Employee Relations in the Public Services: Themes and Issues

By Susan Corby; Geoff White | Go to book overview

2


The economic and financial context

The shrinking state?

Jean Shaoul

Public Expenditure is at the heart of Britain’s economic difficulties. Over the years public spending has increased on assumptions about economic growth which have not been achieved. If this continued our economy would be threatened with endemic inflation and economic decline.

(Treasury 1979: 1)

The central policy of shrinking the public sector was introduced and justified as an economic necessity in 1979 and was not repudiated by the incoming Labour government in 1997. This chapter provides a brief exposition of the economic, financial and managerial changes by which this policy was implemented to show the context against which employee relations in the public services must be considered. It examines the changing levels and composition of public expenditure and the cost structure of the different functional programmes of the state; the various attempts to control expenditure and costs and to increase outputs; and the recent reconfiguration of the entire public sector into business units delivering services. This is illustrated by a study of the NHS acute hospital trusts. The chapter concludes by drawing out the significance of some of these changes for employee relations.

Trends in public expenditure

State expenditure encompasses revenue expenditure by central government, local authorities and public corporations (state enterprises and other bodies) on goods and services; transfer payments such as pensions, unemployment and housing benefit, sick and disability allowances, and subsidies; capital formation; and debt interest and net lending. While this appears relatively straightforward to specify, interpretation of the relevant data is difficult as a result of conceptual, definitional and measurement problems (Heald 1983). Partly this is because government can choose methods other than state expenditure to achieve the same objectives. For example, child tax allowances, investment grants and housing subsidies may be substituted for child benefits, capital allowances and mortgage interest relief, and reflected

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Employee Relations in the Public Services: Themes and Issues
Table of contents

Table of contents

  • Title Page iii
  • Contents v
  • List of Figures and Tables vii
  • Part I - Introduction 1
  • 1 - From the New Right to New Labour 3
  • Part II - Context 27
  • 2 - The Economic and Financial Context 29
  • References 51
  • 3 - The Legal Context 53
  • Part III - Issues 71
  • 4 - The Remuneration of Public Servants 73
  • References 92
  • 5 - Equal Opportunities 95
  • 6 - Employment Flexibility 114
  • 7 - Tendering and Outsourcing 136
  • 8 - Quality Management 156
  • Part IV - Players 175
  • 9 - Personnel Managers 177
  • References 195
  • 10 - Trade Unions 199
  • References 221
  • Index 225
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