The public sector is all too often “bloated, over-centralised, incompetent, and unaccountable”, said the Liberal Democrat Shadow Chancellor Vince Cable in his keynote speech to the Liberal Democrat conference this week.
Cable is a former chief economist at Shell International. He said: “We’ve got to stop the gravy train of management consultancy in government; stop questionable government IT projects like that for the NHS and insist that procurement is from the cheapest, open source, and take an axe to the overgrown thickets of quango land.”
He said he believes that there are areas where more public money could usefully be spent: on schools, further and adult education; mental health; law and order; the state pension.
“Despite being a tight fisted Treasury spokesman, I support selective increases in public spending. But we also need to challenge in a fundamental way many of the things which government spends money on…
“The coward’s way is to sack or squeeze the pay of low paid public sector workers. The correct way is to start at the top: require every non-front line public sector employee on £100,000 or more to reapply for their jobs. Those allowed back would take a cut in pay and public sector pension entitlement…
“The message must be that government should do fewer things well, rather than many things badly. And that will help to give us the resources to deliver Nick Clegg’s commitment to handing money back to ordinary people.”
Cable, like the Tory MP Richard Bacon, has a strong grasp on government IT matters. This is his speech in full:
Last year when I spoke to you we were preparing for an election. Gordon Brown was enjoying a political honeymoon. Since then he has gone from Mr. Boom to Mr. Bust in record time.
His claim to have delivered prosperity and economic stability is dissolving by the day in the acid bath of recession.
Custom dictates that I should make some jokes at his expense. But I have already done enough of that. I am not a sadist. I have no wish to kick a twitching corpse.
I want to turn my attention instead to the plausible, oleaginous, well-bred salesmen who are marketing a new brand of snake oil: the Cameron Conservatives.
They resemble one of those phoney, American religious cults. Unlike the nasty Old Tories, the Latter Day New Conservatives seem warm and welcoming.
Any references to frightening Old Testament prophets like Margaret Thatcher and Norman Tebbit have been deleted from the scriptures.
Instead they preach the gospel of St. Anthony (Blair), their spiritual inspiration.
The door to Cameron’s heaven is wide open – unless you are overweight, or from the North of England.
The rich are especially welcome and the need to pass through the eye of a needle has been waived – provided large cheques are made out to the Latter Day New Conservatives.
The Book of Zachariah (aka Goldsmith) explains the new creed: “Truly blessed are the Super-rich”.
This explains the growing missionary activity overseas with flourishing branches in Europe – in Monaco and Liechtenstein – and in the Third World – in Belize.
There will be miracles. Mr Osborne, like Mr. Cameron, a graduate of Oxford’s Bullingdon Theological College, will perform the miracle of the loaves and fishes on the public finances. The sick will be healed without additional health funding. Water will be turned into cheap petrol.
They now promise us the ultimate miracle: Tory ‘fairness’. There are, no doubt, people who believe that North Korea is a democracy, or that the BNP promote’s racial equality, or even that pigs can fly.
But even people who believe that pigs can fly, struggle to get their heads round the idea that the Tories are the party of ‘fairness’.
Their new policy is to share the proceeds of recession. If there are any proceeds to share their top tax priority is to lift millionaires – indeed double millionaires – out of inheritance tax; his second is to remove the burden of stamp duty from share dealers.
The Cameron Conservatives want a marriage based tax system which will punish widows and women escaping domestic violence through divorce because they are no longer married.
That’s what Tories mean by fair taxation.
In the competition for converts it isn’t just Brown’s Labour Party which will be under pressure.
We will also be faced with an onslaught of the Conservatives’ vacuous friendliness and all embracing emptiness.
We therefore have to offer a more deeply rooted, more principled, alternative, a clearer analysis of why Britain faces a growing crisis; and a more honest statement of what the Government can and cannot do.
We are now in the middle of a major financial earthquake. This time last year we had the collapse of Northern Rock. Today we have the collapse of one of the world’s largest investment banks – Lehman Brothers. Some people say this is the curse of the Lib Dems.
