A common rhetoric in the UK 2010 election campaign is “private sector good, public sector bad” which gets extended to public sector costs us money, private sector makes us money. Therefore, the politicians tell us the answer is to get rid of all these highly paid public sector managers who earn exhorbitant salaries. Preferably, by stringing them up from the nearest lampposts next to the bankers who are presumably also now in the public sector as we own most of them!
However, as with most rhetoric these appealingly simple statements are simplistic as well as simple. Yes, we need to reduce public expenditure. Yes, some public sector employees are paid too much. However, there may well be unintended consequences which may end up costing us more money in the long run.
The Private Finance Initiative (PFI) is a convenient accounting fiction to keep debt off the public accounts. But it’s still debt. By transferring activity from the public sector to the private sector, in this case, you actually increase the long term cost to the country.
The Liberal Democrats have announced the largest proportion of the cuts it is estimated they will have to make. They say they will cut the Eurofighter programme, which will likely have immediate job cuts in the private sector at BAe Systems in Lancashire. The two sectors are too intertwinned these days to separate them simply. many private companies generate wealth off the back of the public sector.
In health care, IT projects are an easy target. Because they have not delivered as promised, they are almost certainly part of the problem. So cut them, yes? There are two problems with this. The first is that the suppliers who have delivered very little over the last ten years are all PRIVATE sector companies, so the idea that the public sector has not delivered successful IT programmes is largely a myth. Secondly, the NHS is charged with making 5% efficiency savings year on year. As far back as 2002, Sir Derek Wanless identified the need for the NHS to operate more efficiently to remain viable and said that better information and use of Information Technology were a prerequisite. If we cut back on information budgets further how will we deliver the required efficiency savings?
And what about those highly paid managers? Terminating their contracts is an expensive business. If a manager costs £80k but is responsible for innovations that save £10M, then their salary may be distasteful, but it is surely a good deal for the tax payer (that’s you and me). Further, if you take out the inhouse management and still require innovations and change then you will end up buying in expertise at even higher rates from private companies who will recruit the former NHS managers and sell their expertise back to the service at higher cost. At the 2010 HealthCare Computing conference in Birmingham, there was already evidence of this on the speakers list.
Election campaigns are not the place for complex informed decision making. Let us hope that after the election, the necessary tough decisions may be a little more informed.