Scalpel before the axe

Local government "savings" could turn out to be a myth, if there is no cap put on their spending. The former chancellor had toyed with the idea of allowing local councils to tax employer-provided parking spaces, to the tune of £200 per space per year. Has that been ruled out now?

Private sector impact.

The civil servants will protect themselves at the expense of contractors and consultants. It is only natural.

If you are an IT consultancy or contractor you may be very hard hit indeed. (Many of the now axed schemes and projects are IT ones (i.e. ID Cards etc etc.) But they must have been expecting this and I suspect have built in harsh cancellation clauses in their contracts - so the 'savings' will be far far less than claimed.

A Better Way.

By far the best solution is to keep all the civil servants but to reduce their pay by the required amount. This has the advantage of not increasing social security payments, not reducing service delivery and also reducing inequality in society.

It is an exercise that needed to be done, not one that Osborne particularly wanted to carry out

Overspending by 29% is simply a road to bankruptcy

I am interested to know, Stephanie, exactly how protected education is going to be?

The old Labour increase in education spending was not necessarily reaching the front line. The transfer from Treasury to the DfE resulted in the first 'cut' being taken and another when cash went from the DfE to the LEAs. There were signs in opposition that the Tories were thinking about trying to short that particular circuit and make the path much more efficient with less 'wastage'.

Any news on that or is that plan a victim of the Gove Empire or pressure from the LD part of the Coalition?

It is still unclear in my view exactly what impact this will have on the wider economy.

Although we know in more detail now where the cuts will be made, without having completed a full analysis of each department in detail, it is impossible to know whether this money was being wasted or put to good use.

Whilst I agree the defecit is the biggest concern, cutting too much now runs the risk of reducing growth, tax receipts and could potentially be counter productive. Trying to get this balancing act right was always going to be fraught with danger. I suspect the overall deciding factor as to whether they are successful will be more down to the health of the global economy. If we get a fair wind from abroad over the next few years things, we might tackle the defecit without a double-dip recession. If things go wrong the US and the far east however, we will be in big trouble. Unfortunately the rest of Europe doesn't seem to be in great shape at the moment.

No sacred cows sacrificed today, think Labour apologists will struggle to paint this with evil undertones. I suspect it will be received with a shrug of the shoulders and a harumph!

Think the budget will be the big talking point, and if growth for the last quarter is revised up significantly, the cuts may not be as deep OR there is potential to eliminate ALL of the deficit in 4 years. Imagine that a balanced budget a year before the 2015 election.

No mention of doing anything about the cast-iron multi-billion pound PFI deals that will last for years and ensure the Private Sector get paid no matter what. They will doubtlessly implement the Inheritance Tax cut as a gift to the rich depriving the Exchequer of revenue. Ringfencing the Defence and International Development Budget have we not wasted enough money being America's lapdog in the last ten years? L ess cuts to farming than local government, Foreign Office budget not taking too much of a cut so Hague can swan around the globe as if Britain is still an Imperial power, scrapping the easy target Child Trust Fund. And apparently the City is all in favour which is a bit like saying Foxes are pleased that Henhouse doors are going to be abolished.

All administrative roles in the Public Sector should be capped to 100k. The reason that CEO's in Private Business get more than 100k is they have to increase sales and grow the company. It is their ability to sell that motivates this very high pay.

Clearly Surgeons Medical Staff should be the exception to this ceiling.

In the Public Sector, the income is fixed and, yes, there is an administrative skill in allocating resources, but it should not be rewarded more than 100k.

I am just finished university with a masters in engineer. I first became interested in economics over a year ago as a procrastination subject and when it was clear the world’s economies were failing, especially here in the UK. I have long wondered about how the system of governance and economy could be improved to give ourselves a better society. As I didn’t know much about the topic, I been SF blog for sometime as I’ve found that the people who leave comments are extremely knowledgeable and I’ve learnt a lot about economics through it. This is my first post as I felt I didn’t have anything to add before now.
As a graduate engineer I am trained to look for improving efficiencies and look for new and better ways for things to work. However I do not think I am unique in seeing in the world a lot of room for improvement. E.g. people die of hunger when there is plenty of food in the world, lots of waste etc. So while individual problems occur, like the one in SF blog, I think that there is a bigger problem with the system we live in that generates these smaller problems and leaves such a large room for improvement as stated above.
I have thought about methods of government to create a fair and working society; however all seem to have flaw:
Communism: Good in that everyone starts off equal. Bad: It eventually leads to a political elite.
Capitalism: Good that everyone can trade freely for things. Bad: It eventually leads to a corporate elite.
Socialism: Try’s to combine the two ways above but fails.
I’ve looked at other ways to make them fairer or work better but didn’t get far.
I then looked at the monetary system, and what money actually is and this has taken me a while. I’m still no where near through finding out exactly what it is and how it works and only once I understand how the monetary system works could I start thinking about ways to tweak it to make it work better.
At the weekend I looked into a resource based economy which lead me to “The Venus project” and “the zeitgeist movement”. I try to always remain critical bordering on sceptical whenever I read/watch/listen to something due to so much dogma/propaganda/PR going about. However I found that I agreed with and had already thought of some of the ideas that was said, and that it had arrived at much of the conclusions I already had. The parts I hadn’t thought about was clearly explained and logically thought through.
I have tried to find faults with it but the only sticking points I can find is the transition to a resource based economy. But that should be no reason not to do something that would benefit everyone. When I consider which world I would prefer to live in, the one stated there seems much better, and certainly seems to work much better than the broken world we live in now.
I dislike anyone trying to force ideas on anyone else, but I do believe in looking at new ideas and judging them on their merit. So I’m going to sound like a hypocrite when I urge you to have a look into this idea, if you haven’t already, and see what you think.
WD

Very appropriate title Stephanie - I imagine that this government will cut little and often so they can show year on year savings while at the same time keeping interest rates low (I know this is a BOE job but there seems to be no appetite for interest rate rises - nudge nudge wink wink, say no more).

Next round - tax increases in the emergency budget

After that - fresh round of cuts in 2011?

I am still not sure that the ring-fencing of particular areas will last. Certainly the biggest spenders (NHS anyone?) will at some point face significant pressures but that might not in itself be a bad thing - there may be better ways to do things but the most significant (and difficult) area will be how much money do you spend on people who are in the last years of their life and will never really add anything to the economy.

