Wednesday, April 30, 2008
“transferring non-core services to the private sector..”
Northern Ireland’s current Finance Minister, and expected next First Minister, the DUP’s Peter Robinson, asked Gordon Brown about the second Varney Review [of competitiveness], to follow his previous review of taxation, during Prime Minister’s Questions today and called for the UK government’s response in time for the upcoming US investment conference. As RTÉ reports that review has been published. NI Secretary of State Shaun Woodward has welcomed the “roadmap to prosperity” and the review itself is available here. PDF file direct link here. RTÉ gives an interesting summary.
Adds As Mark Devenport says - “There ain’t no Sanity Clause”. Heh.In today’s review, Mr Varney indicates that the North’s strengths include a young population, an excellent education system and strong transport links. However, he recommends several reforms to further boost competitiveness.
Recommendations include the transfer of many public sector services to the private sector and greater co-operation with the Irish Government and agencies like the IDA in the development of an all-island economy.
From the Treasury press statement
Sir David’s Review identifies a number of core strengths that make Northern Ireland a good place to do business and attractive to a wide range of investors. These strengths include a young population, an excellent education system, macroeconomic stability, strong transport links with the rest of the UK, Ireland and Europe and ambitious plans for further infrastructure investment. These strengths – alongside a range of investment incentives – have already attracted notable inward investment, and seen some of the strongest growth in output of any UK region.
The Review makes the case that increasing globalisation will bring a number of new challenges to the Northern Ireland economy in the years ahead, as emerging economies compete increasingly in a range of sectors. To succeed in the face of this growing competition, Northern Ireland will need to continue to raise its relatively low productivity and employment rates and reduce the number of low-skilled workers in the economy.
Sir David found that the Northern Ireland Executive has responded well to many of these challenges, and welcomes the priority given to the economy in Northern Ireland’s Programme for Government and the strategies developed to support economic development. The Review concludes that the Executive should now focus on the rapid and effective implementation of those strategies.
To boost the competitiveness of the Northern Ireland economy further, the Review recommends action in a number of areas, including:
deepening and intensifying public sector reform, in particular increasing the role of the private sector in the delivery of core public services and transferring non-core services to the private sector in order to help stimulate its growth;ambitious labour market and welfare reform, aimed at increasing the employment rate and reducing the number of people on Incapacity Benefit;
more employer-led skills training to help tackle weaknesses in the stock of skills in the labour market, which is a legacy from the past;
ensuring a joined up approach between Invest Northern Ireland, UK Trade & Investment and the Irish Industrial Development Agency (IDA) to market Northern Ireland to the full; and
continuing development of the all-island economy with the Irish Government, supported by the UK Government, including increased trade, movement of labour and capital, tourism, energy markets and financial services as well as many other sectors.
Pete Baker @ 03:51 PM
Hasn’t Brown been trying to get Stormont to sell the Port of Belfast (a rare public sector success story) for years? I hope this doesn’t succeed, we have precious few public assets as it is.
Posted by on Apr 30, 2008 @ 04:58 PMWhatever about the recommendations, this report shows the problems facing Northern Ireland:
- Net annual fiscal deficit of an incredible 30% of GVA or 7 billion pounds.
- 26.9% inactivity rate. It has been between 27% and 30% since 1984.
- Nearly 10% of Northern Ireland’s population is classified as disabled as opposed to just over 3% for Ireland.
- A quarter of working-age adults have no qualifactions.
- Twice as many longterm unemployed as the UK average.
- 30% of students leave Northern Ireland to study.
- Expenditure on R & D as % of GVA is 0.5% as opposed to the 1.2% UK average.
- Fewest number of spin-off companies from universities in the UK.
- Lowest rate of venture capital financing in the UK.
And the good news:
- Same proportional capital expenditure by business over the last decade as the rest of the UK.
- 18 billion in investment over the next 10 years.
- UK average for startup companies.