But more seriously, this is clearly a crisis of far reaching proportions. The Government didn’t cause this crisis. But its biggest folly has been hubris: the delusional claim to have abolished the boom and bust cycles to which all capitalist economies are prone.
They forgot that financial success breeds excess; unearned rewards feed greed; and overconfidence leads to folly.
New Labour incubated a culture of financial gambling with other peoples’ money which has contributed to the collapse of trust in financial institutions. It also bred a dangerous dependence on debt.
You will have heard me, every year, warning that British families were acquiring unsustainable levels of debt. Most of this debt was secured against the illusory ‘wealth’ of rising, vastly inflated property prices. People have been encouraged to believe they would rise for ever and ever.
Those of us who warned of the dangers were initially treated as eccentric, then as scaremongers and prophets of doom. But we were right.
We now see the inevitable consequences of a bursting market bubble. Many houses cannot be sold. The house building industry is collapsing. Banks’ balance sheets are drenched in red ink.
Millions of families face negative equity. Those who cannot service their mortgages face the threat of repossession. Many families are worried; some are scared. We have the credibility which goes with having warned of the dangers.
We must use that credibility to spell out, honestly, what can and cannot be done:
The Government must not try to prop up house prices which have to fall back to a sensible level which makes housing affordable for ordinary families
The Government must not compromise the independence of the Bank of England by telling it to slash interest rates and generate another dangerous inflationary ‘bubble’.
It must not underwrite new mortgage lending by the banks. It is simply not acceptable to socialise losses and privatise profits. Overpaid financiers rattling their begging bowls and demanding help from the taxpayer should be sent packing.
There are, however, sensible practical things which can, and should be, done:
Social landlords should have more freedom to acquire surplus property and land to provide homes for those in need on housing waiting lists.
Lenders must be stopped from pushing thousands of families into homelessness through repossession.
There has to be effective regulation to stop a repetition of the binge of irresponsible lending.
And, more fundamentally we need to confront our national obsession with property. Houses are homes to live in; not gambling chips.
Britain has also experienced another price shock, from oil. Living standards in Asia are rising rapidly: something we should welcome. But demand is now outstripping supply.
High prices are an advance warning of the need to move rapidly to a post-oil economy.
Many people ask: since Britain is an oil producer, why can’t we have cheaper oil? In fact our own production is falling rapidly. Over a quarter of a century a valuable resource has been squandered.
By contrast, look across the North Sea to Norway. They could easily afford to have the cheapest petrol in Europe. But in reality they have chosen to have the most expensive petrol, and diesel, in Europe.
Why – you might ask – are Norwegian road hauliers and motorists not rioting in the streets of Oslo?
They aren’t because instead of the gimmicky populism espoused by our Conservatives and Scottish Nationalists, their political leaders say that resource conservation and the environment must come first. They advocate ‘green taxes’ on oil. Britain needs a political party with the courage and maturity to spell out the same message.
But there will be a great deal of pain from the coming recession. What makes pain worse is the knowledge that it is unfairly distributed.
It isn’t possible to have a sense of society, let alone of patriotism, when hard-working families and pensioners pay through the nose while others don’t pay their share and dodge taxes through tax havens or tax avoidance scams.
I keep reading in the press that some of our activists don’t like the language of tax cutting; they think it is “right wing”.
But I don’t see what is “right wing” about wanting to cut the taxes of millions of people who earn less or barely more than the equivalent of the minimum wage.
We know from the backlash against the loss of 10p rate just how strongly low and middle income households feel about tax.
Standard rate taxpayers currently pay 31 pence of every extra pound they earn on their income to the tax man. And that is on top of what is clawed back through wickedly over-complicated means-tested benefits and tax credits.
Any rational person faced with this wall of disincentives will ask “why bother to work?”, “why bother to save?”
We have not just an opportunity but a duty to confront this problem head on: to become a tax cutting party.
