Oh heck … Bloated public sector is damaging economy, warns Andrew Bailey.

fancythat

Common economic sense.

But is it?

It depends what the costs are if the public sector doesn't provide a service.

My daughter is an HR manager in the civil service. They have recently been given more work to do (involving child porn and tracking people smuggling gangs) but are facing budgetary cuts, which will inevitably lead to redundancies. There might be short term gains and balance sheet targets might be met in the short term, but what about the long term costs?

It's a nightmare!

The Governor's point wasn't that the public sector is 'bloated' but that an increased public sector does not contribute to productivity. I think that is arguable: using the NHS to return people to active work in the private sector would help. Of course, productivity depends on multiplying human efforts by investing in training and equipment which the Tories failed to do.

Grantanow

The Governor's point wasn't that the public sector is 'bloated' but that an increased public sector does not contribute to productivity. I think that is arguable: using the NHS to return people to active work in the private sector would help. Of course, productivity depends on multiplying human efforts by investing in training and equipment which the Tories failed to do.

I think it's arguable too. If people aren't educated or fit and healthy, they're not going to be very productive.

Does Mr Bailey think if public services were to be privatised they'd suddenly contribute to productivity?

I read that Bailey said the public sector productivity was nor improving, rather than that it wasn't contributing to over all productivity.

Public sector productivity is calculated quite differently from private sector productivity. Private sector is in the nature of a financial calculation of the contribution workers make to profits.

Public sector, obviously, can't do that because the public sector doesn't make any money directly, even though it has a very significant contribution to make to economic activity in the domestic economy by means of purchasing goods and services and the payment of wages.

So, their productivity is, apparently, calculated on the financial inputs, such as purchase of goods and services, capital spending and wages. Inputs are compared with 'outputs' to see if increased inputs engender increased outputs.

I'm not sure how 'outputs' are calculated, though. I can understand if it were just straight targets, such as shorter waiting times for surgery, more GP appointments, more criminals caught and prosecuted. But what about the non tangibles?

What about increased expenditure on maintenance and repairs of the public estate? Or increased expenditure on teacher training leading to better outputs for pupils?

In the instance of repairs and maintenance how could the output even be determined, let alone monitored? Or in the case of increased spend on training, if, as is inevitable, there is a time lag between the spend and its results is that accounted for?

Trying to find answers to questions like this I got the impression that calculating public sector productivity is something of an art rather than a science. So maybe not an absolute measure to trust implicitly?

growstuff asked:

"Does Mr Bailey think if public services were to be privatised they'd suddenly contribute to productivity?"

Maybe he does

After all, it has worked so well with the water companies.

Ilovecheese

growstuff asked:

"Does Mr Bailey think if public services were to be privatised they'd suddenly contribute to productivity?"

Maybe he does

After all, it has worked so well with the water companies.

Public sector is always going to be less productive because its product is only partly financial, which means that private sector has to make more to fill the gap. That’s not happening we are using borrowing to fill the gap, I doubt the economy is going to provide more short term, so public sector needs to cost less.

However short we are of money it suddenly appears for some things. Listening to a radio programme yesterday and apparently we will be providing substantial funding to rebuild Gaza. How long would it take and last when rebuilt?

Allsorts

However short we are of money it suddenly appears for some things. Listening to a radio programme yesterday and apparently we will be providing substantial funding to rebuild Gaza. How long would it take and last when rebuilt?

WE are not short of money, Allsorts.

We are able to create enough money to do whatever we want to do, within the constraints of resources available to purchase and proper taxation to control inflation.

We've been sold a myth of the national economy being just like a business or household economy ever since the 1980s and it just isn't true.

However, while politicians and commentators continue to believe the myth, and support economic theory and practice which serves the interests of the wealthy while marginalising everyone else, we're in trouble.

Not to mention the fact that it is politically inept to be sending money abroad (which I absolutely think we should be doing) without offering any relief to those who are struggling in the domestic economy, or making a push to do what, seemingly, the entire not rich UK population wants, which is to improve public services.

