With the current credit crisis and the massive publicly funded bank rescues, it is easy to see why, recently, many people have begun venting envy and anger at chief executives and all those who earn excess of a £150,000. Indeed, going so far as equating them to the minority of failed bankers and city traders who helped trigger the crises, in an attempt to denigrate objections to the proposed 50p income-tax threshold.
The difficulty with this viewpoint, although understandable, is that there are a great many businessmen and entrepreneurs, both from the UK and overseas, who invest significantly in the UK economy. That investment is good for employment and raising tax revenue, and there is a real fear that this policy may end up costing more money than it actually raises.
In the UK healthcare is a major economic pillar and there are a great number of companies investing £-millions, innovating and furthering technological advancements. It would be a great pity if this were to decline as the result of a desperate, headline grabbing, and somewhat ineffective tax raising initiative.
The idea of heavily taxing the wealthy will continue to remain controversial with many polarised viewpoints. However, it is masking the much larger problem of paying for the colossal public sector and welfare state in this country. The government, both national and local, now has to seek ways to prune their budgets and reduce costs. This is not helped either, by further guarantees and pledges to allocate yet more state aid to other struggling enterprises, such as the auto-motive and steel industries.
Every government department is expected to make cuts to their budgets, but the biggest cut, some £2.3 billion, must come from the Department of Health. Senior managers and ministers have pledged to try and achieve this by efficiency savings alone and refrain from cutting investment in equipment or services. Unfortunately, I have doubts, given the monolith that is the NHS. The government is unlikely to plug such a huge deficit through reducing bureaucracy and improving efficiency alone.
Indeed, I fear it may even exacerbate the situation in the short term by appointing highly remunerated “efficiency administrators”. These administrators, in an attempt to justify their positions, will add swathes of useless, idealistic, officialdom that will probably frustrate rather than streamline any efficiency drives.
The biggest concern though, is that public sector procurement will take the short-sighted path of focusing on buying the cheapest products and services available. With something as multifaceted and interconnecting as healthcare, a policy of merely focusing on unit price alone, without careful consideration to cross-departmental impacts and contract management, is likely to have the opposite effect.
For example:
Each year the NHS treats about 650,000 falls in the elderly at a cost of some £2 Billion pounds from its budget.
Research has identified that adapted homes for the elderly (those that have grab rails, special bathrooms, hoists etc fitted) can reduce the instances of accidents by 60%. Given that the average cost to adapt a property is less than £1,000 and the average cost to treat a fall £3,076, one would expect to see more “strategic investment” in this area? Quite simply, the more homes that are adapted the less chance of accidents and falls to treat.
Therefore, it is somewhat disheartening to report that rather than increase expenditure on home adaptations it is going to be reduced, in real terms, by about 40% to a mere £166 million next year.
It is also, perhaps, worth reminding those who draft and manage policy, that is unacceptable to impose strict conditions and expectations on others, while ignoring reciprocal responsibilities of their own. That is like a council environmental policy, that inflicts punitive fines on people who drop a mouldy pineapple into the wrong dustbin, yet buy in supplies from a factory half way across the globe, when there is a similar one 20 miles down the road.
Many industry bodies such as the Chambers of Commerce and the British Healthcare Trade Association (BHTA) are seeking to engage with public sector procurement organisations to see how industry can help the public sector to maximise best value for money and ensure future procurement polices are more commercially proficient.
In summary, instead of trying to hasten the exodus of prosperous business leaders by meddling in their tax affairs, may I suggest our wealthy ministers and civil servants seek first, strategic management of our public expenditure instead?
After all, our wise and honourable leaders are at pains to inform us, with the deepest sympathy, that during this recession we should all make fiscal sacrifices and learn to make do and mend. Naturally, until this recession is over, society must collectively face any financial adversity with a painful austerity. Unless one is an MP that is, for whom personal cutbacks and paucity is simply unconstitutional.