A week ago neither the Lib Dems or Tories could specify where the cuts in public services were to fall. But the NHS was definitely safe.
Now we know from the London Evening Standard that they want to cut more than £20 billion from this front line, protected service. All waste, of course.
The sheer hypocrisy of this is staggering. Have not a shadow of a doubt they knew they were going to do this last week. They just forgot to tell the electorate. That’s at least £5 billion a year over the targeted period — and in reality it seems its likely to be somewhat more.
Now I’m not saying there is no waste to eliminate in the NHS. They could, for example, centralise management and get rid of swathes of Primary Care Trusts. It’s hard to work out why these bodies need to duplicate so many roles — including local medical web sites, different formularies for for different parts of the country, and much more besides.
The whole process of treating the NHS as a market could be swept away — and vast amounts of accounting with it.
Foundation status could be be abolished for hospitals.
PFI could be swept from the system, with massive cost benefits.
These would be ethical cuts. But there is no way on earth these savings could deliver all that is being demanded, not when demand on the NHS itself will be growing. Not by a very, very long way.
Put this in context. The NHS costs £100bn a year to run. It employs about 1,700,000 people although many are part time and full time equivalent numbers may be lower.
60% of the budget is staff, 20% medical supplies and 20% overheads such as buildings.
Assuming that the NHS remains local there won’t be too many premises closed.
And assuming that there isn’t going to be a cut in services medical supply costs won’t fall massively. In fact, due to an aging population that proportion is highly likely to rise.
So the savings will have to come from staff, and will be well in excess of £5 bn a year, becasue we’re told that will be the case and drugs costs will rise. Let’s call it £6bn a year.
£6 billion saved from the staff budget of about £60 bn means in that case job cuts of 170,000.
And this form just one public service.
That guarantees not just double dip recession — but a recession of epic proportions.
This is the reality of the ConDems cuts plan — cuts we do not need.
And remember to ask yourself what these people are all going to do — except swell the ranks of the unemployed and claim benefits? After all there is no demand for their services from the private sector — because there is already mass unemployment — and those people are not choosing extended holidays as neo-classical economists assume. They can’t find work.
And then what the NHS is to do without them whilst all those made redundant sit at home doing nothing at taxpayer’s expense when they could be providing health services.
Are doctors to be their own receptionists?
Are they also to type their own referral letters and still do ten minute patient appointments?
And file all their own records?
And push trolleys round hospitals?
And will care for the vulnerable — especially the mentally ill disappear?
And will preventative medicine be a thing of the past?
Along with the two week cancer rule?
And midwifery?
I could go on — but the madness is now revealed. The plan is to create mass unemployment whilst massively increasing state spending on benefits, all to ensure countless people will die from a lack of care.
This is what you’re to be ConDemed to.
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Are you drunk? Have you even read what you have written? Why would any politician want to ensure countless will die??! Doesn’t make any sense at all – do you think people are fools?
A cut of 5 billion in an annual spend of 100 billion seems very reasonable I am afraid – countless families up and down the country are cutting down on spending because they can’t afford it. And govt. needs to do the same. And don’t forget who got us into this situation in the first place by borrowing too much, a certain Mr. G. Brown.
Richard, what you, critically, forgot to mention was that Labour had planned cuts in the NFS of between £15-20 billion between 2011 and 2014.
So can one assume therefore that Labour were also planning mass unemployment?
On that case, no difference between the parties!
Bet you a thousand pounds they don’t. Nor do they want to.
Actually if you read the agreement properly you will see that the £20 Billion’s worth of efficiencies is actually to be re-invested in the NHS budget meaning there will be no real-terms cut to the budget at all. In fact there is a real terms increase. This is nothing more than ridiculous, and vaguely moronic scaremongering from a clear left winger.
If you knew anything about politics whatsoever you would realise what is in fact going on is a bit of spin-doctoring. The reason these £20 Billion of efficiency savings are being made and then re-invested is merely to look like improving efficiency. In fact the budget will remain unchanged but it will appear cosmetically in the press to have been an improvement.
After working in private industry until the age of 42, when I began my Nurse education, I started in the NHS in 1995. The waste and inefficiencies are staggering. A lot of management would not be employed in the private sector, they would not be good enough. As long as you interview well and you produce the right jargon, you can become a manager.
PCT’s are slaves to Gov’t initiatives, which are often ill thought out. No-one ever tells the DoH that though because they are too busy protecting their very well paid managerial jobs.
I have never been treated with such disrespect as when I entered the NHS. If I had known then what I soon learnt, I would have stayed in the prestigious investment bank I worked for. Foolishly, I wanted to give something back to society. Nurses in the NHS are totally disrespected. Our receptionists at HQ are on the same banding as staff nurses and do 10% of the work.