Morally - whatever it takes but with an aging population this debate will have to start since I saw a statistic which says approx 90% of NHS costs to do with providing for people in the last years of their lives rather than general health costs for the population as a whole. That's a lot of money and I suspect we will eventually see a system of additional insurance payments for the NHS.

Surely when it comes to education cuts the item that really needs pruning is the LEA's and Whitehall bureaucracy.

The most recent Treasure spending review I have indicates that we spend roughly £6,000 per secondary pupli school year. Of this the headteachers are generally lucky if they get £2,700 of it to run their schools.

The system needa a fundamental re-engineering with most of the money, say £5000 of it going direct to the schools.

If all the people who sit in Town Halls and central bureaucratic roles add sufficient real value to the classroom experience of our children then there is nothing to stop the headteachers hiring them to carry on. Or they could hire more teachers or build / improve facilities if that what the governors and heads felt would achieved most.

What impact will this have on the terrifying statistic that for every £3 raised £4 is spent?

#2 - I agree that many IT firms and others will have put costly exit clauses into contracts. However, I expect the government will say something like "We want you to forgo the exit penalty - and if you don't your chances of getting any government work in the next five years is nil - and if we're re-elected, it could be ten years or more".

As far as I am aware, there has been no work done on the consequences for employment in cutting - sorry re-negotiating - private sector supply contracts. Whilst the emphasis and focus will be on large IT contracts the savings are going to be made at the expense of many private sector suppliers at both a national and local level. So whilst a non-replacement policy is trumpted in the public sector another trench of private sector workers head for the jobcentre!

JFH. Are you really proposing an across the board % cut? Just look at the skewed position of salaries in the public sector.

Kevinb You have no idea what Gorgeous George did od did not want anymore than any of us.

"A large share of the cuts - around 27% - will come not from civil servants but from private sector contractors"

This is still "public spending" isn't it?

"The former chancellor had toyed with the idea of allowing local councils to tax employer-provided parking spaces, to the tune of £200 per space per year. Has that been ruled out now?"

I rather hope so, as that, as a pure revenue raiser, is a worse tax on jobs than the NI raise is, as it will hit low-paid particularly badly.

I would support it if it was mandatory to put proceeds into providing public transport over and above what was already being spent (a kind of planning gain to serve the business on which the tax was being levied), though.

If Council Tax needs to rise, rise it should, or services should be cut if that is felt more appropriate. Same with income tax. Let's be honest with ourselves and not try to hide these things in stealth taxes.

This looks to me as though the new government are starting with 'small cuts' affecting mostly themselves and government departments before they inflict major pain on the public at large.

Come on this is all a joke. Spending has been increasing greater than real terms for years. This is just taking it back to when... last year's level? the 2008 level at worst.

Was the level of spending in 2008 really so terrible that having to go back to that level will create serious hardship at all?

I'm suprised that they didn't work out the level of spending in 2007 and cut back to that level as a first stab.

MoD spending may be ring-fenced, but that doesn't mean that the axe can't be wielded.

MoD Procurement Executive should justify its continued existence by reviewing the need for the hideously expensive, late and over-budget equipment we always seem to purchase, even when the need for their complexity has long gone (e.g. Eurofighter) We must be able to produce something adequate for purpose in greater quantity for the same money, in most cases.

Then they should take a critical look at every defence contract, starting with the most expensive - I'll bet there are hundreds of highly-paid contractors, especiallty in IT, doing very little for an awful lot.

Then they should show, for every one of the plethora of middle-ranking officers who are sat in Whitehall instead of being operational, why they shouldn't be "de-centralised" to somewhere to do the job they were trained for. I'll bet that most can be spared from fighting the "paper wars"

Then they should do the same for all MoD agencies and direct staff, including themselves.

If MoD PE can't identify large-scale savings by these means, they are obviously no good at their job and should be reviewed into oblivion themselves.

How about offering all public sector workers a 4 day week for the next 3 months and paying them pro-rata? Then review it after 3 months.

Whenever Civil Service work is contracted out the price goes up. I used to work in IT for the Department of Work and Pensions. When I was made redundant (with a handsome payout - thanks!) I went to work in private sector IT, doing nothing related to the Civil Service. The private contractor who took over the work I was doing employed THE SAME PEOPLE - civil servants, who were not able to take redundancy, paid them about the same and charged the Department a fortune. Fact is, IF a task needs to be done for Government, then civil servants do it better and cheaper than private contractors. Ironic it takes a Conservative Government to see this ;-)

The end result will be
a) New fulltime job openings because of insufficient capacity and know-how once the contractors go
b) Random indiscriminate sackings by management who are not competent enough to save costs any other way
c) Several years of misery before new types of management get in place who are able to cut costs through optimisation and improvement, creating unexpected value and wealth in the process

Good idea to administer a 6Bn dose of deflation now? Sure some of the items chosen are eminently disposable but much could have been done to spend the savings on stimulating jobs and investment. The economy is working well below capacity (8 million economically inactive).

Don't forget that reducing staff numbers in the civil service is not an easy option. Many highly paid employees have long term notice periods. In some cases up to three years on full pay(really). The courts recently threw out an attempt to reduce a notice period to two years. Cutting £6bn now is therefore even more difficult.

Every time this game is played everyone acts like it is the first time. There are always guidelines given but never mandatory. The politics of politics at every level will provide the illusion of fairness when it will be about political friendships. Rather than develop a standard for impact and performance the willy-nilly decisions will be made the way they always are after a great deal of report writing and recommendations..of course everything will be advisory so as to not tie the hands of the political decision makers. Bureaucrats make it very expensive to save money.

