Cross-government Cost-cutting

Lord Rees of Ludlow Excerpts

Wednesday 21st December 2022 Lords Chamber

[Lord Rees of Ludlow (CB)]

My Lords, I pay tribute to the noble Lord, Lord Bird, for instigating this debate and for his fine opening speech, and above all for his lifelong campaign to promote a fairer society.

We should welcome some savings—for instance, tightening of terms of procurement contracts and cutting the number of consultants—but most cuts are far too drastic to be absorbed by efficiency savings. Indeed, they add to costs. The gross inequalities in our society and the poverty and insecurity suffered by the sick, the old and the low paid have of course been aggravated by two events beyond our Government’s control: the Covid pandemic and the fallout from Ukraine. But the impact has been worsened by the Government’s policies; in particular, their reluctance to raise taxes.

We have learned from recent crises that there is a trade-off between efficiency and resilience. I have two examples: first, dependence on long supply chains, allied with just-in-time delivery, can be a false economy if large-scale manufacturing is jeopardised when one link in the chain breaks; and, secondly, although it may be efficient to have 95% utilisation of intensive care beds in hospital, it is prudent to bear the cost of spare capacity to cope with emergencies. It is unrealistic to claim that crises in our schools and hospitals can be solved by efficiency savings alone. These institutions are forced to pinch and scrape to make savings, which can lead to reduced efficiency because of decaying infrastructure, outdated IT, falls in staffing and staff morale, and so on. Our expenditure and outcomes have fallen below those of other advanced countries, a contrast starkly spelled out, incidentally, in a coruscating article in the latest Economist.

I had the privilege of being on the Times Education Commission, the subject of a recent debate in this house instigated by the noble Lord, Lord Lexden. An especially moving section of its excellent report highlighted the problems at preschool level. A head teacher of a northern primary school recounted that many children in reception classes could not say their name and were not toilet trained. This was a consequence of the shutdown. Home schooling was a reality for children with educated and well-resourced parents, but absolutely not for children of disadvantaged and insecure parents. Even before Covid, this contrast had grown starker because of the closure of around 1,000 Sure Start centres. It will be hard for these kids to catch up after facing such deprivations at the beginning of life. For them, equal opportunity is a sham.

At the end of life too conditions for the disadvantaged are shamefully aggravated by austerity. There is an almost decade-scale gap in life expectancy between the rich and the poor. We all know that it is the underfunding of care homes, distressing for the old and sick, that leads to the overwhelming of hospitals that endangers all of us.

These inadequacies cannot be cured by efficiency gains. The predicament that we are in surely calls for a rise in some taxes—for instance, on multinationals, on six-figure salaries, and on dividends and capital gains. Our nation should emulate the US less and northern Europe more, to sustain public services that we can be proud of and which allow the rising generation to fulfil their potential in a more secure and equal society.