Not efficiency at all

The coverage of, and reaction to, the report of the Auditor General has inevitably concentrated on its headline message about the need to reduce staff in the public sector. The overall conclusion is that the sector somehow needs to deliver more for less.

How practicable is that, in reality? I was interested in the conclusions of the report on the mass of so-called 'efficiency savings' which the government and local councils have claimed to be making over recent years. The key sentence for me was:

"The report has also highlighted concerns that 'efficiency savings' have all too often resulted in cuts to services rather than any real improvement in efficiency."

I can't say that I'm in the least bit surprised. Indeed, it chimes very much with a point I made some time ago. The phrase 'efficiency savings' is one that politicians - of all parties - seem to like. Just like cutting waste or reducing 'red tape' and 'bureaucracy' (or motherhood and apple pie) it's something that no-one can really argue against.

However, the way it is implemented is usually for a budget to be cut and the relevant budget holder told to manage on less. How that is achieved is up to the budget holder, and more often than not, the savings owe more to reducing (or 'redefining' - another good jargon word) the services being provided, rather then delivering them more efficiently.

The Auditor General has bluntly summarised what a lot of us knew already - that an awful lot of public sector 'efficiency savings' are nothing of the sort; they are cuts to the services being provided, just re-labelled to sound like something rather less unpleasant.

Does it matter?

At one level - no, not really. We all know that there is a need to re-evaluate priorities, and some of the savings being made (cutting the grass less often, for instance) are hardly major threats to the quality of life for most of the population. But at another level, I think it does matter. Politicians who pretend that budgets can be cut purely or largely as a result of being 'more efficient' or 'cutting out waste' are being less than honest with the electorate.

Public bodies which simply list all their budget reductions as 'efficiency savings' make it difficult for the public to identify where there are real cuts being made. And it's hard to have a proper discussion about priorities if politicians continue to give the impression that budget cuts can be somehow painless.

It would be nice to think that the report of the Auditor General, in highlighting the transparency of the politicians' cloaks, might usher in a more honest debate about the effect of budget cuts. I won't hold my breath, though.

Competing for customers

More and more counties are now preparing their plans to re-organise secondary education at the behest of the Assembly Government, and it seems that more and more counties are going to find themselves in the sort of battles which people in Carmarthenshire have been fighting for many months already.

Although not all the councils are coming up with completely identical solutions, the similarity of approach seems to me to undermine the oft-repeated claim by the Assembly Government that this is not being driven from the centre. I have suspected for some time that whatever is being said publicly, this is, in practice, a central agenda, being driven by a combination of carrot and stick.

Part of the rationale, of course, is the Measure passed by the Assembly under which it has been decreed that all pupils must have a choice of at least 30 subjects in years 12 and 13. Whilst there are good arguments for ensuring a wide range of choice, ultimately the figure of 30 is pretty arbitrary. Why not 29, or 31?

But the effect of the number is highly significant, and is leading directly to the closure of some sixth forms, and the merger of others. It's been set at a level which effectively guarantees that counties will have to close or merge a number of smaller secondary schools. I do not believe that is merely coincidental. It's surprising that this arbitrary decision has not been more strongly challenged.

Another factor is the way in which FE colleges were given such a high degree of independence that they are now directly competing with schools for 'customers' (pupils or students to the rest of us!). Yes, that's right, in some of our most rural areas, where critical mass is so important in enabling viable numbers on courses, we have two sets of institutions competing for students, and offering the same courses in the process.

It's set to get worse. Although, in theory, schools and FE colleges can collaborate to reduce duplication, it seems to me that, on current direction of travel, FE colleges – currently looking at mergers and consolidations anyway - will be subsumed into HE institutions in the fairly near future. The result will be that 'school' education finishes at year 11 (GCSE year), and education beyond that happens at multi-campus HE institutions.

That may be the right thing to do, although I happen to be highly sceptical about it. But my real concern is that it is happening by stealth, without adequate public debate or scrutiny.

