Government's plan B for strikes

BBC business editor Robert Peston on a public sector culture shock

This is what Simon Wolfson, the chief executive of Next, wrote in the Times last April:

"We need change in the culture of the public sector. We need a culture that will play to the strength of its many capable managers rather than compensate for the weaknesses of the few poor ones.

"The first step is to recognise that good management starts with good people; all the 'processes' in the world will not make up for weak individuals. Public sector managers must have the same freedom to rapidly advance talent and correct poor performance that their counterparts in the private sector enjoy.

"Yet public sector working practices are geared up to limit initiative and freedom of action. Managers' hands are tied at every turn. The essential activities of recruitment, promotion, reward, disciplinary and dismissal are so hidebound by restrictive practices that good managers find it hard to promote good people and nigh on impossible to remove underperformers."

What I hadn't realised, till I had a conversation with a senior cabinet minister earlier this week, was the extent to which this analysis by Wolfson (who became a Tory peer in July) underpins the government's programme to shrink and reform the public sector.

In particular, this minister told me that when it comes to cutting significant numbers of public sector employees during the coming year, the cabinet is clear that it will take whatever action is needed to retain more able officials and sack what Wolfson calls "weak individuals".

In practice this means that if better staff apply for redundancy, their requests will be turned down, said the minister. "If it means we have to have substantial numbers of compulsory redundancies, that's what we'll do", he said.

This will be a shock to a public sector in which redundancy programmes have been rare in recent years - and compulsory redundancies have been seen as to be avoided, if at all possible.

That's why the government is only hopeful that the shrinkage of the public sector won't lead to widespread industrial action. In practice, ministers are realistic that the threat - and reality - of strikes is highly likely.

So ministers and officials are beavering away working on contingency plans, to maintain security in prisons, keep our borders manned, and prevent the collapse of the tax and welfare systems, for example, in the event that there is serious industrial action.

The point, according to the minister, is that it is impossible for the government to negotiate credibly with unions on public sector changes and cost-cutting, if the unions are confident that strike action would lead to chaos.

But it is by no means easy. The minister wouldn't tell me what he was doing to make sure that prisoners are kept where they should be, if prison staff walk out. All he would say is that it is a priority - albeit a very challenging one - to find a solution.

Of course the programme of revolution in the public sector isn't just about cuts. It is about imbuing a culture of responsibility, of sharing best practice across services, and of improving data collection and analysis (so that public servants actually know what goods and services cost).

Little of this requires legislation. Mostly it is about importing the methods and mindset of the private sector.

To an extent, quite a large one, it will be about transferring a growing number of public-sector operations directly into the private sector - although the big players in this area (the Sercos and Capitas for example) should not under-estimate the government's determination to stimulate much greater competition for contracts to manage all kinds of government services, by making it much easier for smaller younger companies to make credible bids.

That said, a big new wave of outsourcing or other forms of de facto privatisation probably won't happen till after the summer, because a precondition is that the government has to decide how to limit the costs for private-sector companies of taking on the pension rights of officials who are transferred out of the public sector.

What I am less clear about is whether the government's big idea, mutualisation of public services, will become a serious practical reality.

There is no doubt of ministerial enthusiasm for mutualisation, for the sense of personal responsibility and common purpose that shared employee ownership of a public service may deliver.

But whether the formidable practical obstacles can be overcome? Work in progress.

You can keep up with the latest from business editor Robert Peston by visiting his blog on the BBC News website.

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