Wednesday, 28 July 2010

Coalition broadens its attacks

The fragile Cameron-Clegg Coalition is drawing in more forces with mad but bad schemes to help with the assault on public sector services. And they are using little known, fast-track parliamentary procedures to get their way.

Today, the Cabinet Office launches its early intervention review. It’s a genius idea led by an equally stunning partnership of labour and capital - Graham Allen, Labour MP for North Nottingham and the chief economist of Goldman Sachs, Jim O’Neill.

Like many of the Coalition’s liberal-influenced ideas, the objectives are undeniably attractive. Experiments have shown that it is possible to prevent people falling into drink and drug abuse, vandalism, criminality and joblessness with targeted programmes of education and other forms of early social intervention.

Right-thinking Labourite Allen has been promoting the idea for years, and it fits in beautifully with the Coalition’s approach. The trouble is, cuts in government spending needed to reduce the deficit means there’s no money to pay for it. But don’t despair! Goldman Sachs is at hand, with proposals to draw in private sector investment. It’s really worth trying to get your head round it.

Early intervention saves money that would otherwise have to be spent on keeping repeat offenders and poorer people in prison. So if you can get richer folk to buy specialised investment bonds from the government, and use that money for early intervention schemes, you can pay the investors dividends in the future from the money you didn’t have to spend later on.

No really, they’re serious. Never mind that it was Goldman Sachs that talked the Greek government into the rather similar debt-based schemes that got it into so much trouble, bringing it to the brink of state bankruptcy. Goldman Sachs is after all a very successful, highly profitable company. Able to pay vast bonuses to its senior staff. An example to us all.

At the same time, Cabinet Office minister Francis Maude, a real Tory, and former managing director of investment bank Morgan Stanley, is advancing his campaign against public sector unions. He aims to reduce the cost of outsourcing swaths of government business from cleaning and catering to information technology, health and waste management.

Maude’s plan is to scrap the protection of conditions for workers whose jobs are transferred from the public to the private sector. It will be discussed in the Public Services Forum, a cosy consultation group involving unions and employers who take on outsourcing contracts.

Maude’s latest proposal follows in the wake of his emergency legislation to slash the redundancy terms of 500,000 civil servants. “Thousands of civil servants are sitting around doing nothing because it is too expensive to make them redundant,” he says.

“It is not a good way to treat people, to leave them in limbo with no actual job,” Maude believes. So he’s going to get rid of the current scheme, which can pay up to six and a half years salary, and cap it at 12 months’ salary for compulsory redundancies, but a “generous” 15 months for voluntary ones.

Just to speed things up, Maude has labelled the emergency legislation a “money bill” which limits the Lords’ ability to amend it, and allows the government to put it into effect as soon as it becomes law – which could be in October – without the usual two month delay.

A muted response from union leaders will only encourage the Coalition to press on with its attacks. Rank-and-file members facing the onslaught deserve and need better leadership.

Gerry Gold
Economics editor, A World to Win,
28 July 2010

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