By Colin Borland
The current industrial unrest in the civil service seems, if reported comments are a good barometer, to be polarising the public versus private sector debate.
This is not particularly helpful. Extremists on both sides may pretend that the public and private sectors could or should exist without the other. But, as I have pointed out repeatedly, we live in a modern, interdependent economy in which the public sector is an important actor.
Indeed, judging by the way public service delivery reform is going, our relationship is set to become even more intertwined. We cannot have public services which focus solely on their own patch, in glorious isolation from the local community or economy. Or, as the newly unveiled Christie Commission report puts it, we need to embrace a “radical, new, collaborative culture throughout our public services”.
I would argue that, if we’re being honest with ourselves, we know that the way you achieve this sort of rounded, outward-looking work is to make it pay.
Consider this example. A public body, faced with a shrinking budget, identifies some short-term savings which could be delivered by consolidating a raft of procurement contracts with a single multinational company. On the face of it, it’s great news for them and the taxpayer. However, the knock-on effect over the coming years could be to take trade, revenues, jobs and skills away from the local area.
If concerned only with their bottom line, the wider consequences should not concern the public body – especially if another body or department would need to bear the cost of them. However, if their own budget was to be affected by these wider impacts, then they suddenly take on a new relevance.
I would be lying if I said that there’s a simple mechanism by which you could incentivise sustainable decision-making. But some interesting ideas are out there.
South of the Border, the Deputy Prime Minister, Nick Clegg, shared some of the Westminster government’s thinking on this last week. In a speech to the Local Government Association, he argued that allowing English councils to keep all the business rates they collect will give them an incentive to boost economic growth. (At present, councils collect the rates and pass them to central government, where they are then redistributed.)
Others, myself included, are sceptical. The fear is always that councils who are simply lucky enough to have a thriving commercial district within their boundaries could just sit back and watch the cash roll in. Those where trading is tougher, however, would have even less to invest in making their area a viable business location.
Far more equitable, one counter argument runs, would be to allow councils who take decisions which see a relative rise in rate income retain some of that increase. Thus, everyone starts from where they currently are, with increases only for relative improvements.
When money’s tight, it’s only natural that you examine your spending to see where savings can be made. Without any incentive to do otherwise, though, false economies can look far too appealing.
Colin Borland is Head of External Affairs for the Federation of Small Businesses in Scotland
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