I AM PROBABLY BEING OVERLY CYNICAL, BUT AS SOMEONE WHO HAS SPENT MOST OF MY WORKING LIFE (c. 40 years) IN THE PUBLIC SECTOR, I CANNOT REMEMBER A TIME WHEN WE WERE NOT SUBJECT TO ECONOMIC CRISES, SPENDING CUTS, AND BELT - TIGHTENING EXERCISES. BACK IN THE 1980'S WE WERE TOLD THAT "THE PARTY WAS OVER!" WELL, SOME OF US WERE NEVER AT THE PARTY.IF THINGS GO THE WAY I THINK THEY WILL,WE WILL NOW SEE A FLOOD OF SENIOR APPOINTMENTS WITH JOB TITLES LIKE "CUTS CO - ORDINATOR" ON BIG SALARIES WHO WILL AFTER MANY MONTHS OF INVISIBLE ACTIVITY RECOMMEND THE SACKING OF CLEANERS, RECEPTIONISTS, AND OTHER LOW PAID STAFF. THEY WILL ALSO RECOMMEND CHANGES IN THE PENSION SCHEME, AND THEN PROMPTLY TAKE EARLY RETIREMENT BEFORE THEIR RECOMMENDED RULE CHANGES TAKE EFFECT. THEY WILL THEN COME BACK AS HIGHLY PAID "CONSULTANTS" AND NO DOUBT ADVISE ON HOW TO SAVE MONEY BY USING CONSULTANTS! NEXT TIME I HEAR SOME APPARATCHIK ON A SIX FIGURE SALARY GO ON ABOUT HOW WE ARE "ALL IN IT TOGETHER" I SHALL GET VERY ANGRY. WE ARE NOT ALL IN IT TOGETHER - JOE PUBLIC IS "IN IT" UP TO OUR NECKS. THE WIDE BOYS, POLITICIANS AND OTHERS WHO PUT US THERE WILL AS ALWAYS, ESCAPE UNSCATHED AND CONSIDERABLY BETTER OFF AS A RESULT. FOR THEM, THE PARTY GOES ON - FOR THE REST OF US, IT NEVER STARTED.

Alastair Darling was a bit lost earlier today in his commentary. He said - if this is about cutting waste - no-one will complain. In fact he said he recognised many of the measures as being ones that he would have done himself - but later on. I think that the government should go on the offensive and challenge Darling, Mandelson, Balls etc to tell us now what cuts they would be planning to deal with the structural deficit. If all they are going to do is sit on the touchline and carp it will be very revealing.

I think that the coalition government is going about this sensibly and if some tax rises come along as well so be it. I would rather this country rebalances its budget than go the way of Greece.

A lot of it is pretty aspirational to me.

The type of stuff that complements an austerity package and is a bonus if it is achieved.

Not the foundation of the package itself.

It's no wonder the review was "collegiate" - the tough choices were almost all parked.

#8 gruad999,

What a complete load of tosh!

The performance of UK CEOs has been poor in comparison with their European counterparts. Hence their salaries should not only be pegged but drastically cut. If a 10:1 ratio is going to be applied to the public sector it should also apply in the private sector too - wonder how much say Willy Walsh or Marc Bolland would have to repay?

If Labour and the Libdums sorry Libdems - were right that £6bn of cuts this year is too early and we go into recession/depression - what does Osborne do next - cut again and then again and at what point does he stop cutting? Is there a point where the social costs become too great - or will we hear the French refrain of 'let them eat cake'?

By my estimates, the amount of 'unprotected' spending in the Education budget amounts to no more than £9bn (or £5bn if you exclude the Building Schools for the Future capital programme). So there will be more than a 10% cut to those areas... and that is just in 2010.

It is highly likely that by 2011 many educational quangos and agencies (e.g. National College of School Leadership - more expensive than Becta) will have been radically scaled down.

Will it affect educational standards or teachers lives? Probably not. I think everyone in government and schools agrees they would rather sacrifice advisors than actual teachers. Teachers will just have to become more self-sufficient, using teacher resources from community services like Teachable.net rather than costly quango services.

https://blog.teachable.net/2010/education-spending-cuts

How will we know if these cuts are actually saving any money? Is it just the case that money will have to be spent somewhere else to make up for the fact that jobs/departmnents have disappeared?

If we are paying civil servants +£100K, more than many CEO for companies, why do they need so many consultants. They also get index link pensions etc, it is way out of balance with the private sector. We need quick annoucments on increasing pension age this is only way to start balancing that debit, e.g just the Royal Mail has £8bn debit in it's pension scheme. Civil servants on more than £100k should have multi-year pay freeze if not pay cut and that should be on reducing scale further down. We need to look to examples of what Ireland has had to do.

Not many people are aware of this: Labour 'won' the Metropolitan District elections on the 6th May. A dubious victory given these cuts in revenue support, and caused by the high turnout in local elections that fell on the same day.
Which means the big losers from these cuts are the new Labour City Councils up and down the land. For those Councils, the cuts mean they'll have to either cut cherished local services, or raise Council Taxes above the rate of inflation.
Which is just what a new Conservative-Lib Dem coalition would want to happen, wouldn't it? An opportunity to characterise Labour Councils as friendly to either cuts, tax hikes or both at once.

Whiskey Drinker, nice ideas, but.....

It doesn't sound like you are hitting the nail on the head. Money is just a symbol of relative wealth. Inequality is the basis of Capitalism and motivates people to work. Without a goal of getting richer people have no incentive to provide a more efficient service. The efficiency makes the lives of the average person more interesting (more products on shelves, films, music, hotels etc). People see what the west has to offer and greed/jealousy provide the motivation for many to demand the opportunity to have the same.

Countries slowly adopt capitalist ideas. It's happened in China, and Cuba is also starting to allow profit making.

But where does the money come from? How to generate wealth. Well just look at the largest companies - Oil&Gas and Financial Services. Former being a natural resource (free money for those with the infrastructure and contacts), and the latter being a great mover of wealth (from poor to rich with the bank bailouts, but who knows overall).

@ 27, Colin Marsh, where have you been? It's a bit late to start crowing now AFTER the election? But the points you make are quite valid. Sadly the majority of the population don't want to believe that's how things work. They like to believe the local authority has got "everything organised!"

Also I thought this lot agreed there were too many MP's? If they weren't so modest they could cut 51 Labour seats and automatically provide themselves with a majority?

What was it Kinnock said? “If the Tories win the election, I warn you not to be old, or sick, or poor…”

How true thaat is beginning to look already. You can add to the list "...or interested in higher education".

At my place of work we have already seen the costs of these cuts today. However, what no-one seems to notice is the knock-on effect to the private sector, and I do fear the cliche of a "double-dip" recession if Obso continues on his way.

Also, why do we have to cut anyway? The extra government debt was mostly used to help the banks, so why can't the banks pay back that money? I undertand this has happened in America to some extent. Rather than let Tory dogma hold sway they and their Liberal Lapdogs should get back the money from those who needed it in the first place. Still, maybe people will get outraged when the Tories continue to decimate Big Government in order to replace it with the Big Corporations. god help us all.

Why do I feel that most comments on this blog are ignoring the fundamentals. These cuts and expected tax hikes would have to be made whether or not Labour or The Con-Dems were in government.

If you have had it good under labour---tough! As the outgoing Chief Secretary to the Treasury said " Sorry, there is no money left". About the only honest thing any government official has said in the last 13 years.