And more bad news aka the public sector:
- 28% of Northern Ireland’s workforce are in the public sector as opposed to 20% in the UK. That’s 56,000 too many on the wage bill by my estimate.
- Public spending accounts for 67% of GVA, the highest in the developed world.
- Per capita capital investment in transport is only just over half of what it is in the rest of the UK despite the infrastructure deficit.
- The UK has sold off 80 billion of its public assets under Labour and now expects NI to do the same, starting with Belfast Port.
I like some of the recommendations:
- Reduce the number of Executive departments.
- Reduce the number of MLAs
And don’t like others:
- privatise bus, rail and water.
- sell anything that you can get a few bob for.
Also interesting to see that even Her Majesty’s Treasury has started using “Ireland” instead of “Republic of Ireland” now.
Posted by on Apr 30, 2008 @ 06:10 PMGeorge
“Ireland” is the name of the state we share this island with. Accordingly, Ireland it is for official business and not just HM Treasury- all inter governmental treaties are with the “Government or Ireland”.
As de Valera said “Ireland is Ireland without the North”.
Posted by on Apr 30, 2008 @ 06:49 PMInactive section of the population and much-vaunted cheap jobs.
Oh and lets hammer the public sector who kept the place going since ‘69. After all, the Housing Executive never did half as fair a job housing people as did the councils before ‘73.
What original thinking we see here. Of course, if they want to pay off a few thousand public servants on the same terms as the former RUC people, I won’t say no to a £100,000! :)
And while we’re at it, give all current PSNI responsibilities to Group 4, all benefits payment jobs to the good folk who handled Northern Rock so well and have Jeffrey Archer head up a Truth Commission.
There, thats my consultancy input. Another £100,000 for that, you say?
Yeah, thanks a lot!
Posted by on Apr 30, 2008 @ 07:09 PMBonarLaw,
rather odd that the last HM Treasury report by Varney used “Republic of Ireland” so.Posted by on Apr 30, 2008 @ 07:21 PMSo if Ireland means the 26 counties, what’s the island called these days? The island of Ireland and Northern Ireland? I guess Korea is no longer a peninsula either.
Posted by on Apr 30, 2008 @ 07:24 PMJo,
Oh and lets hammer the public sector who kept the place going since ‘69.The public sector didn’t keep the place going, the people who shelled out the 7 billion a year did.
Now the people who are shelling out the 7 billion a year are getting a bit tired of stumping up the cash.
And do you think that having 56,000 more public sector workers than is necessary is giving Northern Ireland a world class public sector?
And who is going to pay for it in the long term?
Posted by on Apr 30, 2008 @ 07:26 PMSo NI could do with 56,000 job cuts, George?
Stand for election on that ticket when you next get a chance?
Posted by on Apr 30, 2008 @ 07:52 PMPlus, I seem to recall a similar line of argument. A politician calling people here “spongers”.
That went down well. Of course, this was an age before spin.
And the price of having partitioned the island continued - and continues - to be paid.
Posted by on Apr 30, 2008 @ 07:55 PMAnd who is going to pay for it in the long term?
The British taxpayer, or to be more accurate, the SE England taxpayer. We’re just a bit more profligate with their money than Scotland, Wales and N. England.
George, the MoD is starting the pullout, but the 11 departments, and absurd 106 member assembly along with the massive duplication of work in NICS and the quangofest will take years to dismantle. The RPA is already behind schedule and there will be much gnashing of teeth there. The generation currently studying are going to have to look to GB or the Republic. The massive public sector pension scheme here has to be paid for as well as the lifetime on DLA brigade.
All the recommendations outlined by Pete above are pie in the sky. People hear what they want to hear. Jo is spot on about the consultants though.
