So the Spending Review is out and the time has come to take a razor to the public sector. Osbourne’s abstract list of proposed cuts will, in the next few weeks, have to be worked up into planned actions. How these will actually play out is anyone’s guess. The BBC’s Mike Sergeant (link here) pointed out that “one part of public spending so often affects another. For instance: if incapacity benefit is cut, do we need to spend more on Jobseekers’ Allowance? If higher education spending goes down, does youth unemployment go up? If social housing is reduced, do we need to spend more looking after the homeless? If people pay more into their pensions, will they spend less in the shops (VAT)? [...] It’s not a zero sum game”.
The cuts will ask a lot of the private sector too. How will they respond? They need to generate the wealth required for the recovery by producing products and services of such quality and necessity that the population will be enticed to stop saving and start spending. The state sector, now increasingly hollow will give the private sector contracts and they will provide the most effective, economic and efficient health and social care money can buy.
And the private sector will need to expand. It will provide more local jobs to accommodate the armies of people shifted out of the public sector (490,000 workers) or off benefits into work. The private sector will accommodate the family lives of single parents who will need to work to survive. Those with disabilities who are now to be reassessed as able to work will enter the workforce needing accommodations for their disabilities. Education, now unaffordable to many, will still be needed making employers more responsible for their workers’ learning. The Government’s support for apprenticeships is welcome here but the abolition of the Train to Gain programme is not.
On top of all of this, the private sector will have to pay a decent living wage. If we apply Osbourne’s formula that it will always ‘pay to work’ rather than live on benefits, we need to take into account that benefits are to be capped at the average working family income. Surely this means that salaries will need to be at least average if not better.
Let’s hope the private sector are up to it. I’m not a cynic by nature. Maybe good things will come of this. I recently had lunch with an old friend who was now working for a large international company providing a range of services – school dinners, construction, office reception to name a few. She worked in the bit that ran prisons and she described an organisation committed to the rehabilitation of its prisoners and providing the kind of working conditions and development opportunities that enticed workers to leave the public sector and come to them. I’m hoping that the ‘sober decade’ will give us a private sector that carefully balances self interest with a strong sense of what is good for our society as a whole.