I have little or no sympathy for overpaid civil servants and even less for private sector contractors that have been delivering services for way more than they are worth. The last government spent £1.5bn on consultants, presumably so they could tell ministers and civil servants why they needed to employ more contractors?!

So for those of you who were always good with money and saved for the rainy days, congratulations. Whilst your savings haven't accrued much interest in recent years, you can at least whether the storm. For those that didn't and have lifestyles to keep, then I can only say you will have to trim your budgets like those of us who did so without any choice when the banks failed.

Gordon Brown /Alistair Darling would have been better putting £10,000 into each taxpayers bank account than bail out the banks. As well as not taking a further hit on falls in their share price, new deposits would have strengthened balance sheets and indirectly, reduced both mortgage arrears and benefits payments.

I am reconciled to taking the financial pain that must come with dealing with the deficit, because I still hold the belief that if I want my kids to have any future then I will do what is necessary. At 52 and having been put out of business by HBOS, I hope that the new way of government will do more for those who want to contribute.

watriler 24

Watriler, I think you'll find we've been applying your preferred approach to economic policy for the last 13 years and look where it's got us - £160 billion deficit and 8 million economically inactive. Time for a rethink perhaps ?

I think that-as Gordon Brown was adamant throughout the campaign-the coalition's plans to proceed in this quick fire spurt of fiscal consolidation when a strong recovery is still not a certainty is a bad decision. Simply put, it is not so much the reduction of £6bn that is important, but the further implications this reduction has and Gordon Brown didn't pass on his message well enough about this. The relevant importance is that these cuts are going to lead to reduction's in investment and a lot less jobs being created over the next few years, the crucial period when they're needed! The coalition should maintain spending levels over the next year, and maintain some things they plan to cut because these reductions and removals will come at long term costs that are significantly greater than the £6bn saved now, in terms of lost growth, investment, eventually a larger stock of unused individuals in the labour force and when they push us back into recession due to the rather strange political based economics the coalition is governed by, once again there will be ruined business and consumer confidence.

This is not the exact time for austerity. For the meanwhile the economy has to be kept stable, and with govt. spending + it's benefits during a such times being so crucial, due to lowered tax receipts, investment and consumer spending, this whole 'lets cut waste, and show how inherently bad and wasteful Labour were' policy they are following is just simply bad, and in the long run these mistakes will mean we will end up being even more 'squeezed' in the long run than we have to be!

All this 'fairer' society talk that the co talks about is not reflected in their policy! In a fairer society they would be extending more help to those who need it now, and before cuts have even been made D. Cameron would not be speaking about the potential to eventually abolish the 50p tax rate and increase inheritance tax thresholds! One word-redistribution! The economy needs long term funding help, and even after the so called mess is solved we are going to need these higher tax receipts so that we don't lower the deficit only to feel the mission is accomplished, have to borrow again to finance future spending, and a repeat of the cycle!

The massive bureacracy in the NHS must not be a sacred cow. Just look at the waste surrounding NHS research governance. So much money is being wasted in that space between the Department of Health and the Trusts.

32. At 2:43pm on 24 May 2010, Edward

I for one have to listen every night to my partner gripe about initiatives and change for change sake.

She sees massive waste in her own school the Head is over the moon with the plasma screens in the corridors with rolling adverts for the school but she goes mad when she wants some pritt stick glue sticks for the children to glue their work together and she can't have them as there is no money.

leftie 35

'An opportunity to characterise Labour Councils as friendly to either cuts, tax hikes or both at once'

Win, win, win.

Ah yes we have a huge deficit as a consequence of saving the financial system and so now we need to spend less in order to pay off the deficit. What could be simpler to understand?...unless of course this is not the whole story.

Take Spain who are applying similar reasoning, but they are a couple of weeks ahead of the UK in announcing spending cuts. And what do we find? Why the almost instant collapse of a 146 year old savings bank

https://www.businessweek.com/news/2010-05-22/regulator-seizes-cajasur-lender-hurt-by-bad-loans-update1-.html

There will be more to come. Now what is the story about incurring a huge deficit to "save" the banks?

I would like to see a commitment to limit the number and value of new PFI contracts awarded. These are hugely expensive and often provide too big a profit for the private partnering contractor.

At present central and local government is already committed to paying £215 billion over the lifetime of these PFI deals. Future deals must be scaled back in order that we can afford these existing commitments.

Why are we ring fencing international aid? Often fighting poverty in third world countries only frees up money which is used to build nuclear weapons or have wars.

Somehow I can't see the shire Tories cutting much. They will find this very difficult indeed. Perhaps they will have to learn the hard way that Council Tax cannot increase willy-nilly any more.

This looks very much to me like the appetiser. The attitude seems to be let's see how this goes off so we can measure how heavy the main course can be. That main course will be very heavy indeed.

The big question which I have is how long can all this ring-fenced spending remain ring-fenced as it suggests that some very heavy reductions will have to be made in the non-ring-fenced areas.

I fear we will have to spend part of the summer listening to pips squeak. The real music will come later.

You know, they could bring back Stamp Duty, on all Stock Exchange trades.

At Five percent, the pre Mrs Thatcher level.

That would slow down the Spiv's and their SIV's !

And reduce the Tax burden to be shared out over the Wealth creating People.

This comment was removed because the moderators found it broke the house rules. Explain.

The only way out of this Debt mountain brought on by far too lax lending, and far too light regulation on the Financial Market operators, is to have a controlled burst of Inflation say ten to fifteen percent for five years.
This would of course mean luxury imports would become more expensive but it would make relative British pay more competitive in Global markets.

Of course, you could have import controls, higher customs duties instead.

But Britain needs to manufacture more of what it needs at home.

However, reducing Services, lower standards for all, just to protect the lifestyles of a few Rich people who have likely never actually had a real job (clipping coupons and trading stocks and bonds are not real jobs) is foolish.

But look at some parts of America, where the forgotten poor from many a previous Recession are ignored by their Gated Community, Chauffeur driven neighbours, and you will see a Vision of how things could go here, if the so called Business Gurus have their way.

This comment was removed because the moderators found it broke the house rules. Explain.

Mind you, there will be further growth in Jobs in the Bodyguard/Minding sector.

All the remaining Rich people will need protection.

This comment was removed because the moderators found it broke the house rules. Explain.

With the baby boom 2002 - 2008 now coming through the schools not sure they are going to be able to do much cost cutting without affecting class sizes etc.