Posted by on Apr 30, 2008 @ 07:56 PMIt’s a pity Telly Savalas has passed on, we could have used him to sell the new Belfast to American cinema audiences…
http://www.bbc.co.uk/radio4/arts/tellysavalas.shtml
Posted by on Apr 30, 2008 @ 08:06 PMJo,
public sector workers are getting 19% more than the private sector so maybe we could start with a campaign for a three-year pay freeze and a bar on any new recruitment. Alright I won’t get elected.But whatever about my electoral chances, the current situation is unsustainable and the signs are beginning to show.
Look at the transport infrastructure deficit, the social infrastructure deficit, the brain drain, the huge and evergrowing disparity in educational attainment etc.
This all while Northern Ireland supposedly has 4.2% unemployment, has a “vibrant” economy and still gets 7 billion a year in a subsidy.
All available public assets are going to be sold in the coming years, rates are going to rise, Northern Ireland’s brightest are going to leave, the low-paid jobs could move elsewhere. The gap to the Irish Republic and GB will grow.
Driftwood,
this report is quite similar to the Agenda 2010 one brought way back in 1998 and I’m sure it will have the same result.There isn’t the will or the power within Northern Ireland to effect the changes necessary. As Jo intimates, why would anyone in their right mind want to voluntarily risk losing their well-payed pensionable public sector job?
But the subsidy tap is slowly but surely turned off.
Posted by on Apr 30, 2008 @ 08:19 PM“Northern Ireland’s brightest are going to leave”
Not necessarily. Some work in the public sector. And more are needed. :)
AND: this place is seeing more young people return to work (I think)
IEven if I agree with Varney and your good self about the pay differential, it doesnt imply we need less public sector jobs.
If these are indeed better paid (few civil servants are at the top of their range (the agreed rate for the job)) why should we not retain these rather than the call centre jobs which delight some but dont really represent a good enough reason for the brightest talents to stay?
Posted by on Apr 30, 2008 @ 08:28 PMJo,
you are forgetting the small problem that your paymaster is turning off the tap. The huge public sector is a luxury Northern Ireland can no longer afford.Norhtern is running an incredible deficit of 30% of GDP. That wouldn’t even qualify as a grotesque and insanity pact.
Northern Ireland’s brightest who remain all ending up in non-wealth-generating employment is also unsustainable.
We’d all love to eat lotus leaves for the rest of our lives but there is a limited supply.
Posted by on Apr 30, 2008 @ 08:44 PMI am with George @ 07:10 PM throughout here: his itemised list is a very fair analysis.
Nobody is talking 56,000 job cuts. The consensus of opinion is that an appropriate transfer of some services to agencies would be more efficient and would kick-start private-sector operations. Curiously, there might even be greater public scrutiny.
Yes, the public sector ... kept the place going since ‘69 because it was a time of economic war, and any enterprise coming to NI (e.g. De Lorean) had to be bribed—with UK tax monies—to do so. That was then: this is now.
As for the ironic the Housing Executive never did half as fair a job housing people as did the councils before ‘73, we are not in the context of pre-’73. However, let’s just hope the extra-NI tax payer doesn’t spot that he/she is shelling out to provide conditions, benefits and costs unavailable elsewhere in the UK. And that also applies to water.
Finally, for the moment, I was around (it was Saturday, 25 May, 1974) when Harold Wilson referred to the UWC strikers (not to the people of NI) as “spongers”. I wonder if others remember how “popular” support for the UWC strike had to be enforced by Brown Shirt levels of threats and intimidation. But, of course, that was, indeed, an age before spin.
Posted by on Apr 30, 2008 @ 08:47 PMI’m at a loss to see how firing public sector workers will act as a panacea for the ills of our private sector. Sounds suspiciously like the parroting of Thatcherite propaganda rather than serious economic analysis to me. Or have we returned to the age of alchemy?
Posted by on Apr 30, 2008 @ 08:55 PM“an appropriate transfer of some services to agencies would be more efficient and would kick-start private-sector operations”
Water Service is now a government owned company. Not a private company. Its establishment as such is totally opposed by every NI political party. That is, by the electorate.