GPs had pay rises of 40% just a few years ago. For a 4 day week, no nights or weekends, our GPs earn £140,000+ per year. Who in the DoH negotiated that contract? Get rid of managers by the hundred, stop catering to GPs and the new Govt will save, save, save.
@Pam Jukes – I wish the new govt were listening to more people like you, and not Richard Murphy, who just seems to be bitter and full of rage, ready to vent even before the govt. has done anything!
Pam Jukes, what ‘prestigious merchant bank’ were you working for? Not one of those involved in tax avoidance schemes or CDO’s of any of the other rubbish that nearly brought the world economy to it’s knees?
As we know, bankers are so much more competent than everybody else aren’t they? If there large numbers of unnecessary managers in the NHS that’s more to do with the internal market and other reforms brought about by politicians obsessed with the ‘superiority’ of the market than the the fact that the NHS is in the public sector.
@Justin
Let me be clear – I’d have opposed this just as strongly if Labour had done it
So let’s ignore that and deal with the real issue – job losses
@Pam Jukes
9-% of all NHS contacts are with GPs
They keep our costs lower than any equivalent service
It’s an interesting idea for waste cutting that you have
Let’s guess that a) you work ina hospital and b) have no clue what GPs do
@Libertarian
Respectfully, that’s nonsense
Reinvestment is not a saving or a cut
The minister says there will be cuts to pay for growth – presumably in the drugs budget (got to keep big pharma happy if you’re a Tory)
So the job cuts I outline will happen in that case
And if all I’ve done is respond to gross misinformation from the minister – whose fault is that? Should he supply such information with such catastrophic underlying meaning?
@Guido Fawkes
Of course they won’t
But they want to
“And remember to ask yourself what these people are all going to do — except swell the ranks of the unemployed and claim benefits?L
Let’s dream for a second. Maybe this will help these people rediscover their primal sense of enterprise and self-reliance.
Maybe it will help them understand that doing 9-to-5 non-jobs (thank you Pam Jukes for the post) while expecting somebody else (those filthy “RICH”) to pick up the tab for their healthcare, pension, security and kids’ education is no longer a socially acceptable behavior.
May in the process they will find again their basic dignity.
@Richard Murphy
I’m more than aware that reinvestment is not a saving or a cut and that is precisely the point. The NHS budget is not being cut, it was have real terms increases. So therefore to suggest that there will be a cut is a falsehood as it simply is not the case. This is merely a bit of political spin doctoring where and “efficiency” is “reinvested” meaning that nothing actually happens.
You’re simply taking artistic license with the facts.
@Libertarian
They’re taking license with people’s lives
They’re going to deliver untold stress to undermine well being
I have related the reality of their message
Who is playing?
Certainly not me
The obvious retort is to point out that the NHS budget is ring-fenced, such that any savings within the NHS will go on…the NHS…which might involve new roles, or indeed new treatments (heaven forbid!), more care for “the vulnerable” etc etc. Certainly the only losers are going to be the vested interests e.g. the 47-man Department for Stationary and so forth.
But even if these *were* going to be real cuts in the NHS, your translation that this would mean ‘Job losses’ full-stop is naive.
Why on earth do you pretend that somebody is ’employed’ if their job is not productive?
If the Government wishes to spends £1m on ‘jobs’, this is £1m that it first has to take via taxation from those who could spend it better. Or it is £1m it has to borrow, that cannot be loaned to private enterprise, that cannot be loaned to first-time buyers who might otherwise refloat the housing market etc.
Our long-term ability is to pay for public services generally (or indeed anything else), does rather depend on our ability and capacity to produce goods and services that people would actually willingly pay cash for. Believe it or not, there is not a great export market for the work of Diversity Officers, Street-naming executives, 5-a-day co-ordinators or people in one department filling-in 27 forms for people in other Government Departments – anymore than allowing 8 weeks per annum on the sick pays for much either…
@Man in Black
Your rhetoric is as hollow as your moniker is daft
The reality is that when people go to look for these infamous non-jobs they find a few – about as many as you’d find in any corporation – but that they account for a tiny proportion of the budget
All organisations do, of course, need to be subject to review to prevent empire building and waste
But the reality is that there is about as much export market for UK CEOs as the people you mention and you might be better off asking why that is the case
@Richard Murphy
Oh come on Richard, one only had to read the Guardian on a Wednesday at the height of of the spending splurge to find non -jobs jumping out at you. I remember £32K being offered by Hackney for a 4 day a a week “5 fruit and veg coordinator.Plus the spate of council and NHS outreach workers.
Nice versus necessary springs to mind
@Justin
I never said there weren’t any
But answer me this: when there are no jobs to be had ion the private sector (and there aren’t) what are you proposing those you sack should do?
@Richard Murphy
It is a tough one Richard.