Another point - I have heard many private sector 'spokespeople' commenting on various media outlets about how the cuts are necessary to bring the public sector back into line with the hardships in the private sector. They are completely ignoring that a lot of the private sector is currently working in the public sector especially construction which is almost completely reliant on public sector work at the moment. Cut the public sector and there will be big job losses in the private too and the associated benefits burden.

Economists used to speak of the speed of circulation of money, many Moons ago.

Each time a Pound is spent (changes hands) it generates activity.
Each time it is spent it generates Taxes (to some degree).
Each time it is spent it supports or creates business.
Business creates Jobs.
Taking Six Billion Pounds out of Public Spending actually takes more than that out of the Economy.
Depending of course, on the speed of circulation of said cash.
A Six billion Pound cut could become a thirty or forty Billion Pound decline in Sales and other Economic activity over the course of a Year.
That thirty or Forty Billion would likewise have supported Private business and generated possibly five to eight billion in Taxes.

But the new Gov't is dancing to New Yorks tune, they are all would be Merchant Bankers !

Who can blame them, whilst Wall Street remains licensed to print bonuses ?

Having worked in the Civil Service and seen PFI in action, I'm glad they're looking to review private sector contracts!

For example, at this point in time, all waste disposal in the department I worked for has to be tendered out to private contractors. Not too long ago, I saw a quote to remove an old broken fax machine that came to five pages and an estimate at the bottom that suggested a sum of over £100.00 would be required to get rid of it. This sort of going on is endemic and an obvious waste that simply should not be allowed. Reform is required and it looks like the new administration is going to deliver.

Time to put all public sector workers on 4-day weeks. We are facing a government spending emergency, so everyone should be part of the solution. In the same vein, all social security benefits need to be cut by 20%. Third, put up VAT to 20% and basic rate Income Tax to 25%.

I can understand and support "ring fencing" nhs, defence and schools.But why international development.?????? This is an area with corruption and unaccountabilty! When times are hard,as now, we should look after our own first.DO NOT waste our meagre resources on corrupt African and Asian dictatorships!!!!
I'm sure IF the British tax payer had a choice, this is one area where we should see a reduction in aid and resources, remember Charity Starts at Home, only when you have sound financial footing, can you then start sending aid.

So many people seem to follow the idea that we as a country have a "choice" between cutting spending or not.

We don't - we have a choice between cutting spending ourselves, or having it cut for us by the markets like Greece.

The worrying thing for me is what a small drop in the ocean £6bn is compared to the £150bn deficit - we owe an arm and a leg, and so far can't even agree about paying back one finger.

I agree with Colin's comments so whole heartedly. In my area we have senior managers who don't seem to do anything, many originally from the private sector. Yet it will be the lower orders who will be down graded and their pensions reduced. Thank you Colin for saying how it really is.

"It will be interesting to see whether the private companies concerned cry foul - or whether they, too, decide to hold their fire for future battles"

- many of these will be self employed contractors who far from looking to future battles will instead rapidly end up as part of the ever growing unemployment statistics.

Here in York, we have a University that is building a second campus at Heslington East. This is completely unnecessary given the number of higher educational establishments already in the UK.

We also have a City Council that is planning to spend millions on a new office building. The Council has published beautiful plans but has not issued any detailed analysis to the public on how it will be financed.

The same Council is also obsessed at spending thousands and thousands of pounds on building cycle lanes. A worthy cause this might be, but it is certainly not affordable or a priority at the present time.

These are examples of public sector waste in just one small city. It is clear that the nation's waste, financed by the taxpayer, must be colossal.

In reply to • 36. statmuncher.

They are good ideas, and I think enough of it works that it is a viable way of living. For example of the two worlds in “Where are we going” by peter joseph, which would you prefer to live in? The one peter joseph describes, or the one we live in now? There is nothing stopping us except the will to do it. We have all the technology to do it, and we have all the resources to make it happen. So why not?
As for efficiency, I agree that capitalism is good at making things more efficient, but it extremely lacks capability when there is no money involved: People dying of famine when there is enough produced in the world to feed everyone.
The whole basis of the resource economy is efficient use of materials, there would be as much efficiency as capitalism, but more efficiency could be found in all the areas that aren’t profitable in a monetary system.
Arts don’t suffer, people will still want to learn instruments and perform to others, people will still want to hear people play. People will still want to read books, and see art etc.
Where is the drive to do anything? Well without food or energy worries, people are free to do what they want to do, what interests them. For example, I didn’t learn about everything I stated in my earlier post because I thought I could make money, I did it because it interests me. I think there are a lot of things people do and would have more time for, if their life wasn’t tied down to ‘making money’ and constantly competing with the rest of mankind.
When I first read about it, I thought it was awfully utopian, until I realised we have the technology and the resources to make it work. There was a lovely quote from the founder when asked if it was utopia, he said no it wasn’t, “You can never achieve utopia because as soon as you think you have it there is a new utopia.” He called the resource based economy simply “progress”.
I don’t think its going to happen straight away, and it would take a while to set up, but I just think its where we should be aiming for.
As for china and cuba moving to capitalism, I’m not surprised. They would be left behind as out of the monetary systems we have at the moment, capitalism works the best.
WD

Post 45 that particular savings bank (much more like our Building Society rather than a normal High Street Bank) has been going on for many months.

They were vastly over exposed to the Spanish property market and commercial loans. It has been a dead bank walking for a long time.

It certainly isn't anything to do with the Spanish governments announcement last week.

Sorry folks but this is just the first course of a multi course dinner of cuts. A mini cutlet if you will.

Having read the Red Book, by my "fag packet" calculations, this administration needs to reduce expenditure over this parliament by 25% across the board, just to keep National Debt at its 2007/08 level of c. £525bn by 2014. For we the great unwashed, this means that if the Government had £1 to spend in its budget annually in April, it has only 75p to spend each year for each of the next 5 years.

That said this assumes 3.25% pa economic growth and no changes to the previous administration's economic forecasts. If we fall short of this, the cuts are even deeper.

I also hear on the wires that our former PM is tipped as a senior figure (the new head???) of the IMF. I hope that the lure of good causes and voluntary work are real and tacit.

Otherwise, would the last one out please turn the lights off (as we did in 1974!).

Well - find out what prospers in a recession. Banks mainly if you rlucky enough to work as a senior executive at one.

Banks pay nothing on their funding, and stitch up the general population a good'un.