Vehicle licensing would kick-start private sector operations? Really?
Serious questions about what generates wealth in 2008 werent answered, nor were the reasons why such wealth generators arent flocking to Belfast or Derry or Ballymena. The answer of course is that this same man refused to contemplate lower corporation tax.
A vote winning move that hurts only those who generate wealth for shareholders (think oil companies performance while the rest of us pay a feckin fiver for a gallon!)
Now: a FoI question. How much have the Varney reports cost the taxpayer?
Posted by on Apr 30, 2008 @ 09:10 PMjo, you could always sell your Petrel (PET) shares and grow champion spuds in Cnnemara ;-)
Posted by on Apr 30, 2008 @ 09:16 PMGaribaldy @ 09:55 PM:
In the early 1980s I found I was responsible for continuing to pay our Borough Council employees for looking after the horses. We hadn’t used horses in several decades. Was I firing public sector workers for discontinuing the payments? Was the (liberal) Tory leader who properly made capital of the issue merely into Thatcherite propaganda? [In fact, it only involved redeployment and redesignation: nobody actually lost out. The pay-off was that we looked closely at the depot in question, and discovered the Borough owned a veteran Rolls-Royce, laid up in a shed. When we sold it—at a significant profit on the original cost-price—I was accused by the ideological purists of “selling off public assets”. Sheesh.]
As I said @ 09.47 PM nobody is talking of firing public sector workers. The issues are:
* does the need for those jobs still exist?
* what is lost if those functions are fulfilled through agency services?
* is there any wider “public gain” by that delegation?Quite frankly, much of the public-sector insistence on “What we have, we hold” is as hysterical as bleating “Four legs good, two legs bad.”
Posted by on Apr 30, 2008 @ 09:17 PMJust a few notes.
The Annual Survey of Hours and Earnings shows that the median difference between UK (all areas) public and private sector (all jobs) is around 10%. Public sector is running at around £395 pw. Private, at £366 pw.
Certainly the public sector here does support the local economy. However, do you really think that anything other than a long-term, managed reduction of the public sector will be useful to the economy? Why do you THINK they never follow through with the “swingeing cuts to the public sector” that they promise?
“Deepening and intensifying public sector reform, in particular increasing the role of the private sector in the delivery of core public services and transferring non-core services to the private sector in order to help stimulate its growth;”
Hasn’t THAT worked a treat across the water? PPP, and the ensuing long term cost to local councils, anyone...?
“more employer-led skills training to help tackle weaknesses in the stock of skills in the labour market, which is a legacy from the past;”
And why should the public sector bother tackling this one? Everytime they do, employers don’t take up the opportunity to engage. Not unless it guarantees a cheap apprentice for a minimum of a year.
“Nearly 10% of Northern Ireland’s population is classified as disabled”
Expect this to change, but only over a period of 10-20 years. This is societal change. It ain’t easy, it ain’t quick and it ain’t cheap. What it is, however, is an easy, quick and cheap shot.
Somebody had to go and mention RPA. Once more: your local councils ARE NOT the big drain on cash here. They take up between 5-7% of the NI pie. AFTER RPA, that will increase to around 9-12%, but only because of the transfer of powers from some government departments. Your Councils here, on a comparison with similar service delivery across the water are under-manned. There will be little in terms of mandatory redundancies, and the biggest cost will be a payoff to 15 CEOs and 30-40 directors, most of whom will be coming up to retirement anyway.
The 4.2% unemployment rate is about right. Would someone prefer it to be at the 1980’s rate of 17%. Or indeed the 1990 rate of 14.4%?
Someone made a point about well-paid and pensionable jobs… Of course they won’t give them up. A certain plant on the North Coast pays on average £16,000 to operators. It’s closing. Those jobs are gone, while the nearest source of jobs is from call centres. Average starting wage? £12,000. I would suggest that the public sector shouldn’t be reducing wage levels - the private sector should be paying a decent one.
