Andrew Haldenby: A productive public sector poses a challenge to the unions - and the Government

Andrew Haldenby is the Director of the pro-market think tank Reform. Its report, "Reformers and wreckers" is available at www.reform.co.uk.

Today's TUC Congress is important because of the barrier that the organisation represents to the Government's public sector reform agenda. This week it will set out its opposition to free schools, academies, reforms to public sector pensions and any variation at all to a publicly-financed, publicly-provided NHS.

The TUC argues that any local management of the workforce means worse services (explaining the opposition to free schools), and that any cut in inputs (headcount, wages, pensions) means worse services. But in a report published on Friday, the Reform think tank published eight case studies of successful public service reform which show the opposite is the case.

It highlighted Denbigh High School in Luton at which a visionary headteacher transformed results by introducing her own development programme for the teachers there. It described the Merseyside Fire and Rescue Service which reduced fires in Merseyside by a half, while reducing the number of firefighters by 40 per cent, because real fire safety means fire prevention, which does not require traditional numbers of firefighters in traditional stations. It described hospitals in India, visited by Reform staff this summer, which have individually taken lessons from leading private sector companies, and which deliver safer care than the NHS as a result.

In fact the retrograde TUC agenda would deliver a low-productivity public sector which could only justify low wages for public sector workers, including union members. The better alternative is a high productivity public sector, and readers of this site will remember that the Conservative Party made exactly that case in Opposition. In November 2009, Philip Hammond, then Shadow Chief Secretary to the Treasury, argued that if the public sector could deliver the same productivity as the private sector, it would save £60 billion a year. 

Some Government policies are line with this, notably the Winsor Review of police terms and conditions, and the freedoms for free schools and academies are important. But others are not.

In particular, the Coalition Agreement says de facto that nobody in the public sector should be paid more than the Prime Minister. But public services, in particular the NHS, need a group of leaders who are willing to take the tough decisions to save billions of pounds over a number of years. If they succeed, the return on the taxpayers' investment in their salaries will be colossal. The Government has to look beyond the simple cost of salaries. What matters is the value that public sector workers can achieve. 

Equally, the Cabinet Office has imposed a ban on the use of external consultants in Whitehall. But what the civil service itself has reported that it is light on the management skills needed to open up public services. The Government seems to think that Whitehall will deliver better advice if it feels that it has a monopoly position. This sits oddly with its opposition to monopoly in other areas of public services. 

Lastly, most Government Ministers (and in particular the Prime Minister) argue that they must safeguard the number of traditional "front line" workers in public services. This is pretty much indistinguishable from the TUC position. It prevents reform because every proper reform of the big public services starts and ends with its impact on teachers, doctors, nurses, police officers and so on. 

The idea of a high-productivity public sector poses a challenge not only to the TUC but also, currently, to the Government.