I for one was dissapointed when my firm imposed a 7% redundancy across the globe and then obliged all our remaining people to take an additional one months unpaid leave. I honestly felt that this was on part driven by partners (of which I am one) wishing to retain boom time earnings in a downturn. I preferred the route where we took people who were not busy and trained them ready for when our world faced an upturn (similar to what Goldmans did in the last downturn, but not this one).
At the end of the day iot became apparent that we frankly had rtoo many people, even for another boomtime – we had gone about employing people to take on short term work that was never going to be sustained and we had a lot of people empire building. A 22% growth in headcount over a 3 year period was unsustainable and stupid and people lives were made a misery when we let them go.
This is the same stupidity undertaken by the previous government in letting the public sector grow unchecked.
What to do with people who have lost their jobs – you hope they find another or start their own succesful business.
What should really be done – consider short – time, pay cuts, unpaid leave , study opportunity etc – but certainly do leave victims of large headcount cuts to flounder on their own. And out placement is a lot of bull – but a nice earner for those that do it
richard “when there are no jobs to be hand in the private sector (and there aren’t) what are you proposing those you sack should do?”
that question includes the assumption that the country can afford to keep people in well paid, fully pensioned jobs when those jobs a) are not needed and b) the government IS BANKRUPT.
when will you realise this is not about jobs. the NHS is not about jobs, its about providing a service. and it has to provide the service it can afford to provide with the money it has. not just ignore reality and assume that bills don’t have to be paid, that jobs are more important than services.
I read recently that 1 in 6 jobs out of those 1.7 million (!!) NHS employees is front line and the rest are support, managerial or governance. tell me who we should keep then?
Oh come on Mr Murphy. If there are no jobs in the private sector you have to get the government off its back so that it can function properly. That’s one of the reasons why you need tax cuts. And to fund tax cuts you need government spending cuts.
Any fool can see that you can’t build a strong, prosperous nation on the basis of appropriating the money made by wealth-creators and using it to keep unproductive thickos in so-called government sector ‘jobs.’ A job is something that needs to be done, not just an opportunity to gain votes by throwing god money at useless and/or stupid and/or otherwise unproductive people.
If this country were run by people like you it would be bankrupt. Oh, hang on, it has been and it is.
@Vi__sa
Drunk or on some (hopefully) prescibed mind bending medication. This piece is neither well researched or well thought through. Mindless/mindbent drivel.
@English John
No, calm, rational, cool analysis by a chartered accountant faced with facts, offered by a minister and offering the only rational explanation there is for them
Now why not stop the abuse and explain what other consequence cuts of £6bn a year could have for the NHS
Don’t make anything up
Just use the facts: £6bn a year is to be saved.
How do you do that without cutting all thsoe jobs
Please explain
Or else I can quite reasonably decry all who have commented as offering senseless rhetoric of no substance
Well, a friend of mine who’s self employed went without pay for one month (March) last year, so as to stay in business.
How’s that for a way of saving public sector money without cutting jobs?
Hilary
So let’s all not pay ourselves for a month
Let’s take more than 8% out of GDP as a result
And let’s cut the flow of cash by the same amount
And stop the flow of tax into the government by more (since profits will fall, disproportionately as a result)
To use your simplistic approach – tell me how if a household has increasing debts cutting its income helps it meet them?
You’ll never manage it – ever
In my friend’s case, he cut his outgoings to match. But, actually, I think you’re right in thinking it would be difficult to persuade others to do the same.
@Richard Murphy
Difficult to find them? Really?!? Spend 3 months in an SME. Then spend 3 months in the NHS. Very easy. I’ve done it. Or hire a financial controller from the NHS for your SME and watch the look on his face when he first goes through the books?!?
Who said anything about a Market in UK CEOs? What proportion of UK exports last year were made up of their firms’ output? And what proportion resulted from the work of NHS administrators? Or anybody else in the public sector?
That’s the issue. You seem determined to squeeze the productive sector of the economy to support the unproductive.
@Man in Black
I have spent many years in SMEs
I also know something about the state sector
I see massive waste and incompetence in both
Why do you think so many SMEs go bust?
This is the reality of human existence. we are flawed. decisions are sub optimal. we waste
I don’t wish it
I’d rather it did not happen
But people work in both state and private sectors
they’re not different people
they don’t have two heads
Generally they’re better educated and trained in the state sector
And the proportion of mistakes is probably about the same
Which explains why despite the rhetoric Tories are never able to find much waste. some for sure. That’s easy. Much – no
And that’;s also why you’re wrong
And why your black and white definitions are also wrong
Unless of course you maintain that education, transport, health, defence, housing, safety and so much more is all waste
And porn and drug trafficking are obviously productive (to use examples of things only the private sector produces to my knowledge)
So shall we move away from your crass analysis and accept both state and private sector are essential?
@Richard Murphy
“Why do you think so many SMEs go bust?”