Folks, you’re dealing with a part of the island coming out of a conflict situation, however absurd some of us viewed it to be.
Two thirds or more of the population is rural.
10% (14 in Derry) is on DLA and related benefits.
You have years of under-investment by the region’s government, the legacy of absentee landlord ministers. (No, I mean here, not Donegal)
You have a business development agency that spend half its budget on enticing overseas investment, and shirks - I mean ABSOLUTELY shirks - its responsibilities to local economic development.
You have an administration that is fledgling to say the least.
You expect this to be fixed in less than 15 years?
Posted by on Apr 30, 2008 @ 09:21 PMMalcolm,
I have no desire to see egregious waste such as you describe in the public sector. Nevertheless, look at the fucking disaster that privatising cleaning in hospitals has been. All that has kickstarted is MRSA and profits for shareholders. Or Metronet. Or any of the other massively undervalued public companies that were handed over to the private sector cheap. Until someone can convince me that there is a need to remove these jobs, or transfer them to the private sector, I will oppose it. Especially as the private sector has shown itself far from capable. It was your suggestion that transfer of public services would kickstart the private sector that I objected to. And still do, having read your post.
Posted by on Apr 30, 2008 @ 09:50 PMThe issues are:
* does the need for those jobs still exist?
* what is lost if those functions are fulfilled through agency services?
* is there any wider “public gain” by that delegation?Indeed. And the questions have been asked and answered.
After 1979, under the Conservative government, the UK Civil Service underwent its most radical reforms since Northcote-Trevelyan. The reforms were driven both by economic need – the UK was still recovering from the oil price shock and the IMF intervention of 1976 – and a new political agenda, whose prevailing assumptions were that:
The State was too large (consuming nearly half of GDP)
Government services were too costly and inefficient
The private sector was by definition more efficient & provided better value for money
Private sector practices and techniques could be applied directly in the public sector – indeed several key reforms, including the creation of Executive Agencies under the “Next Steps” programme, were led by senior private sector figures seconded to the civil service.
In a series of separate initiatives, successive Conservative governments ruthlessly pursued a drive for increased efficiency and effectiveness.
These shifted the focus of most civil servants towards delivery of services, separated policy functions (left in Departments) from delivery functions (mostly restructured into “Executive Agencies”), and challenged and dismantled the state monopoly of many services. The Civil Service Department was abolished. Utilities were privatised, with the State now acting as regulator.
Support and delivery functions traditionally placed in government were put under the spotlight and tested against an eager and growing services industry in the private sector.
A new Senior Civil Service was formed from the top 5 grades and career-managed from the centre. All other pay and grading was decentralised to Departments and agencies, and the central Civil Service Department had been abolished.
Many services had been privatised altogether (for example IT)
I apologise for this lengthy post but I think that an informed viewpoint is worth a huindred polemic posts and Slugger can show the way in demonstrating that research on the internet and an informed viewpoint can replace uninformed relfexive and personally offensive perspectives that in many other instances, this blog is happy to indulge.
Posted by on Apr 30, 2008 @ 09:53 PMGari
Private Eye is particularly good on cataloguing the massive con that is PPP/PFI - and the huge debt that builds month on month for us and our descendants.
All in the cause of keeping projects of vital public need “off the books” in 1997-2008.
We, or our children, will still be paying when they are the age we are now.
Scary.....
Posted by on Apr 30, 2008 @ 10:00 PMCheers Jo. We kickstart the private sector by giving them loads of cash, then billions more when they get into trouble. Then they yap about tax. Shocking.
Posted by on Apr 30, 2008 @ 10:02 PMGari
That *kickstarting* is of the order of millions, or, subsequently, billions.
Then we heard today a fuss increasing payments for prisoner labour by £1-30. If its all down to money, Im sure that people could quote me for a length of rope.
But then, we’d disagree on who should swing from it. :)
Posted by on Apr 30, 2008 @ 10:10 PM
