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June 26, 2009



£20,000 is mostly 'hotel fees'. Let's take Oakham (of which both you and I are familiar). Day fees £7k. Full Board £20 k

Education budget divided by number of children in education about £6.5k.

It's not really the fees is it? It's state delivery which is crap.

Bob B

"If you want quality education and healthcare then, you’ve got to spend."

Hmm. The London Borough of Sutton regularly comes at or near the top of the Local Education Authority league table for England. Two state-funded boys schools within walking distance of where I sit attained better A-level results than Eton in last summer's A-levels and so did a state-funded girls school a bus ride away. Other state schools in the borough did almost as well but not quite:

Strangely, the borough is only a modest spender on its schools by London standards - in per capita terms, Lambeth and many other boroughs spend far more yet local living standards in Sutton are only average by London standards:

The data for income distribution in the London boroughs in 2006/7 show that Sutton is virtually the same as the London average - namely, 21% of Sutton households had a household income of less than £15k (compared with 22% for London); 53% had a household income less than £30k (53% for London); and 85% had a household income less than £60k (85% for London).

The percentage of local residents in Sutton with graduate qualifications is above the national average but below the average for London. The real problem is this:

"Government figures show only 15% of white working class boys in England got five good GCSEs including maths and English last year. . . Poorer pupils from Indian and Chinese backgrounds fared much better - with 36% and 52% making that grade respectively."

Luis Enrique

"workers on the ground know better than ministers where waste lies, so they should be empowered to cut it"

We know (your Baumol point) that public sector costs are largely made up of wages. So cutting costs means cutting the payroll (via process improvement, or cutting functions. Are you really expecting workers to agitate for their own redundancy?

"IT projects that are just transfers of cash from taxpayer to companies"

There's no denying that some public sector IT projects are badly managed to the point of farce, but IT projects go wrong in the private sector too and we don't advise the private sector to avoid investment in IT. Not every IT project is a transfer to suppliers - sometimes you get something for your money. Do you really think that they way to cut costs in the public sector is avoid investing in technology?


From personal and anecdotal experience, I would say private schools are run fairly inefficiently and make some pretty stupid decisions that have little to do with pursuit of academic success. They could certainly do with a lot more competition than they have right now.


@ Jackart. Oakham's day fees are £5065 per term for older pupils - £15,195 pa.


Christ, they've gone up since I last looked. Memo to self - check facts before writing.

And I need to earn some more money before having kids.

Luis Enrique


presumably if your schools are filled with nice middle-class pupils, you don't need to spend much to get good results?

Bob B

Luis: "presumably if your schools are filled with nice middle-class pupils, you don't need to spend much to get good results?"

The headmaster's speech on Speech Day in 2005 of the school just down road included this passage:

"A large scale social event, the largest in my 15 years at the school, dignified as on this occasion by the Mayor, it brought together over 500 parents, staff and pupils. It celebrated the ethnic diversity in the school community, about half of us coming from ethnic minorities; in total 52 countries were represented, with flags decorating stalls."

Perhaps the fact that about half those in a school achieving better A-levels than Eton were from ethnic minorities is probably one contributing factor. It happens that my son attended that same school and, as I learned after he left to go to uni, so in his youth did Chris Woodhead, the once infamous Chief Inspector of Schools, which may explain the frequent comments he used to make as inspector about schools with broadly similar catchment areas achieving widely different exam results.

We really need to get away from the appeal of the automatic equation that the quality of public services depends only on the amount of public spending of taxpayers' money.

I believe corresponding strictures also relate to the NHS although I can only support such a claim with reference to anecdotal evidence and personal experience - such as where expensive diagnostic procedures were reapplied to a (frail) patient ahead of inexpensive tests when the latter produced the significant diagnostic results as well as other examples of waste and inefficiencies. By the assessment of independent observers, the NHS only ranks as mediocre compared with other healthcare systems in Europe:

Admittedly, part of the NHS's problem by 1997 was that Britain had only about half as many doctors per head of population than France and we need to reflect on how that happened but part of the persisting problem of the Labour government has been its repeating assumption that better public services can be attained only by throwing more taxpayers' money at them.