So..... when will the protests start then ? If British form is any guide we will wait until we are truly bankrupt and have nothing left to fight for. The banks will have buggered off into the sunset with all our silver - saying "so long, and thanks for all the money" ........

fdd wrote

Kevinb You have no idea what Gorgeous George did od did not want anymore than any of us.

I think anyone can work out that the first act you wish to carry out as chancellor is not to have to make cuts because of the overspending of the previous administration

Pretty obvious really

EmKay wrote

I am still not sure that the ring-fencing of particular areas will last

If you take the NHS, for example, Lansley has to make budget savings in order to spend money on different things, eg cancer drugs

So whilst the totals are ring-fenced, there is flexibility within them

I am not sure that your statistic is anywhere near accurate, so if you can I would check it(90% of NHS on end life care)in fact I know it is not accurate

The projected spending according to the budget for the NHS is £110bn, which is on a par with pensions, with welfare on £94bn

The NHS costs over £300million every day, so even a 1% efficiency saving can be very useful

A paltry £6 billion? Is that all? Simply tax the Duke of Westminster at 85% and the job will be done. He'll still have £1 billion left and millions of people won't have been cut.

#65 Ian_the_Chopper. The point is: That the deficits were incurred to save the financial system. The fact that CajaSur has collapsed evidentially proves that the financial system was not saved. Therefore someone, that is not me, must have been telling you lies. Ask why these deficits were incurred and why you should do anything at all to pay them back.

I would not expect to see any senior civil servants make a quick exit from their own jobs. After all, where would government ministers go to get advice on spending cuts and who would have to oversee their implementation?

Even Nelson may be wondering which surgeon wielded the scalpel to his beloved flagship, H.M.S Victory. I am beginning to think there may truly be a 'Message in the bottle'!

41. At 3:28pm on 24 May 2010, Macros Future wrote:
I think that-as Gordon Brown was adamant throughout the campaign-the coalition's plans to proceed in this quick fire spurt of fiscal consolidation when a strong recovery is still not a certainty is a bad decision. Simply put, it is not so much the reduction of £6bn that is important, but the further implications this reduction has and Gordon Brown didn't pass on his message well enough about this. The relevant importance is that these cuts are going to lead to reduction's in investment and a lot less jobs being created over the next few years, the crucial period when they're needed! The coalition should maintain spending levels over the next year, and maintain some things they plan to cut because these reductions and removals will come at long term costs that are significantly greater than the £6bn saved now, in terms of lost growth, investment, eventually a larger stock of unused individuals in the labour force and when they push us back into recession due to the rather strange political based economics the coalition is governed by, once again there will be ruined business and consumer confidence.

This is not the exact time for austerity. For the meanwhile the economy has to be kept stable, and with govt. spending + it's benefits during a such times being so crucial, due to lowered tax receipts, investment and consumer spending, this whole 'lets cut waste, and show how inherently bad and wasteful Labour were' policy they are following is just simply bad, and in the long run these mistakes will mean we will end up being even more 'squeezed' in the long run than we have to be!

All this 'fairer' society talk that the co talks about is not reflected in their policy! In a fairer society they would be extending more help to those who need it now, and before cuts have even been made D. Cameron would not be speaking about the potential to eventually abolish the 50p tax rate and increase inheritance tax thresholds! One word-redistribution! The economy needs long term funding help, and even after the so called mess is solved we are going to need these higher tax receipts so that we don't lower the deficit only to feel the mission is accomplished, have to borrow again to finance future spending, and a repeat of the cycle!


I am sorry, I couldn't disagree with you more

New jobs can only be created in the public sector or the private sector

We were spending 52% of GDP on the Public Sector at the end of the last Government and this is just unsustainable

We need to borrow money each year from the money markets just to pay the bills

The deficit is currently £156bn ish, so in this year we need to borrow that

If we don't start to live within our means, it will just cost us too much to borrow this money, the IMF will get involved, and then the cuts will be much deeper, and hurt far more

Osborne is correct to start cutting now, and Brown got that wrong, as he did just about everything else in his disastrous time ruining the country's finances

I am unsure as to how you think saddling the country with a huge deficit and $1.4tn of debt is fairer

The coalition are going to ensure that the most vulnerable are protected, and I am pleased that the £10K tax allowance will be phased in over this parliament

If you are concerned about these actions, then please don't be

What is happening is difficult, yet it will create more jobs in the private sector, and we need to, as we can't create anymore in the public sector

I note that Essex County Council are paying consultants £25,000,000 to make recommendations for savings of £100m a year - are not the members and officers elected and qualified to make these cuts - they have been running the services and should know how to cut them? This would save us £25m immediately - I also note that in these days of austerity the members have voted themselves an 8.3% !!!!!!!!! rise in their own expenses of £1.6million !!!!!!!!- whilst freezing the pay of staff - great leadership !!!! They are not following the cabinet example

The government plans to scrap child benefit, Concessionary bus fare, winter fuel allowance, free tv licence for over 70s, Educational Maintenance Allowance, Charge student loan borrowers at the market rate ...as well as the cuts today. Why are they not telling us about these plans (which are listed on the conservative party's www.reform.co.uk website). Noticed Frank Field (Labour) and Vince Cable (Liberal) are involved with this right wing think tank...no surprise they got government posts then.

47. At 4:01pm on 24 May 2010, Political_Incorrect wrote:
Why are we ring fencing international aid? Often fighting poverty in third world countries only frees up money which is used to build nuclear weapons or have wars.

Could you point out which third world country has nuclear weapons?

Unless you mean France

This focus on cuts is a bit of a waste of time really unless it is really carefully managed, which it won't be.

Absolute debt is not relevant to anyone; what is relevant is total debt relative to GDP and applicable interest rates. Taking 6bn out of the economy and hitting the private sector peripheral to the government is only going to add to deflation and increase the debt to GDP ratio.

This Office of Budget Responsibilities and these cuts demonstrate a worrying perspective on the economy from these people. Seems to me they have a very mainstream view of things and they'll be in for some nasty surprises pretty soon.

How are the changes going to punish the bankers who created this mess ? It seems to me that the nurses, street cleaners, teachers etc will pay but not the rich who incidentally doubled their wealth in real terms last year.

66. At 4:58pm on 24 May 2010, PrisonerNumber6 wrote:
Sorry folks but this is just the first course of a multi course dinner of cuts. A mini cutlet if you will.

Having read the Red Book, by my "fag packet" calculations, this administration needs to reduce expenditure over this parliament by 25% across the board, just to keep National Debt at its 2007/08 level of c. £525bn by 2014. For we the great unwashed, this means that if the Government had £1 to spend in its budget annually in April, it has only 75p to spend each year for each of the next 5 years.