Nick Clegg is absolutely right to have made this issue the central focus of debate for our party.
Tax cuts cannot, of course, be conjured out of thin air. We say that tax cuts should mostly be paid for by those who currently don’t pay their fair share.
How can it be right that the rate of tax on capital gains on second homes is less than half what it was under Nigel Lawson and Mrs Thatcher or half that on earned income?
How can it be right that people with million pound pension pots don’t just have more tax relief but a higher rate of tax relief on their contributions?
How can it be right that failed executives paid massive sums in golden goodbyes can claim the first £30,000 tax free?
This must stop. We must declare war on the anti-social practices of rich individuals and companies who avoid tax.
We should target tax havens in our dependent territories. I was brought up to feel proud of atlases covered with the red of the British Empire. But it is now a source of shame that the last few bits of British rock have been turned over to tax dodgers from the Channel Islands to the Cayman and Virgin Islands.
Britain’s hard-pressed taxpayers might well ask why our country’s biggest retailer, Tesco, should be packing up billions of pounds of British property in the Cayman Islands to avoid stamp duty.
Now, some of you might say: if you can raise more tax from the well off and tax dodgers why not spend it on public services rather than cutting taxes?
I am often told that in Sweden or Denmark people are happy to see half the country’s GDP raised in tax and publicly spent. There is a difference.
These are highly decentralised democracies which raise far more tax – including income tax – and make big spending decisions locally. There is real democratic accountability.
We must be committed to working towards those structures in Britain, decentralising from central to local government.
But in the meantime we have a public sector which is, all too often, bloated, over centralised, incompetent and unaccountable.
I believe that there are areas where more public money could usefully be spent: on schools, further and adult education; mental health; law and order; the state pension.
Despite being a tight fisted Treasury spokesman, I support selective increases in public spending.
But we also need to challenge in a fundamental way many of the things which government spends money on.
We have already spoken out against industrial subsidies and payments to big farmers, the unnecessary Child Trust Fund and the means-tested tax credits which extend into the upper income range, ID cards, superfluous and extravagant defence contracts mainly designed to fill the order books of defence contractors, and widening further the bottomless financial pit of the nuclear power industry.
We’ve got to stop the gravy train of management consultancy in government; stop questionable government IT projects like that for the NHS and insist that procurement is from the cheapest, open source; and take an axe to the overgrown thickets of quango land.
The coward’s way is to sack or squeeze the pay of low paid public sector workers. The correct way is to start at the top: require every non-front line public sector employee on £100,000 or more to reapply for their jobs. Those allowed back would take a cut in pay and public sector pension entitlement.
And politicians cannot lead a crusade against self-servicing public sector extravagance unless they lead from the front; so MPs and Ministers must accept deep cuts in numbers and fringe benefits like pensions.
The message must be that government should do fewer things well, rather than many things badly. And that will help to give us the resources to deliver Nick Clegg’s commitment to handing money back to ordinary people.
In conclusion, I don’t believe that economic policy is simply a matter of pulling policy levers and making numbers add up. It has to be rooted in a sense of values and a clear narrative about the kind of society we want to see.
I think there is a mood of austerity; A reaction against greed, excess, waste, tax cheating and selfish, self indulgent behaviour; an intolerance of binge lending by banks and binge spending by government; a craving for economic and personal security, sobriety and discipline; a demand that there is respect for fellow citizens and for the natural environment.
No other political party has yet found the language or the policies for this new world. We have. That is our opportunity. There is only one party that has a clear; sound; sensible; and fair; path through this economic crisis. Our party. The Liberal Democrats.
Lib-Dems call for halt to NPfIT – ZDnet, 2008
Lib-Dems call for halt to NPfIT spending – Healthcare ITnews.eu, 2007
Secret Downing St papers reveal Blair rushed NPfIT (including Vince Vable’s comments) – IT Projects Blog, Feb 2008
Vince Cable’s website