How far they have fallen

Lord Adonis is absolutely right to call for both sides in the BA dispute to resume talks. Discussion is ultimately the only way of seeking to resolve any industrial dispute, and the inevitable disruption which will result from a strike is something no-one really wants. I can't believe that anyone - least of all the staff who will lose pay - really wants to see the strikes go ahead.

Adonis is also entitled to hold, and to express, his own views about whether the strike is or is not justified, although I'm not convinced that doing so is necessarily helpful to the settlement of the dispute. But the phrase that really struck me was towards the end of his interview today, where he called on the union to "put the company first".

A Labour minister suggesting that the proper responsibility of a trade union is to put the employers' interests ahead of those of its members is a staggering indication of how far that party has moved away from its roots.

Carrots and sticks

In a recent debate about how to change lifestyles in order to reduce the dangers of climate change, a point came up about giving people incentives to do the right thing. I wonder whether we don't need to turn that round, and start talking about increasing the cost of doing the wrong thing.

It's quite a tough call for a politician to make, and I can easily see why so many avoid the question, and keep harping on about incentives. Making some things cheaper, rather than making others more expensive, is always likely to be the most popular option.

But making some things cheaper always involves an element of cost to taxpayers – either through direct subsidy or else through some sort of tax break. The first increases the expenditure; the second decreases the income – both will only add to government deficit. At a time of healthy government finances, it's possible to do more on the incentive side of the equation. At a time of rather poorly government finances, we may be unable to provide all the incentives that we might want to provide.

That can leave us with a pretty stark choice – either do nothing, or else deliberatly increase the cost of those things which we need to stop doing or reduce the frequency of doing.

As an example, I believe that we should make more use of rail travel for many journeys, and less use of air travel. Increased public investment in rail, and subsidies to keep train fares low are both things that I support. But I also support ending the anomaly under which petrol and diesel are subject to fuel duty, but aviation fuel is not.

The first is likely to be popular; the second rather less so. I really do think though that the days of considering only the carrot are inevitably going to be constrained by the financial crisis, and we should not be afraid to say that.

Prestidigitation

Passing the buck is not unique to the public sector. I can remember working for one company where I was expected to waste hours of my time arguing whether costs should really be in my cost centre or someone else's, when I felt it would actually be more productive for me to spend that same time trying to improve the overall bottom line.

But, when bonuses and targets are set on the basis of departmental targets, the result is to encourage behaviour which works against the overall greater interest. Something similar happens in local government...

Another of Carmarthenshire's wizard money-saving wheezes is to stop maintaining public conveniences and pass the responsibility to town and community councils. The move will apparently 'save' £100,000 each year, and is one of a number of plans the county council has to 'allow' town and community councils to take over services currently provided by the county council.

It's not really a saving at all of course – it is merely a transfer of cost from one public body to another. But I suspect that we can look forward next year to hearing the council leader praising her own council for its good management in reducing costs, whilst attacking town and community councils for the likely increases in their own council tax levels to pay for the transferred services.

This is no saving at all – it's not even a particularly clever conjuring trick.

What day of the week is it?

I've mentioned a few times before that the Tories locally seem to have a particular problem with numbers and mathematics. It seems that the problem also affects their grasp on the calendar. The above is taken from the calendar which they kindly distributed to households in the constituency. I'm told that people found it quite useful, until we got to March, when confusion set in.

It's the first time that I've been able to accurately and honestly claim that a political opponent doesn't even know what day of the week it is.

Rationalisation and centralisation

The collapse of plans for a number of local councils to pool certain functions has inevitably led for calls from some to force local councils into co-operating. The Western Mail editorial leads the way with a suggestion that if councils won't share functions voluntarily, then the number of councils should be reduced.

There is a question here about whether the proposed rationalisation should ever have been restricted to local government anyway. If we want a single centralised payroll system for ten councils, why not for 22? And why not include the NHS? Why not, indeed, a single payroll system for the whole of the public sector in Wales? What makes one particular combination 'right' and others 'wrong'?