That said this assumes 3.25% pa economic growth and no changes to the previous administration's economic forecasts. If we fall short of this, the cuts are even deeper.

I also hear on the wires that our former PM is tipped as a senior figure (the new head???) of the IMF. I hope that the lure of good causes and voluntary work are real and tacit.

Otherwise, would the last one out please turn the lights off (as we did in 1974!).


The government isn't trying to reduce the debt

It is trying to reduce the rate at which the debt increases

This comment was removed because the moderators found it broke the house rules. Explain.

#71 The true state of the banking crisis will take many years (10) to unravel, as PwC works through the Lehman transactions. Ultimately, someone has borne a loss on substantial CDO tradesand other countrerparty transactions. For every credit there is a corresponding debit.

By the time the Lehmans books are reviewed, things will be different. Whether the banking system is as it was in 2007 or even today is at this point, conjecture.

The indebted Western economies will all pay a price. We don't yet know how much.

36 Statmuncher wrote:

"Whiskey Drinker, nice ideas, but.....

It doesn't sound like you are hitting the nail on the head. Money is just a symbol of relative wealth. Inequality is the basis of Capitalism and motivates people to work. Without a goal of getting richer people have no incentive to provide a more efficient service. The efficiency makes the lives of the average person more interesting (more products on shelves, films, music, hotels etc). People see what the west has to offer and greed/jealousy provide the motivation for many to demand the opportunity to have the same. "

Not necessarily true. Many people would be prepared to put considerable effort into providing a more efficient service, for the same salary, if they were allowed to reduce their working week from 5 to 4 or 3 days. The incentive is a better work/life balance rather than increased disposable income. Unfortunately, Capitalism does not favour this approach even though it is perhaps more desirable, when considering the benefits to Society.

#64 WD

Getting side-tracked here, but your resource-based economy is looking a lot like fascism. Not sure where the incentive is for anyone to do anything when thinking outside the box has no benefit.

For example, a manager of a company that makes plates. There are 5 types of plate and enough to give everyone in the world 20 plates each. Why would the manager risk looking like an idiot by trying something different? He could change the shift pattern to increase productivity allowing an extra type of plate to be made. But why bother when there's no penalty and no incentive to change?

The Venus Project is a nice idea although where is the basis of it working in reality.

For a basic reality check, compare the NHS with Bupa. Now I'm sure Bupa make mistakes, but the NHS is rife with inefficiency and poor customer care. I've worked at a hospital and the private wards are a cut-above in terms of care. A resource based economy would only continue the inefficiency and that will cost peoples lives directly.

By the way, if the public sector GDP is greater than the private sector GDP we are not generating enough revenue from TRADING to start to increase our UK cash pot to repay debt. The Government does not trade it RECYCLES money, whether from tax collection or government borrowing.

Our UK plc credit cards are soon to be maxing out. Perhaps the enlightened amongst you can tell me, one of the unwashed, just where we generate £150bn of additional GDP over the next five years at the present rate of expenditure to get to budget neutrality at the end of this parliament. Or should I ask Paul Daniels?

So if we really want to save money, why don't we stop paying for the "EU"?

# 79 - KevinB - I was merely pointing out maintaining the status quo. Of course the UK has long term systemic debt - look at the 0.5% long dated 2052 Gilt issuance notice in the past few days. We cannot spend beyond our means.

I did not even mention the risk of downgrading our credit rating and the interest rate impact that has on ALL of our debt. 1% hike for a single level downgrading on all debt (based on debt prices in the market) means between £25 and £30bn of addition debt interest to pay for this borrowing.

We have to generate wealth (from the private sector) to find the tax revenues to manage our debt more effectively.

Whisky Drinker 64

Capitilism is simply a system under which people are given freedom (within certain limits) to decide how they earn a living, and how they spend their money.

It isn't just about economic efficiency, it's about personal freedom. If you're happy to let someone else decide these things for you then I guess there are other systems you might find attractive including the ones you refer.

@ 66

My candle's at the ready. Alongside the stale bread and cup of water.

I wonder how many City bankers face such cut backs?

376 kevinb - Why not look up India, Pakistan and North Korea in your big book of bombs of the world. While you at it look up AQ Khan, and you will find out that he was apprehended by the Dutch with his book of How to Make Bombs. Luckily he had friends in high places as the US applied pressure that he be released so that he could change the title of his book to "How I made a Bomb - By Making a Bomb and then Selling the Technology to Libya and North Korea"

Funny how not all "Islamic" bombs seem to be problematic is it not.

If you actually read the news you will also discover that Israel tried to sell atomic bombs to the Apartheid regime in South Africa.

56. At 4:23pm on 24 May 2010, supercalmdown wrote:

"Each time a Pound is spent (changes hands) it generates activity"


Your economical model is more or less logical in an ideal and "closed economy". Reality is we spend a high proportion of those pounds importing and creating activity in China and since we do not export enough the balance has to be borrowed and interest paid abroad. In your economical model we then said decrease money supply, increase interest rates and deflate domestic demand reducing imports until we again had a trading balance. Of course we also hoped that we had sufficient velocity in the economy that these adjustments would occur quickly, before the next election.

Unfortunately we managed to avoid reality through reducing prices by importing and financing through inflating property and other asset pricing. That was however just a "Gap" decade and now back to reality, what do we have that we can export? We allowed our exporting industries to evaporate and with a population going to the 70 million and no natural resources, our choices are limited: will we be smarter or just poorer than those Chinese and Indians before the next generation.

#81 PrisonerNumber6.Yeah we know the price, it is more than we can pay. In a free market you don´t try to pay for things that you can´t afford.

If I have a total of $5k I would be insane to use it as a deposit for a $1 million house, because I couldn´t find the balance and would lose my deposit. This is the game being played on the citizens of the world - the master puppeteers really do think you are stupid!!

Mr_Sensible 82
' if they were allowed to reduce their working week from 5 to 4 or 3 days. The incentive is a better work/life balance rather than increased disposable income. Unfortunately, Capitalism does not favour this approach even though it is perhaps more desirable, when considering the benefits to Society. '

Have you heard of part time work ? If people don't want to work full time they don't have to, but clearly if they work part time they'll earn less money.

The point is that people should decide for themselves what hours they work rather than someone like you or me deciding what's 'best' for them.

