When is a 25% cut an increase? In the case of the public sector cuts, when you want to communicate your strategy, create an imperative for change and protect your reputation. Let me explain.
I feel a little sorry for Lord Young. He has been lambasted in the press for saying “You never had it so good”, thereby undermining the government’s message and ignoring those who have found the recession hard on savings and jobs. The Guardian say Labour want him sacked. The BBC has him apologising. The FT gives you the speech.
But read a little deeper (or listen a little more) and behind the hubris there are some truths in his statement. For instance we all know there are 25% cuts and massive redundancies planned for the public sector. Six hundred thousand jobs to go over five years. Quangos being decimated. One council I know is cutting £150m off its £450m budget.
Yet Lord young has let the cat out of the bag by telling a truth that the government has hidden away in its figures. All these cuts amount to spending staying the same as the 2007 budget in four years time. Over five years there is a £9 billion pound increase in public spending compared with 2010. Yes I said increase. If you don’t believe me the source is the Bank of England briefings and their quarterly forecast, but you will have to download the report to find the details.
So what is going on?
Well the government are being smart on two counts (and this is the communicating strategy piece).
- If they convince the money markets they are being prudent then the pound will remain strong and the currency protected. It’s about avoiding the situation the Irish, Greeks, Portuguese and Spanish are in (and a few others as well).
- It is about creating an imperative for change in the Public sector.
The main point, is that they are creating an imperative for change in the public sector by publicising the size of the cuts. Also the 25% is true of some sectors, but not all. Some budgets are ring-fenced. So instead of all getting a 5% cut, (Salami slicing) some budgets are protected and others have to take a larger slice of the action.
What does this mean for you, if you are in the public sector and managing the message of cuts?
Well as I started my talk at a public sector conference last week, it’s very useful. They are helping you create the imperative for change, which means that making changes will be easier. You then have still to work out where you are going to go and how to make the cuts, choosing what to do and what not to do.
But remember they are helping you build the imperative for change.
As I re-framed the issue for the audience the other day, there is a big difference between
- “The government is making cuts”
- “We are in the business of public sector service provision and have a responsibility to run it as effectively and efficiently as possible”
Foolishly, Lord Young opened the bag with the cat in, at the wrong time, and is paying the price very publicly as others jump to close the bag before the cat escapes.