Cuts to public services have been widely touted as the answer to tackling the fiscal deficit, but do they really make economic sense?
Some of us think not. Public services have, in fact, become more important than ever; not just as a social safety net but as a means of preventing further economic decline and placing the UK in a strong position to emerge from the recession.
In a recent poll conducted by Association for Public Services Excellence for the TUC, we found that while 70% of public sector staff think the public sector is becoming more important to the general public as a result of the recession, more than half are expecting cuts and 81% fear this will mean poorer services.
The TUC commissioned the survey, which had 2,000 respondents, for its pamphlet – published this week – Speaking up for public services: the vital role of the public sector in and beyond the recession. The pamphlet puts the case that cuts to public jobs and services do not make economic sense.
Examples from history and around the world show that investment in public infrastructure and services can be a way to provide economic ballast amidst the boom and bust cycle. Boundaries between the public and private sectors have become blurred and the two are interdependent. This ‘multiplier effect’ means public employment and procurement spend feeds directly into the wider social and commercial economy.
By contrast, fewer jobs mean both the tax base and demand for goods and services are weakened and the downward spiral continues. Figures from the Joseph Rowntree Foundation show that poverty costs the nation £25bn a year. To keep one person on unemployment benefit costs £8,000 per annum. Add onto this costs of billions in terms of long-term negative impacts of associated social breakdown, crime, education, housing, family problems, health inequalities, life chances, educational attainment and community cohesion.
Everyone in the public sector agrees that waste must be minimised and efficiency and value for every public pound must be maximised. Taking a long-term approach and building on progress made by public bodies following investment in education, health and service improvements is the way to do so. Making crude cuts to public services is not.
Mark Bramah is deputy chief executive of the Association of Public Services Excellence. Speaking up for public services: the vital role of the public sector in and beyond the recession is available to download free at: www.tuc.org.uk/touchstone.
Great idea – according to this logic everything should be in the public sector and all our problems will be over…. just as it has worked well in the Soviet Union, North Korea and Cuba.
And cutting public sector employment cuts the tax base? Well presumably up to 40% of their pay goes as tax, but 100% of this came from taxing someone else or borrowing (which is taxing a future generation).
So who pays this in the end… yup, the private sector (ie businesses and employees).
The fact of the matter is the country borrowed more than it can afford and, the same as when a household borrows more than its income, ultimately the good living has to stop and the debts of the past also need to be repaid – a double whammy.
Mark Bramah would have done better to have spoken up for less growth in public spending over the past 10 years – that way the current re-adjustment would not need to be so painful!