Not so tough at the top

28 Nov 08
PETER HETHERINGTON | Invoking yet again the late environment secretary Anthony Crosland’s warning to the nation in 1975, one of the larger management consultancies specialising in local government cautioned this week: ‘The party is finally over.’

Invoking yet again the late environment secretary Anthony Crosland’s warning to the nation in 1975, one of the larger management consultancies specialising in local government cautioned this week: ‘The party is finally over.’

With the chancellor telling the public sector in his Pre-Budget Report to make additional efficiency savings of £5bn by 2010/11 — on top of £30bn already demanded — it certainly has a point.

But the circumstances are very different to the International Monetary Fund crisis 33 years ago when Crosland preceded his famous line by calmly telling the nation: ‘The crisis that faces us is infinitely more serious than any of the crises we have faced over the past 20 years.’

Then there was no unprecedented collapse of the banking system in a global financial crisis that had not been experienced in living memory. Public spending in 1975, which had reached unsustainable levels — although a pale imitation of today’s mounting public debt — had merely to be slashed.

Now, on top of public sector efficiency savings, public spending will rise at an annual rate of only 1.1% after 2010/11, conveniently following the next general election.

We have already had the ritual, autumnal howls from the Local Government Association: dire warnings that councils will have to find £1bn worth of savings over three years to avoid forced cuts.

But local government minister John Healey insists there’s no need for either service cuts or ‘excessive’ council tax rises — and in this harsh financial climate you can be sure he will insist on near-zero increases over the next few weeks.

In short, local government could soon find it has few friends. Put aside the findings of a survey this week by the insurer Liverpool Victoria Friendly Society that shows high levels of dissatisfaction with local services and concerns about council tax.

Consider, instead, last week’s figures from the Department for Communities and Local Government, showing that the level of cash in council reserves has more than doubled in 11 years to £12.56bn.

Town halls — and big quangos — need to watch their backs. With the basic salaries of council chief executives rising by 34% between 2003/04 and 2007/08, according to Audit Commission research, the public sector ‘fat cat’ label is beginning to stick.

As the impact of the recession, redundancies and all, bites deeper into household finances, generous public sector salaries will become harder to defend and sustain.

As the commission has noted, the focus on an increasingly narrow band of chief executive candidates has increased the market value of the top town hall posts, with few — if any — well-qualified people from outside the sector entering councils at the highest echelons of management.

Rather than being pressured by the government to make efficiency savings, perhaps it is time for town and county halls — as well as Whitehall — to begin taking out layers of management and, crucially, sharing more back-office functions as well as pooling services.

The decision from the DCLG to push ahead with statutory city-regions, in which groups of urban authorities can set common planning, transport and economic policies, opens the way for more service sharing deals or even full-blown mergers.

But the deepening recession will have a more profound impact. Those of us either self-employed or in the private sector will, increasingly, have little sympathy with the bleatings from councils and other agencies about their (perceived) financial plight.

The dividing line between the private and public sectors will grow. This will doubtless be sustained by research unveiled this week by the Financial Times showing that two out of three jobs created since 1998 have been in parts of the economy dominated by public services: health, social care, education and public administration, for instance.

This is not to downgrade the importance of the public sector and the essential role it plays in a caring, liberal society. It is merely to argue for a degree of humility and reality from a relatively cushioned sector, which, if it accepts the new financial realities of cash-strapped and indebted UK Plc, could gradually become a more attractive career choice for young people.

With jobs in the City and financial services less appealing and harder to come by — these days bankers and financiers seem more loathed than journalists and estate agents — one consequence of the recession is likely to be a surge of applications from graduates for the limited number of public and third sector jobs.

Perhaps an infusion of younger talent, motivated by public service rather than ostentatious personal gain, would breathe new life into a sector generally held in low public esteem — provided it accepts that, this time, the party really is over.

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