In simple terms, a person in the public sector is paid money from the government.

A person working in the Private sector, is not.

a person working in the public sector, that should read.

If people are going to quote a newspaper headline as their title, they should really put it in quotation marks and provide attribution.

Members make decisions about which sources they use to get their information and not to identify a source used to drive a thread seems rather underhand and unethical.

I am careful where I choose to get my information and would like to be aware of the bias of the reporting before I read it. This is especially true when the headline is taken from what has now become a far-right newspaper and it's slipped surreptitiously into our reading.

fancythat

In simple terms, a person in the public sector is paid money from the government.

A person working in the Private sector, is not.

That has set me questioning fancythat. You re right of course but who "pays" those externally employed but the company is paid by the government. This crosses many levels from small training companies where all their income comes from government, to outsourcing both high level and low paid jobs in say the NHS and companies like Price, Waterhouse, Cooper employing staff working in the civil services. There are also the places paid for in the Care Homes sector.

It's fairly easy to cut the budget of, say, a school - they can't argue - but these may be more difficult to cut, or are they?

fancythat

In simple terms, a person in the public sector is paid money from the government.

A person working in the Private sector, is not.

That's not true. Plenty of private companies have contracts with the government or local authorities, which receive their money from taxation of one form or another. Care homes are a very visible example of that.

PoliticsNerd

fancythat

In simple terms, a person in the public sector is paid money from the government.

A person working in the Private sector, is not.

That has set me questioning fancythat. You re right of course but who "pays" those externally employed but the company is paid by the government. This crosses many levels from small training companies where all their income comes from government, to outsourcing both high level and low paid jobs in say the NHS and companies like Price, Waterhouse, Cooper employing staff working in the civil services. There are also the places paid for in the Care Homes sector.

It's fairly easy to cut the budget of, say, a school - they can't argue - but these may be more difficult to cut, or are they?

It's not correct.

PoliticsNerd I'm not disputing your interpretation. Interesting that we both mentioned care homes. There are many other examples.

growstuff

PoliticsNerd I'm not disputing your interpretation. Interesting that we both mentioned care homes. There are many other examples.

Any person working for a private company on a government contract is being paid with government money

This, and the examples others have given, show why you cannot divorce the public sector from the private sector when it comes to thinking about the UK economy.

Apparently, the productivity 'outputs' of private companies contracted to the government aren't always included in public sector productivity calculations because they are included in private sector 'productivity'.

I know of training companies whose entire income is from central and local government. Why don't we have more not-for-profit companies, I wonder?

Basically, PoliticsNerd, because people running and working for companies like to be paid!

Barleyfields

Basically, PoliticsNerd, because people running and working for companies like to be paid!

Not-for-profit companies do pay their employees, but they don't make a profit for share holders.

Wyllow3

Two hours ago it appears by a pundit in the Telegraph, straight to an O/P in GN.

Yes, lets appoint a crazy multi billionaire and sack key staff administering huge chunks go cuts without any planning done as to how, where, consequences, ensuring vital services continue.

Well said!

FriedGreenTomatoes2

Totally and utterly agree with this, one of Reform UKs stated aims MaizieD (and *Terribull?). Regarding the stagnation in wages, I wonder whether a higher threshold before those on lower incomes become liable for tax would make any economic sense

This was suggested by Reform in their 'manifesto' last year. It is the only thing they proposed that I would be in agreement with. Based on the premise that business needs consumers to buy their products, so keeping the critical mass of consumers short of money makes no sense whatsoever when it comes to looking for growth.

It was one of the reasons I voted for them. It makes so much sense any way you look at it.

We will all be spending the money on private health insurance instead as Farage has stated he wants an insurance based system, no doubt provided by large American companies. Selling the NHS is the aim of Reform. Don’t see the Daily Telegraph, Mail, Express saying much about that. Imagine if Labour or Lib Dem’s had referenced that in Question Time last week!

