Time for some healthy realism on public sector pay and employment

Of course I am going to write that I like Vince Cable's just announced proposals for capping public sector pay rises to £400 per person.  Since public sector pay makes up a quarter of all public spending, it is unrealistic to assume that it can remain unscathed.  Many people in the private sector have experienced pay freezes, pay cuts and of course redundancy.

The elegance of Vince's proposal is to maximise fairness for those at the bottom of the heap. Every public sector worker will be eligible for a pro-rata pay rise of up to £400 - equivalent to a 2% pay rise for someone on £20,000 a year, a 3.3% pay rise for someone on £12,000 and a 0.4% pay rise for someone earning £100,000. Managers will not have to award the £400 pay rise to everyone - they will have flexibility in allocating their budgets so that, where appropriate, organisations can agree further pay restraint in order to protect job numbers.  But they will find it far more difficult to line their own pockets at the expense of junior staff. This neat idea is far more likely to protect front-line services and jobs while still saving £4 billion per year, and it is certainly fairer than the Conservative suggestion of freezing all public sector pay above £18,000, hitting nurses, teachers, firemen and police officers alike, while offering huge tax cuts for the really wealthy.

I was also struck by Gordon Brown's speech yesterday on efficiency savings in government.  If all the vaunted efficiency savings announcements over the last few decades had in fact been delivered, we would be receiving cash back on our tax by now.  I am sure that yesterday's announcement will again turn out to be so much smoke and mirrors. We will not get the improvements we need until there is fundamental reform in Whitehall.  Central Government is too big, too powerful and too expensive. The Liberal Democrats would scrap entire departments and introduce massive decentralisation, making politics better, cheaper and more accountable. I remember telephoning a senior civil servant friend at the then DTI before the last election in 2005 to tell them that he and they would be abolished if the LibDems got into power.  "Oh that's all right," was his reply.  "Just so long as you keep your promise to move the the Treasury to Liverpool."

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