Why not impose an across the board 1% wealth tax on everyone, in one go...
1% tax on the bottom 80% of the population will probably yield the same amount as 1% tax on the top 20%.
So it would be considered a fairer method of reducing the debt....Simple really.

Imagine a 1% wealth tax on all those wealthy people in the S.E.....
I'm sure they wouldn't mind, would they..!!!???
After all, who has benefited most from the excesses of the last 20years...
Now lets see... 1% of my wealth...how do I work out what my wealth is....Easiest method is to assume one's wealth is tied up in property (and fixed assets)....So value of one's property/ properties (minus any mortgage) would be a good starting point plus value of all shareholdings at current value plus any assets in a foreign country...
Can anyone think of a fairer way to do this....Lets have some practical ideas please....
We should having a national discussion on this....Everyone I am sure would welcome the fairest way of reducing our debt....so come on get some ideas going...

76. At 5:25pm on 24 May 2010, Kevinb wrote

"Could you point out which third world country has nuclear weapons?

Unless you mean France"

I think Pakistan is the obvious answer. Not sure why anyone would suggest that France is a third world country?

John_from_Hendon shows a shambolic naivity if thinks that making all the cuts from Civil Servants' pay will reduce inequality in society when public sector pay is lower than private sector pay and a significant proportion of civil servants rely on benefits to top up their meagre pay. Civil Service pay is a myth propagated by those who want to rake it in in the good times and expect somebody else to pay the consequences when private sector greed causes a crash.

Why don't we stop messing around.... people are ready for serious cuts; not liking it but I think are already depressed about it so it's best to get it over with. It would, in the end, take less time to put it right. Radical but here goes.....

1. Remove the Depertment of Education - we don't need them as schools will continue with what is there now and get better at it and even improve education. People at the centre looking for efficiencies and improvements rarely cause either.

2. Remove the Department for Business - also a waste of time and money put regulation in the Home Office and drop the rest. Business will sort itself out.

Anyone prepared to argue over the future of those departments? There are bound to be more we could chop.

In reply to 83 statmuncher
Just to make it clear, the resource based economy isn’t my idea. I just happen to think it would work much better than the system we have now.
I’m not entirely sure how it could be fascism; there is no one in power. Likewise it isn’t similar with communism or other forms of government. No-One has power. It is true democracy. With the internet, and everyone having near instant communication it is possible.
Taking your plate idea, someone asks using the internet if there is a different type of plate available. Someone sees the post and comes up with an idea. The design is agreed on. The plate that the person was using before is recycled and a new plate is made. Just to make it clear, this isn’t necessarily what would happen, just my hypothetical take on the idea. There is possibly a better way of making it work.
Where is the proof that our current system works well? When all around you can see where ‘our reality’ doesn’t work (e.g. poverty, famine, poor schooling etc.). The only reason it ‘works’ is because everyone has grown up with it and makes the best of it they can.
I agree Bupa is better than the NHS. It wouldn’t exist if it wasn’t (why would you pay for worse care?). In a resource based economy, we would have time to take care of our families and friends ourselves.
Eventually surgery would be mechanised and although the technology isn’t quite there yet, if there was a concentration of peoples collective creative minds, I don’t think it’s beyond us considering the things robotics can do just now. The whole idea of the resource based economy is to make everything efficient.
In reply to 83. jobsagoodin
How free are we? Really? I’m already in debt, and haven’t even started yet life yet. I’ve got to pay that back, and then one day I’ll want a house and I’m back in debt again.
I am in the fortunate position of being well educated, fairly smart and in a financial position that I am able to choose how I would like to earn a living, I know that this is certainly not the case for a lot of people. And certainly for the many people unemployed, the idea is to get any job if you can. I would say that choice to do what you want is particularly restricted. For everything you at least need the money.
How in a resource based economy can you not decide things for yourself? You are free to do anything you like. There is more freedom in it than we currently have now. I’m not entirely sure exactly what freedoms you think we’d be giving up.
WD

89. At 6:25pm on 24 May 2010, armagediontimes wrote:
376 kevinb - Why not look up India, Pakistan and North Korea in your big book of bombs of the world. While you at it look up AQ Khan, and you will find out that he was apprehended by the Dutch with his book of How to Make Bombs. Luckily he had friends in high places as the US applied pressure that he be released so that he could change the title of his book to "How I made a Bomb - By Making a Bomb and then Selling the Technology to Libya and North Korea"

Funny how not all "Islamic" bombs seem to be problematic is it not.

If you actually read the news you will also discover that Israel tried to sell atomic bombs to the Apartheid regime in South Africa.


I am not sure that I would describe India and Pakistan as third world countries

It is not known for certain that North Korea has nuclear weapons

I have been aware of the SA and Israel thing for ages

The point is, they didn't

Not really sure what your point is, to be honest

re #93
The LibDem's proposal of a mansion tax was a good idea. Once Vince had sorted out his thinking and raised the start limit to £2m to avoid catching normal London houses that have been inflated to crazy values. Shame it got dumped. It would have caught rich non-doms and temporarily resident superstars aka Premiership footballers plus well to do Brits. Most people have traded up to houses of that value because they have done well out of the UK economy. Downside might be the effect on property prices.

Taxing property portfolios might be a good idea. So, anyone owning more than two properties would pay an extra tax based on their value. This will also affect the property market but much lower down and might help to make property more affordable for those on mean incomes or less. Short-term downside may be a drop in properties available to rent. That said, although we don't know the detail yet, the proposed CGT changes will clobber the property developers and buy to let market, anyway.

I should declare an interest in that during the Thatcher Government I was one of the main architects of the introduction of competition into the contracts for Government computer support.
In a very short period this became a mutually beneficial process for both Government and the private sector, saving Government hundreds of millions a year and creating thousands of jobs.
The Blair and Brown administration kicked the whole process apart, because although they were well intentioned they did not have the expertise to negotiate with the private sector, look at the wonderful job they did on the Doctors contracts, halved their working week and doubled their incomes.

Competition, thats real competition not pretend, could of course be rebuilt very quickly to give huge savings in 2010 that repeat every year there after, for little or no cost.

One of the interesting features of doing this last time round, was that Government departments would negotiate contracts that aped what the thought the private sector did, complete with service level agreements and penalty clauses but then lacked the expertise to manage them, subsequently the private contractors, me included, made far more money than was originally anticipated.
Clearly this is still going on as the profits being made on the PFI schemes are ridiculously high for the investments and risks being taken on.
But no one seems to have the expertise to deal with the abuse.
To good to be true?
No, ask those in say, the Mod who can remember.