James Moore: This is Osborne's chance to clamp down on stupidity in the public sector
James Moore is the Independent's Associate Business Editor and writes the Outlook City comment column from Tuesday to Friday. He also has a keen interest in disability issues and when not attempting to further injure himself playing wheelchair basketball.
Wednesday 22 February 2012
Outlook Did George Osborne just get a little bit of breathing room? Yesterday's public sector borrowing figures contained some welcome news for the Chancellor. January is traditionally a month in which the Government pays back a bit of what it owes, but the £7.75bn returned to creditors this time around was better than most forecasters had expected and well ahead of the £5.2bn surplus recorded in January 2011.
Hooray! Britain's public sector debt has fallen back below £1 trillion and, while it is dangerous to read too much into a single set of numbers, it now seems a racing certainty that Mr Osborne will undershoot his stated borrowing target of £127bn this year.
Lucky us. And yah boo sucks to Moody's and its decision to put Britain's credit rating of Aa1 – or whatever it uses as code for the AAA favoured by Standard & Poor's – on negative outlook
Moody's and its chums might be lagging in the credibility stakes these days, but what prompted its action were fears that the UK's torpid growth will knock the Chancellor off course.
Mr Osborne may be inclined to pay lip service to that issue in his forthcoming Budget but don't hold your breath. His Prime Minister David Cameron's favourite blue sky thinker Steve Hilton once came up with the idea of suspending consumer rights laws as a way of encouraging that elusive commodity when even the business lobby might baulk at such a move. It has heard of the phrase "counter productive".
A better idea would be to look at how the cuts programmes currently in operation might actually save money rather than costing it.
The Coalition's Tory ministers are constantly banging on about the need for the public sector to learn from the private sector. And yet they appear to have failed to pay heed to how sharper businesses dealt with the last recession.
One of the few welcome surprises that emerged from it was job cuts were not as severe as many feared.
Part of the reason is that the cleverer, more forward-looking businesses (they do exist, although sadly they are often foreign owned) got creative. In addition to doing deals on things like pay (cut or frozen) they used measures such as short-time working, or sabbaticals with a job to return to at the end to keep hold of their best staff. Fancy doing an MA or something? Off you go. We'll see you when things are more cheery.
This saved both on redundancy and the cost of hiring recruitment consultants to get the same person back 12 months down the line.
It is a lesson the public sector seems incapable of learning, as managers spend gazillions on redundancies only to find that they've gone too far and need agency staff to keep services going while the recruitment consultants get to work.
Perhaps the best way for the Chancellor to make use of that breathing space is to conduct a careful review of what has been done so far with a view to eliminating such stupidity.
That's not least because the £1trn I mentioned excludes the banking sector's contribution to the national debt. If it were included in the borrowing figures (as it should be) the figure might more accurately read just under £2trn.
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