As I blogged recently, I don't necessarily disagree with the notion that Wales has too many councils, and should re-organise them, but I think we need to start by asking what they are for. The problem with most of the calls for a reduction in the number of councils is that they seem to start from a pretty subjective statement such as "Wales doesn't need 22 Directors of Education", rather than from the question "What's the best way of delivering education services in Wales?".

And it isn't just about education, of course. Local government provides a whole range of services - on what basis do we start with the assumption (which is where most seem to start) that the best way of delivering one service is the best way of delivering all services? Does the structure for delivering education need to be the same as that for delivering leisure services, for instance?

We have an Assembly government with highly centralising tendencies, which is regularly reducing or constraining the scope for local government to add value and make a difference. It sometimes seems to me that differences between Wales and England are considered by some to be perfectly acceptable, but differences between Cardiff and Newport are not.

I find it fascinating to see some arguing for allowing the Assembly Government to do things differently, and then arguing that that same government should enforce a standard approach across Wales' local authorities. This is a particular challenge for those like myself in parties which have traditionally called for more decentralisation. Real decentralisation has to be about more than passing money from the centre to the local authorities and then telling them exactly how to spend it.

I'm not against a reconsideration of local government structures - far from it, I think it's overdue. But we need a proper review, not a knee-jerk reaction. And I think that, as Plaid said in our 2007 manifesto, we really need to look at the governance of Wales as a whole.

The Ashcroft Loophole

At first sight, the announcement by the Electoral Commission last week seemed to be saying that there was nothing at all wrong with the donations made to the Conservative Party through Bearwood Corporate Services (BCS). However, when one looks at the detail, it seems to be, as the Sunday Times put it yesterday, more a case of 'not proven' than 'not guilty'.

The paper went on to say:

'The commission made it clear that it had been unable to find out exactly where the money donated to the Tories by BCS had originated. Papers had been destroyed and the commission had been “unable to obtain any meaningful information” from a Belize company that owned shares in BCS.'

In short, many months of investigation by the Commission have not got to the bottom of the matter, and that has been a result, in no small part, of the Tory leadership being evasive and obuscatory, the relevant Tory officers and staff refusing to attend interviews with the Electoral Commission, and those others directly involved in the matter being singularly uncooperative.

Even the key finding, which is that BCS was 'trading' in the UK, and therefore eligible to donate seems to skip over the fact that the donations were definitely not the result of that UK trading. This seems to expose something of a loophole in the law. On this basis, any company which processes at least one invoice for goods or services supplied in the UK can then proceed to donate millions of pounds without having to disclose where those millions came from.

I don't know what the expectations of those passing the law were, but I would have thought that they would have supposed that a company would be making donations from the profits on its UK activities, yet BCS appears to have made massive donations even when trading at a loss.

In fact, BCS seems to have created millions of new shares in itself, sold those shares to another company or companies in the Ashcroft empire, and used that new-found capital to make its donations. Since the shares were not traded on any open market, it's hard to calculate their worth at the time of their purchase; but the decision to then donate the capital raised to the Tory Party effectively rendered those shares worthless thereafter, since the company had turned capital inflows into revenue outflows.

This loophole, which effectively allows donations from overseas which would be illegal if made directly to then become legal, needs to be plugged. It makes a complete mockery of the law, and politicians exploiting loopholes to avoid the intention of the law should be ashamed of themselves.

Still Digging

The news that Cameron didn't know about Ashcroft's tax status until this week, and that Hague didn't know until a few weeks ago, is pretty astonishing, given that questions and rumours have been circulating for so many years. After all, his lordship has been a key member of the top campaign team for several years and has an office as part of the Conservative HQ structure; successive Tory leaders must have been talking to him on a fairly regular basis.

Yet, assuming that the current Tory leader is telling the truth (and I think we should), we are effectively expected to believe one of two things.

