be a review of the terms for future accrual of additional benefits for exisiting members.

The third area Newsnight raised was the question of do we need free libraries? It was an interesting choice of service. My response was we need some free libraries, but we could do it for much less cost. Why do we have a University library, secondary school libraries, specialist public sector libraries and municipal free libraries all in the same urban or suburban area? Could there be more pooling and joint use? Why is the LEA overhead so high? Why does it cost so much to borrow each book? Can more be delivered on line? Have libraries diversified to offer too much free? What if we split the LEA library monopoly? Would librarians like to turn their lilbraries into not for profit charities or social enterprises? Could commercial organisations manage or provide the library facility for less? There must be enormous scope here for innovation and lower cost.

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