Exactly.
If an SME is inefficient, it goes bust. Or it gets taken over. Or its backers refuse additional finance until it sorts itself out. If it does go bust, the administrator or liquidator may be able to sell the efficient bits of the underlying business as a going concern whilst wrapping up the inefficient…
There is no such external control in the public sector. That’s why labour productivity in the private sector rose 20% in the 10 years to ’07, but fell by 3.4% in the public sector [Source: ONS].
[Before you mention Banks Richard, I probably agree with you!!]
“Unless of course you maintain that education, transport, health, defence, housing, safety and so much more is all waste”
Well, there two isses here.
Firstly, you’ve clearly never heard of marginal analysis if this is how you think. For example, food is also important. It does not follow that every existing farmer is therefore a good thing, efficiently employed etc or that every subsidy to farming is justified. Or take defence. Yes, we probably need state provision of defence. But it does not follow that we need to be spending money on pointless foreign wars. Or Trident. Or an MoD civil service that is larger than the Royal Airforce and makes some astonishing procurement decisions.
Secondly, why do these areas require armies of public employees as you assume? Take housing. If you’ve ever lived on a council estate, you’ll know that modern privately rented accommodation tends (on average!) to be of a slightly better quality. It also promotes labour mobility. Yet you do not oppose the rise in CGT on buy-to-let landlords? Or the lack of mortgage finance in the buy-to-let sector as any liquidity is drained up by new Gilt issues instead of being available for the RMBS market?
“And porn and drug trafficking are obviously productive (to use examples of things only the private sector produces to my knowledge)”
Unfortunately Richard, it’s not what you and I value that counts. If the UK is a net importer of drugs (and it is), and the export markets would pay good money for porn, what is going to help UK Plc pay its way? More social workers? More workflow coordinators in the NHS? Or our capacity to produce porn for sale overseas? [For ‘porn’ you could substitute ‘arms’ or ‘the City’s invisible earnings’].
I don’t follow you. The friend who took a pay cut is certainly a productive part of the economy, I can see that. But it wasn’t me that squeezed him, he did it of his own accord, voluntarily, as a practical measure.
So we can conclude that..
Richie fails to see the irony (?) in his position. more tax = less business = less jobs, something most children can understand. Yet he advocates keeping people in state employment as there are no private sector jobs to go to, more private sector = more tax = less business = less jobs. Head, desk, BANG.
Secondly he fails to see the actual harm that this does. Money spent on keeping people in jobs, that are not needed, harms the service itself. The NHS is full of unnecessary managers and excess staff, this is harmful in two ways. Firstly it takes money from actual productive staff who provide the service and from equipment. Secondly these managers, being managers, spend their time trying to implement “projects”, that essentially waste the time of the latter productive staff.
The road to hell is paved with good intentions, pretty much sums up socialism.
“So shall we move away from your crass analysis and accept both state and private sector are essential?”
Yes, but only 1 funds the other, a lesson that needs to be remembered.
“more public sector = more tax = less business = less jobs”
corrected
@Man in Black
There’s not a person on earth can do marginal analysis
Everything else you say is laughable after you make that comment
As James Galbraith said recently:
“The following is the text of James Galbraith‘s written statement to members of the Senate Judiciary Committee delivered a few days ago.
Chairman Specter, Ranking Member Graham, Members of the Subcommittee, as a former member of the congressional staff it is a pleasure to submit this statement for your record.
I write to you from a disgraced profession. Economic theory, as widely taught since the 1980s, failed miserably to understand the forces behind the financial crisis. Concepts including “rational expectations,” “market discipline,” and the “efficient markets hypothesis” led economists to argue that speculation would stabilize prices, that sellers would act to protect their reputations, that caveat emptor could be relied on, and that widespread fraud therefore could not occur. Not all economists believed this — but most did. ”
I presume you’re one of those who got it badly wrong?
You certainly still are
@Richard Murphy
Hi Richard
Nope. I’m an Austrian Economist. I also reject all that neo-classical rot you refer to.
“We” generally got it right as far as the crash went. It was the so-called New Keynsian lot in the BoE who didn’t understand what was going on. Personally, I called the market correctly by telling my clients to switch wholly into cash on 20 August ’08 – I could see the parallels with Rothbard’s analysis of ‘America’s Great Depression’. But EMH would have told me to do otherwise…
…This contrasts with those who believed they had sufficient revenues to sustain huge increases in Government Spending and who did not understand that the inflow of revenues was from bubble activities. That’s why we’re in this mess with a structural deficit.
The concept of the ‘margin’ is distinct from all this – it sits as much in Menger as it did in Marshall and it holds good. So for example, provision of ‘Defence’ does not require 40,000 civil servants…A few can be useful…but at some point the benefit they add is outweighed by the cost…Ditto NHS admin.