Southport Liberal Democrats

Our next test of courage

Gordon Brown's continual squirming and denials can't conceal the truth: public finances are in a truly terrible mess. People know that nasty spending cuts and tax increases are on the way. They want political leaders to be frank and spell it out. What, when and how?

They will not be convinced by George Osborne's alternative: to win an Election and then get Ministers round a table behind closed doors to decide what the painful cuts will be. His message seems to be like the South Sea Bubble or some of today's property clubs: 'Invest in the project and we shall tell you the details in due course.'

The public want to be part of that debate. They should be.

We know what happens when fat cats are asked to clean up the cattery. There is some arbitrary figure for public spending cuts. The good is cut with the bad. Politically invisible groups such as the very old and the mentally ill, and unpopular groups like young offenders, take the biggest hit.

Investment is cut, not bureaucracy. An army of consultants is hired at vast cost to give advice while lowpaid workers are fired or their jobs contracted out. And if the numbers don't add up, taxes go up as well.

This crisis is too deep for cynical games. Britain has lost the windfalls that kept public spending at unrealistic levels: North Sea oil revenue and the tax take from the housing bubble and the banking casinos.

The British State will have to downsize. Here is a starting list of candidates for the axe: the Trident replacement; the NHS IT scheme; the ID card; other databases like Contact Point; 'baby bonds'; and tax credits, which extend way beyond the low paid.

But that still leaves the need to cut costs without undermining frontline services. The Government's efforts to improve efficiency are a triumph of hope over experience. Its claims to have saved billions have been exposed by its own auditors as largely phoney. This begs the question why, if efficiency could be so improved, wasn't it done earlier?

So we have to address public-sector numbers, pay and pensions. At the last count, three million people worked for the Government and its agencies (including 526,000 civil servants) and three million for local government. Over ten years, the number of public-sector jobs has risen by 800,000, including 90,000 civil servants.

Most new recruits do valuable work in health, education and policing. But an army of quangocrats is deployed ticking boxes, monitoring and controlling the NHS.

Timewasting, overlapping agencies tell schools and colleges what to do. Desktop farmers sit in rural agencies telling real farmers what to do. And poorly paid, badly equipped Service personnel compete for funds with a thick layer of military red tape.

Regiments of bureaucrats and flotillas of land-based admirals will have to be demobilised.

I also predict a battle over publicsector pay. When workers in private firms are taking pay cuts to save their jobs, they have every right to expect responsible behaviour from the public sector.

Pay restraint should start at the top.

Bonuses for senior civil servants have become a concealed pay rise and should stop.

There is no good reason why mandarins with well-paid jobs should need additional inducements to get out of bed in the morning.

We also need transparency over pay and conditions. When I questioned the pay of top public servants last year, I received a volley of aggressive emails and appeals for sympathy and TLC - this from people earning up to 20 times the minimum wage. Actually, I didn't go far enough.

Just as MPs have had to disclose details of their expenses and other payments, so should everyone paid by the taxpayer who earns more than the Prime Minister - say £200,000. The BBC has made a start.

The big test of political courage is public-sector pensions, which are in danger of running out of control. Highly paid staff are obtaining pensions often worth two- thirds of a final salary, index-linked for life.

It has been estimated that the total Government subsidy for unfunded schemes is about £28billion - roughly the amount we spend on policing - and it is rising rapidly.

The MPs' scheme involves a contribution from the taxpayer of 26.8 per cent of salary.

Had my colleagues not argued that this was unfair and unjustified, it would have been raised again last week to plug a £50million hole in the fund. The MPs' scheme is merely the tip of a publicsector iceberg.

There must be no question of cutting the entitlements of existing pensioners. Most have modest pensions earned after a career teaching, nursing or in poorly paid manual jobs.

But the fat cats have muscled in in an outrageous way, creating a system that is unsustainable.

There are, of course, fat-cat salaries, bonuses and pensions in the private sector - some extraordinarily generous. But the taxpayer doesn't have to foot the bill. Indeed, many executives are paying the price of excess in the cold reality of recession-hit markets, and shareholders are starting to crack down on their greed.

Behind the fat-cat culture in the public sector is a wish to enjoy the rewards available in the private sector without the risks.

But the truth is that many of those senior civil servants, parliamentarians, local government bosses and others who feel underpaid on their generous packages would sink without trace if they had to manage a business through the recession.

The system has to be reformed and there are various options including shifting to an average salary basis and raising employee contributions which must now be pursued.

As Sir Humphrey would have said in Yes Minister: 'It is time to be very bold Prime Minister.' Sadly, the Prime Minister doesn't get it.

Vince Cable is the Liberal Democrat Treasury spokesman

The full article from the daily mail can be found here:

http://www.dailymail.co.uk/debate/article-1195993/VINCE-CABLE-Our-test-courage-cut-public-sector-pensions.html