People have different ideas on what makes public services viable. If you take the purpose of services such as the NHS to be meeting the needs of the population, then it is almost inevitable that, at times, they will run at a deficit, as government funding lags demand. This is certainly true of many NHS Trusts at the present time; financial difficulty is not a proxy for the quality of services being delivered.
The corollary in the private sector is that super profits are no indication of a quality service either. It is often assumed that the more profit a company makes, the better the service or product that it delivers or makes – but this is lazy thinking. Key public services operate based on need, regardless of the profitability or convenience of the service user; private companies have no such restriction, and can pick and choose their market based on the path of least resistance.
A consequence of this difference is that public services need staffing levels that match the amount of need – at all times. This is incredibly difficult to achieve. If we think of health, especially, there are some trends you can predict, such as increased incidence of colds and flu in the winter months, but there will always be significant variation from month to month and year to year.
One way to deal with this is through temporary staff, but it’s difficult to get enough people in that way, and it’s hard to obtain that kind of flexibility without taking a hit on quality, which is why hospitals increasingly turn to private agencies to plug the gaps. This, in turn, leads Ministers to panic over what they see as an excessive reliance on temporary agencies. Yet this expense is a symptom, not the ultimate cause. The ultimate cause – whether in the NHS or in other parts of the public sector, including social care, schools and social work – is a chronic recruitment shortage.
Politically it’s undesirable for Ministers to recognise this fact. But a fact it is. Partly, it’s due to ineffective recruitment programmes, which often require a financial commitment on the part of the student. But a lot of it is also due to dismal retention rates. Take teachers, for example: reports in the past 18 months suggest that two-fifths of teachers leave the profession within five years.
Why is it so difficult to keep public sector workers in their posts? Because the work is hard, the pay is low, and the pressure placed upon you by the government is well nigh unbearable. The workload experienced by state school teachers is well-documented, but nowhere is the stress of the public sector more obvious than in social work. Here is a profession which requires you to work closely in some really difficult, knotty situations: where hard cases lead to unfair dismissals and obscenely large compensation payouts. As soon as you attempt to intervene, you are accused of nanny statism. And now the government is moving to stigmatise the profession further by criminalising service failure – threatening to throw ordinary social workers, teachers and councillors in jail for wilful neglect. Who would want to have to find the balance between these two extremes?
So even before Wednesday’s Budget we had the makings of a perfect storm on public sector recruitment: an existing shortage, a crunch in recruitment, and terrible retention rates. I could also talk about the effect of the government’s attempts to shut down immigration routes, which are also highly relevant. But the Budget adds to this storm in two highly significant ways.
The first is the “national living wage”. Amid the furore over the terminology and the impact on business, it’s been little noted that one of the main sectors most affected by a higher minimum wage will be social care. Of course, most providers of social care are private businesses, but they are paid by the public sector, and the providers find it incredibly difficult to find and retain good staff. Social care services spend about 60% of their entire budget on staff, so an above-inflation increase to the minimum wage creates huge cost pressures. And this is against a backdrop of continuing punitive cuts on local government – the purchaser of such services – which has meant a long-term freeze on the fees paid to providers. It’s entirely possible that smaller social care providers will be forced out of the market as a result of this Budget, at a time when demand for such services is inexorably rising. Sooner or later, the system is going to fail, we will see more incidents of bad care or even abuse, and the victims will be vulnerable elderly people.
The second, which is more widespread, is the decision to cap public sector pay rises at 1% for the next four years. This is an outrageous decision that, at a stroke, makes recruitment far more difficult. Ok, at the moment inflation is running low enough that 1% would actually be a real terms pay increase; but compare that to average weekly earnings to April 2015, which rose at a rate of 2.7%. It’s important to remember that the public sector has to compete with the private sector for staff: what’s the incentive for an energetic, ambitious, skilled young person to go into teaching or care or nursing here? At some point, “vocation” is not sufficient to bridge these gaps – and the situation we’re in suggests we reached that point some time ago, so we don’t need to widen the gap further.
So what’s the result of all of this? It seems clear that the current government has taken the decision that vital public services can be allowed slowly to dwindle and die, to be replaced by a patchwork of private sector providers motivated by profit. The contradictory motives and ethe involved in this approach will eventually be unsustainable.
It would take a huge commitment of political and financial capital to turn this listing ship around.
CORRECTION: This article previously mentioned a claim by the Association of Teachers and Lecturers that 40% of newly qualified teachers were not in teaching after a year. This has been comprehensively debunked, for example here, so I have removed the reference. I’m grateful to Damian Counsell for pointing out the error.