Apologies if this is a bit simplistic. I’ve been a bond investor for 30 years, I expect my money back every few years and then decide at that point whether to reinvest. As for creating more pounds to pay debt see my point about currency and inflation. A large part of our national debt is funded by foreigners who don’t want devaluing assets and British investors aren’t daft and it would make more sense for them to buy debt in – say – euros, Swiss franc or dollars if the pound is in free fall. It’s absolutely wrong to assume the government can just print money to pay an ever increasing debt burden with no serious negative consequences

so a 30% cut would leave you with six, non?

No, no you can’t – unless we start comparing Business finance to Household finances and I can’t see the City going for that.
Or rather you can make the comparison when you are trying to dumb down the debate and hoodwink the masses.

You could compare national economies and business finances; but then what happens to social welfare?

Of course our household finances are always balanced by borrowing/repayment via a complex mix of bonds & gilts followed by stocks and shares. Why just the other day little Johnny was offering me dividends on the returns of his Smartie investments…

Maybe my rudimentary understanding of accountancy is why I don’t get it….surely to save money you have to actually cut the service rather than transfer it to a private firm and pay more for it?

You’re right, it’s just out of one budget rather than another. Though I do seem to remember you can report on it differently so it ‘looks’ like you’re not spending as much.

But basically it significantly reduces your pension expenditure in the future becuase they ain’t your staff.

It appears (IMHO) to be accounting flim-flammery, depending on the current whims of the CFO. Some organisations have a culture of preferring CapEx over OpEx, some vice versa, some about face as they change faces at the top.

Every time we’ve outsourced, it’s cost. Although the promise is better,brighter,cheaper the only way it happens is if everything remains in contract – and it never does. All the ‘extras’ soon add up to being more than the saving of outsourcing. But they are on a differnet budget so that’s OK.

My Fire Brigade has cut back to the point where they lurch from one mess to the other. Anything that does not need immediate attention gets put on the shelf, until it needs immediate attention.

They are proposing introducing small fire engines with less people on them. To anyone passing a station it will look like no change but these vehicles and the crew on them will not be able to deal with any serious incident. Smoke and mirrors. We are already seeing safety standards that have been seen as vital in the past being ‘relaxed’ as we don’t/won’t have the people available to carry out procedures safely in the future.

This is before the next round of cuts. The CFO said if they’re anywhere near the % that’s been quoted it will mean compulsory redundancy and Station closures.

As well as how it will affect our response to our usual calls it will have a knock on effect on other services as we regularly turn up to incidents well ahead of the Police or Ambulance services (As we know, both are under huge strain and struggle to meet attendance times) and even if we are not needed as Firefighter we can act as Police/Paramedic until they arrive. If we stop turning up, no one will be turning up which will lead to people losing their life.

Footflaps – nice one, good to see some numbers rather than opinions.

As an aside, I think it’ll be interesting to see whether the government are still going to spend 6bn (at current prediction) renovating the Palace of Westminster. I’ve got an alternative for them – relocate Parliament to the Millenium Dome or one of the halls at the NEC and flog off the Palace to the Chinese or Yanks.

It’s laughable to say the NHS is protected

Efficiency savings have staff moral at an all time low, waiting times increasing, cancer referral targets being missed, just as real progress was being made. Oh and a junior doctors mass exodus.
The promised increase in NHS spending hasn’t actually arrived yet
We all know that an older fatter population needs much more investment, not more belt tightening.
All new infrastructure is coming from more PFI (which labor are too ashamed to condemn)
When a hospital like Addenbrooks is put into special measures you know the health sec is out to destroy the service completely.
Mid staffs was a crisis of understaffing and cost cutting, it seems insane that this is the the eay the entire NHS is being driven.

Maybe my rudimentary understanding of accountancy is why I don’t get it….surely to save money you have to actually cut the service rather than transfer it to a private firm and pay more for it?

That reads like you’re confusing / conflating outsourcing with PFI, as do a few of the other posts on the subject.

PFI is, all round, a con and even a rudimentary understanding of acounting is normally enough to see it. That’s the one where someone else build you a new hospital, school, leisure centre or whatever, and we pay them a lease for the next 30-odd years, bundled in with facilities management lock-ins, which is where you get the stories of it costing £10K to move a lightswitch etc. I don’t know that anyone has ever, with a straight face, tried to claim that it saves money. Oh, they do value for money calculations that prove that they’re better value than a publicly funded build, but it’s not much of a secret that it only comes out that way when they apply subjectively arrived at risk premiums / discount factors, i.e. they fiddle the calculations to get the answer they want. What is does do is not so much move opex costs into capex costs (in fact, with over-inflated facilities costs built into the contracts it’s more the converse) but it avoids the government accounting for any of the costs or liabilities at all, other than at the point of expenditure.

