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Hot and cold Beveridge

Douglas Fraser | 06:50 UK time, Friday, 30 July 2010

Natural wastage and reduced headcount: two euphemisms for job cuts now so widely used that they've almost ceased to be distasteful.

They're playing a significant role in the aftermath of the , which seems destined to be the Second Beveridge Report.

(The first Beveridge Report in 1944 gave us the modern welfare state, and the second one - its chairman, former Scottish Enterprise chief Crawford Beveridge, asks almost as big questions about the retreat of state provision.)

The report is full of trade-offs, options and choices, with an urgency and an urging towards priorities, but without actually offering any.

Close to its core is the trade-off between public sector jobs (or headcount) and provision of flagship policies.

Crawford Beveridge says the number of jobs lost would be between 5.7% and 10%, on roughly 500,000 people working in services devolved to and through Holyrood.

That's where as many as 50,000 could go, and another 10,000 if the same figures are applied to the 100,000 working for Whitehall departments in Scotland.

Relocated problems

The deal is simple: the more ministers cut from the 40% of non-payroll cost, the less damage they do to headcount, and the closer they get to the 5.7% reduction.

That means 28,000 or so fewer jobs would be a good outcome.

Can they be achieved by natural wastage - retirements and people wanting to leave - or by voluntary redundancy?

Can the promise of avoiding compulsory redundancies be continued past next spring?

Crawford Beveridge isn't saying "no", and politicians don't want to either.

But he keeps saying, across all his options, that the more you avoid difficult decisions in one area, the more you relocate and expand your problems elsewhere.

That "no compulsory redundancy" pledge looks set to be a major one going into next May's Holyrood election.

Significantly, Crawford Beveridge says that we ought to assume natural wastage will fall.

If the public sector's being squeezed, and the private sector remains weak, people are going to take a lot more persuading that it's a good time to search for a new start.

And as Robert Peston noted in his blog on Thursday, the results from the UK's BigCo corporates shows their noteworthy financial health is not being accompanied by a willingness to boost investment and create lots of new jobs.

The private sector recovery is not necessarily one that will take up that jobs slack.

The option (looking very like a recommendation) of a pay freeze is, it's conceded, a pay cut in real terms.

And the pay bill could further be reduced by choosing to opt out of some UK pay-setting mechanisms.

Uncomfortable reading

Two further points stand out, for me at least, both with more of a political tinge to them.

One is that the process of setting up an independent budget review seems already to have done a lot to inject something other than the blame game into the debate.

To be frank, this is the kind of document John Swinney's civil servants should have been able to supply him.

But instead, it has wider buy-in. The only significant criticisms on publication day were from the STUC, politely saying the three-member group fall some way short of being representative of anything much.

They're not harsh enough on business support grants, or on the macro-economic implications of what they propose.

The other was from PricewaterhouseCoopers, saying the plans are not sufficiently radical, and do not go far enough in warning how bad things are going to get.

"We don't think this will make its readers uncomfortable enough," says PwC.

The accountants have a point, at least in that Whitehall departments have been told to draw up parallel plans for handling cuts of 25% and a worst case 40%.

The Beveridge Report assumes 12.5%, and there are those who think the scale of what's coming to Holyrood could be worse.

Free for all

The other point is how radical this report is in reversing pretty much every spending innovation the Scottish Parliament has taken over the 11 years since it was set up.

Abolition of up-front student fees: free personal care for the elderly, free eye tests and dental checks: expanding provision of free school meals: free bus travel for all pensioners - and that was just those under Labour and the LibDems.

The SNP came in to power with abolition of bridge tolls, followed by abolition of the graduate endowment, phasing out of prescription charges and hospital car parking fees.

It's been opposed to letting Scottish Water out of ministerial hands, and it's opposed to private provision of NHS services.

This was the fiscal and dominant end of proving how home rule could make Scotland different.

And yet every one of these initiatives to expand state provision and eligibility has been directly challenged by the Independent Budget Review.

It also firmly rejects the campaigning style at three elections, in which parties offered an auction of additional police officers, nurses and reduced class sizes.

While there's little detail on police, justice, hospital provision or education, the approach is seen as outdated, failing to focus on the outcomes expected from that extra spend.

Now, it's about how to gain the same outcomes, but after natural (and unnatural) wastage, with a much lower headcount.

Comments

  • Comment number 1.

    There is something ironic that his name is also Beveridge ...So how much does Mr Beveridge earn...I'll bet it's quite a lot ....so he is suggesting the Council Tax freeze is not sustainable ( well we could have had a LIT if it hadn't been for NuLab and their cronies) and that other things like prescription and transport benefits ,eye test charges etc etc are being attacked .....I'll bet he has no problem paying for such things .....Once again it's the ordinary bloke and blokette for paying to get this country out of a mess that was none of their making and where are those responsible ....well one lot are now in Opposition( NuLab) and the others (Bankers) are probably where they were before .

  • Comment number 2.

    I have to agree with Stuart on this one, the level of mis-management within the banking sector and the admission by GB that he took his eye of the ball as PM, created the problem.
    The current levels of public sector pensions, never mind the banking and finance sectors, are and have never been sustainable.
    One can only take out of the barrel what was put in originally apart from the 鈥渁ngel鈥檚 portion鈥 which has to be accounted for in interest collected or value added.

    When manufacturing was allowed to fail to the enhancement of a concentrated financial sector by the previous 鈥淕overnments鈥 at Westminster, the cross subsidisation that ensued, financed by the 鈥渙il鈥 funds of which much has been written and hidden by lies and innuendo I will leave the readers to digest.
    The current slash and burn techniques now being employed by this current coalition will lead to a general election within the next two years, which will still mean a hung Parliament at Westminster, as none of those offering themselves for office or those in office have a clue about reducing the mandarins鈥 in Westminster, you can change the driver but if the engine is worn out the car still wont move.

  • Comment number 3.

    afternoon, we need to remember we are but a country with a population of around 5 + million. If we were to look at the NHS in Scotland for instance can we now afford to have :
    14 health boards with 14 chief executives and 105 board members ,
    7 special NHS boards (another 7 chief exec's) &
    26 national & support groups(yep youv'e guessed it another 26 chief exec's) ?
    I heard someone on the radio today suggesting that we were over governed with MP's, MSP's, MEP's & councillors (i have 4 by the way)
    I would suggest that a bigger problem we have in Scotland is indeed the number of quango's and if we have to make savings ,which we indeed need to do quite urgently,quango's is certainly not an area that should be ignored in fact they should be at the top of the list.

    Sid

  • Comment number 4.

    The Brits are so stupid. We've now allowing profits from our utility companies to flow to the communist Chinese.



    Our economy doesn't really stand a chance.

  • Comment number 5.

    Wee-Scamp...Do utility companies make profits ?? Oh yes,I forgot ...British Gas made something like 585 MILLION didn't they all off the back of us mugs..

  • Comment number 6.

    Stuart_B

    Yep... Utilities make huge profits. That's why most have been sold off to foreign companies. People forget even Scottish Power is now owned by the Spanish. Astonishing that the City was allowed to get away with that especially given that was under a Labour Govt run by Scots.

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