The first is that Cameron (to say nothing of Hague, Duncan-Smith, and Howard before him) never felt that there was any need to ask Ashcroft the question, despite it being asked of him on a regular basis. He preferred to ride out the regular criticism and questioning than to ask one simple question. If this is true, it's diffficult to avoid the conclusion that he had a pretty good idea what the answer would be, but preferred to retain what Nixon memorably called 'credible deniability'.

The alternative is that he did ask the question, but was told to mind his own business, a response which he quietly accepted and did nothing more about. I find it hard to believe either of these, but surely one or other must be true.

All parties, from time to time, have people who for one reason or another are a potential source of embarrassment. I've always believed that it's better in the long run to risk a bit of bad publicity for trying to deal with a problem when it comes to light than to risk a great deal of bad publicity by turning a blind eye.

It looks very much as though four successive Tory leaders have preferred to attempt to ride out the storm for a whole decade - blinded by the vastness of the fortune directed their way. At the moment, I seem to be hearing the sounds of chickens coming home to roost.

Economic Renewal

There was quite a lot of comment last week about the article from Ron Jones of Tinopolis. And the article itself was certainly hard-hitting. But was it entirely fair?

Certainly, drawing attention in a forthright way to the fact that, after all the time and effort directed towards trying to strengthen the Welsh economy, we are still lagging behind is a fair point to make. And I also tend to agree with his assertion that the public sector 'stole' Objective One, although I might not have put it quite in those words. It certainly did not get spent in a way which lifted Wales long term economic performance, which was supposed to have been the original intention.

His comments on the ways in which Wales has suffered from the centralisation which followed nationalisation, and his criticism of attempts to shore up failing or doomed industries also strike a chord.

I do think though, that in some ways, he (and even more so, some of those who have responded to his comments) seems to have looked at the issue over too short a timescale, certainly when it comes to criticising the performance of the Assembly Government since 1999. And I really do think that it's unfair to simply try and pin the blame on the current incumbent at the relevant ministry - and I don't say that just because he's a Plaid minister.

I'm not saying that there aren't some valid criticisms of government policy to be made - merely that the problem has been with us for a long time, and that expecting the situation to be turned round in such a short time is unrealistic. That said, it is surely clear that a change of direction is needed. Carrying on with the policies and approaches of the past was probably inevitable during the first years of the Assembly, but we should have identified and started out on a new direction by now.

On solutions, though, Ron Jones' article was more than a little lacking. It's always easier to criticise what others are doing than to suggest an alternative - that's something which politicians know only too well, of course.

I share at least some of his concern about any government responding by producing yet another strategy – I've previously expressed concern myself about the plethora of strategies and the dearth of clear action plans. Part of that reflects a limited ability to act in some areas, but it would be a mistake to try and hide behind that. However 'Ready, Fire, Aim', is not likely to serve us much better than 'Ready, Aim, … er… that's it', and we need at least some idea of what it is we're trying to achieve.

My biggest worry about the Economic Renewal Programme is not the fact that it is happening, nor the unfortunate wording of the first objective (an open goal for Ron to shoot into), but the fact that it is planned to take up to nine months to complete before it can be implemented. That smacks a little of excessive concern for the partnership and lengthy (and ultimately meaningless) stakeholder consultation of which government seems to be so fond, rather than the short sharp exercise which any private sector organisation would undertake at this point. Nine months is more than enough time to refocus and reorganise an entire multi-national corporation – and to do so at least twice.

For me, the key elements of any revised strategy for driving economic growth in Wales have already been identified by Ieuan – a switch from dependence on trying to attract footloose multi-nationals to an emphasis on nurturing and developing local enterprises, and an emphasis on building growth around industries and activities which support rather then undermine our commitment to reduction of the carbon footprint. Sounds very simple, but it would be a mistake to underestimate the significance of those two changes in terms of economic policy.

Our biggest need is to get on with it – on that much, at least, I can agree with Ron Jones.