That’s right, that £200 million commitment to pay for a hospital over the next 30 years doesn’t appear as a debt on the government’s balance sheet.

To apply the seemingly popular “compare it to household finances” approach, it would be like if you applied for a loan and were told that you didn’t need to disclose your mortgage in the “liabilities and debts” section. (My other “household comparison” would be that the facilities contracts are rather like buying a house but it being on the condition that you could only furnish it from Brighthouse, in perpetuity).

It’s shameful. I’d go as far as to say it’s scandalous, particulary for those of us with kids, who’ll be paying for all this over the next few decades. Why isn’t anyone making more noise about this? Well, the Tories started the ball rolling on this one, but then Gordon Brown really grabbed hold of it with both hands…

Anyway, back to the point, PFI is not about efficiency or money saving, it’s about spending money you haven’t got on capital you can’t afford in a way that doesn’t show in the accounts. These don’t go out to tender every five years.

Outsourcing is where the state pays someone else to do something that used to be done by the state directly. Might be emptying the bins, running an MRI unit or a whole hospital (although that’s not gone well), might be running the canteen. Happens a lot in the private sector too – go to a big factory and the chances are the canteen is run by someone else.

Done well, outsourcing can definitely result in better, and better value for money, services. Why? Specialism, for one. Say you run a car factory. Your expertise and focus is in building cars. Who’s going to be better at running the factory canteen – you, or the contract catering specialists who do that as their main business? Exactly.

Many years ago I worked for a firm that did outsourced stuff for the government. We had numerous cases where we went in, ran it more efficiently and delivered more units of the thing, at lower cost, than the in-house predecessors, and still managed to turn a profit for the shareholders. One reason for this was that we had shareholders who demanded it, so there was no hiding place for inefficiency.

Nowadays I work for a charity. We work on lots of contracts that come from, one way or another, “the government”. Our sector brings it’s own unique factors that are harder to find from within the “state machinery” – Nimble, innovative, closer to the communities we serve, less bureaucratic, those are some of the things we write in our tenders. And every five years is a reasonable timescale for an outsourced contract – too long and providers get complacent, stagnate. It’s a pain, but re-procuring is a decent way of ensuring value for money in thses things.

Well, there’s various ways of looking at it and the obvious “more or less pounds than last year” one is one of the least useful on health spending. The current government I’ve noticed are making much less noise about this as time goes on, but one example of creativity that some of you may have missed is this one:

Publich Health. When the coalition came in in 2010 this was, unsurprisingly, firmly and indisputably part of the National Health Service. The NHS.

In 2013, commissioning and budget responsibility for Public Health was transferred from the NHS to Local Authorities.

Almosty unnoticed this summer, the lovely George Osborne announced massive cuts to Public Health spending.

But that’s okay, because it’s not part of the “NHS” any more is it?

Cuts to mental health services are going to get someone killed (again); until that happens they will keep slashing the funding.

Mind you its only normally poor people who get killed so I guess the Tories see that as killing two birds with one stone.

I wish I shared your optimism.

Oh I see…

Just heard today that arriva transport won the contract for non emergency patient transport services for hospital visits,

and now the fire service is going to be sent out to people suffering a heart attack, to relieve pressure on the ambulance service, so one less fire engine and crew available to fight fires and cut people out of RTC,S.

Shocking.

That rings a familiar bell, excuse the pun 😀

Yup, that NHS, with its short skirt, hangin around with bad types, they was asking for it.

The point I was making is that you cannot compare our economy to that of a household or business. The UK cannot become bankrupt (that is not being able to service it’s debt)

And you will always get your money back as government bonds are risk free because the government can always repay them. Always, guaranteed, unlike a bond issued by a business, or a bond from a person. Therefore you can’t make assertions that they are the same.

How you manage debt is a policy matter – Japan is running a national debt that is 240% of GDP and is doing fine thanks. UK is around 85% I think.
I agree there are consequences to allowing interest rates to rise and printing money – that’s not the point I’m making.

We don’t have to make the cuts we are making to balance anything – this decision is arbitrary and Conservative policy – you cannot equate it to having household debt as they are different. We will always have a national debt – we need a national debt.

EDIT

These points only apply to a country with sovereign debt. If we had the Euro we could be made bankrupt, technically – like our sun loving friends the Greeks.