UK: Competitiveness

Lord Tugendhat Excerpts

Tuesday 8th June 2010 Lords Chamber

[Lord Tugendhat]

My Lords, I thank the noble Lord, Lord Levene, for introducing this debate. He is my colleague on the Economic Affairs Committee and I know how strongly he feels about the subject. I should also like to express my delight at the appointment to the Treasury team of my noble friend Lord Sassoon. He brings a great deal of varied experienced to the post and will I am sure provide exactly the same strength of reinforcement to the government Front Bench as the noble Lord, Lord Myners, did under the previous Administration.

I approach this debate from a different angle from those that other noble Lords have spoken about. For the avoidance of any misunderstanding, I should state at the outset that I am the chairman of the Imperial College Healthcare NHS Trust. I was prompted to intervene by the Prime Minister's speech yesterday on the severity of the forthcoming public expenditure cuts. I support the objective of reducing the deficit. I support, too, the aim to cut waste, re-examine the role of government and, where appropriate, to shed functions, to make the economy more competitive and, over time, to make society better. But if the Government are to carry through their deficit reduction programme without damaging the economy let alone improving its competitiveness, the Government will need to mobilise all the support, skills, resources and dedication of managers in the public sector.

To put it in military terms, Ministers are the generals who issue the orders. The managers in the public sector are the troops who will have to carry through the fighting. By that I mean that they are the ones who will have to implement the spending cuts, choose which programmes to axe, initiate the redundancy programmes, renegotiate the pension plans and carry through the closures. That is a very difficult programme. I therefore urge Ministers not to repeat the error that the Thatcher Administration fell into of associating cuts in public expenditure with the denigration of the public sector managers whose task it is to carry them out. I was chairman for some of that time of the Civil Aviation Authority, which in those days incorporated the National Air Traffic Services, since privatised by the Labour Government, and I know what damage the denigration of public sector managers did and how much harder it became to recruit good people into the public sector to do the difficult jobs that were required.

I fear that we are already hearing in the background far too many murmurs about pen-pushers and bureaucrats ripe for the slaughter, as if the cutting of public sector jobs is in itself an objective rather than a necessary cost of what is being undertaken. Of course the Government want to maintain front-line services and to free the professionals who staff them to get on with their jobs, but they must remember that doing that in a time of cuts requires skilful and careful managers—the fewer the resources, the greater the management challenge. The cost-effectiveness of those programmes and thus the competitiveness of the British economy will suffer without the skill and the support of public sector managers. The same applies to the redesign of the management structures, the taking out of layers of management, the streamlining of functions and the consequential loss of management jobs. All that will, I know, be necessary, but it should be seen for what it is—a necessary public service that will make the services themselves more robust and more effective—not as a reason to rejoice in the fate of those who pay the price with their employment.

We hear a great deal from the Government—and not only from the Government—about the importance of improving the quality of management in the private sector in the British economy and we hear a great deal about what the public sector can learn from the private sector, as it can, although there is also a reverse process. However, we need to bear in mind that, if the Government are to carry through their programme, which I support, they will need the support of managers in the public sector. I urge them to value those managers and to show understanding of and sympathy with what they will be required to do and the losses that some of them will suffer. The Government should avoid the mistake of conflating reductions in public sector expenditure with the denigration of those who have to carry them through.