I looked up the UK's 100 most valuable private companies (by sales) and was surprised how many of them are retailers (including one betting company). If private companies always produce "stuff", how does a retailer produce anything? Obviously they provide the means by which "producers of stuff" can sell things, but they're not actually producing anything themselves. They're providing a service. How is that any different from (for example) the NHS which keeps the people who make and provide "stuff" healthy? The NHS also uses equipment manufactured by private companies and pays employees, who then spend some of their money on "stuff" produced in the private sector.

A mixed economy is extremely complicated. The private and public sectors rely on each other in a symbiotic relationship. It's far too simplistic to claim that the private sector is productive and the public sector isn't.

Happilyretired123

FriedGreenTomatoes2

Totally and utterly agree with this, one of Reform UKs stated aims MaizieD (and *Terribull?). Regarding the stagnation in wages, I wonder whether a higher threshold before those on lower incomes become liable for tax would make any economic sense

This was suggested by Reform in their 'manifesto' last year. It is the only thing they proposed that I would be in agreement with. Based on the premise that business needs consumers to buy their products, so keeping the critical mass of consumers short of money makes no sense whatsoever when it comes to looking for growth.

It was one of the reasons I voted for them. It makes so much sense any way you look at it.

We will all be spending the money on private health insurance instead as Farage has stated he wants an insurance based system, no doubt provided by large American companies. Selling the NHS is the aim of Reform. Don’t see the Daily Telegraph, Mail, Express saying much about that. Imagine if Labour or Lib Dem’s had referenced that in Question Time last week!

So who will that benefit? Will it result in better health for everybody (or just the few who can afford enhanced premiums)? Why is it better than the NHS?

Ramblingrose22

How refreshing to read so many posts in this thread that I totally agree with.

Unfortunately some people in this country don't understand that public expenditure pays for their public services and that most of Thatcher's privatisations - whilst presented as a great gift to British taxpayers at the time - were a disaster, enriching incompetent CEOs and syphoning British utilities bill payers' money into the hands of foreign shareholders who care only about the size of their next dividend whilst we can't swim in our own seas and rivers because of lack of funding to prevent pollution by sewage spills.

I am not claiming that all public sector organisations are 100% efficient but you only have to watch episodes of "Who Do You Think You Are" to learn that in the last century and the one before that poor people lucky if they lived in a slum to avoid homelessness were carted off to workhouses before the introduction of the welfare state and the NHS where many died.

Do we prefer to have that kind of public squalor again so that we can have a few tax cuts?

Starmer & Co. are far from perfect but IMHO it would be even worse to be ruled by the previous lot or by the oligarchs as in the US.

Could not agree more! There are those on Gransnet who do seem to ignore the consequences of privatisation, tax cuts etc!
So many services provided by Local Authorities are contracted out eg children’s homes to “save money” are deficient, never mind efficient and their shareholders are doing very nicely thank you.

growstuff

Happilyretired123

FriedGreenTomatoes2

Totally and utterly agree with this, one of Reform UKs stated aims MaizieD (and *Terribull?). Regarding the stagnation in wages, I wonder whether a higher threshold before those on lower incomes become liable for tax would make any economic sense

This was suggested by Reform in their 'manifesto' last year. It is the only thing they proposed that I would be in agreement with. Based on the premise that business needs consumers to buy their products, so keeping the critical mass of consumers short of money makes no sense whatsoever when it comes to looking for growth.

It was one of the reasons I voted for them. It makes so much sense any way you look at it.

We will all be spending the money on private health insurance instead as Farage has stated he wants an insurance based system, no doubt provided by large American companies. Selling the NHS is the aim of Reform. Don’t see the Daily Telegraph, Mail, Express saying much about that. Imagine if Labour or Lib Dem’s had referenced that in Question Time last week!

So who will that benefit? Will it result in better health for everybody (or just the few who can afford enhanced premiums)? Why is it better than the NHS?

Well it won’t be those of us who can’t or won’t be able to afford private health insurance that’s for sure! And apart from the more comfortable hospital rooms, (having experienced both when I was working and my company paid for private health care) I would say the NHS better. We should be investing in the NHS not privatising it.