Wallington County Grammer? Would that be the one with the 2008 Ofsted report which said,
"Wallington County Grammar School is a selective grammar school for boys, with a relatively large mixed sixth form. The school is situated in the London borough of Sutton, but draws its students from a wide area. The school has specialist science college status. The proportion of students entitled to free school meals is very low indeed, and the school has very few students with specific learning difficulties or disabilities."

To be fair, as Bob says, it also has a large ethnic minority intake. But it seems fairly obvious that its selective entry policy is likely to distorts the balance of entry cohorts elsewhere, not just in Sutton but throughout a number of neighbouring boroughs.


Ministers can't spot waste, but they can spot the cause fo waste - Targets.

"Systems thinking in the public sector by John Seddon addresses this issue.

Bob B

"To be fair, as Bob says, it also has a large ethnic minority intake. But it seems fairly obvious that its selective entry policy is likely to distorts the balance of entry cohorts elsewhere, not just in Sutton but throughout a number of neighbouring boroughs."

By press reports, only some 38% of the pupils in Sutton's cluster of (outstanding) selective schools are local residents in the borough. This is in consequence of the Greenwich judgement of 1989 which barred selection on the basis of residence, a judicial judgement much resented locally and which most local politicians say they are committed to opposing. Personally, I prefer to encourage talent from wherever it comes for fear it might get lost - or swamped.

If we really want to challenge the grip that prestigious (non-maintained) fee-paying schools, like Eton and Westminster, otherwise have on academically able yongsters then we need to welcome and promote the academic strengths of Sutton's schools and their like in other parts of Britain:

Sutton's special claim to distinction is that it has a cluster of such schools maintained on a relatively modest local budget for schools.

Why penalise academically able youngsters - which is what tends to happen if they are compelled elsewhere to attend local bog-standard comprehensives? Selection plainly works in Sutton because it achieves the best average results in the GCSE exams - which is how Sutton gets regularly ranked at or near the top in the league table for local education authorities in England. The embarrassing fact is that: "Government figures show only 15% of white working class boys in England got five good GCSEs including maths and English last year. . . Poorer pupils from Indian and Chinese backgrounds fared much better - with 36% and 52% making that grade respectively."


A bit of googling brought me to this article: http://business.timesonline.co.uk/tol/business/economics/article6493346.ece

"Calculating output is not easy, but the ONS thinks the average public-sector worker’s output in 2007 was 3.2% lower than in 1998.

Contrast that with the private or “market” sector. Over the same period, again according to the ONS, market-sector productivity rose 22.8%."

Anyone have the figures for market-sector productivity in service industries? I imagine that would be more directly comparable.

Bob B

I can't believe that lump comparisons between the public and private sectors helps to illuminate the challenging management issues - anymore than I believe that the quality of public services can be improved just by throwing more taxpayers' money at the sector. We really need to scrutinise and analyse the various bits of the public sector in all their intricate details.

Consider this supposed enlightened suggestion for improving the efficiency of healthcare spending:

"Billions of public spending can be saved, for instance, if services for those with chronic conditions like diabetes are redesigned around self-care. Similarly, some big welfare programmes have huge deadweight costs: funnelling money to get people to do things they would have done anyway, especially among the more affluent."

Most diabetics are already on self-care regimes of dieting, monitoring, medication and self-injection so it's nonsense to suppose that "redesigning" service delivery is going to save the NHS countless millions.

Presumably, the shift towards "self-care" for those with chronic health conditions won't stop with diabetes but the risk with "care in the community" for potentially homicidal schizophrenics has been that they can't be relied on to take their medication. And if the self-care regimes of diabetics aren't monitored by healthcare professionals, there's a potential risk of dire personal consequences downstream which will be medically costly to remedy by more amputations, intensive care for heart attack patients and more dialysis for kidney failure. Sadly, politicos are apt to relate only part of their beguiling narratives and can't be relied on to mention the downsides.


Can you expand on what you mean by an attack on managers? This does not quite seem to follow from your argument.

Also can you really talk about the public sector as though it is a single entity?

Bob B

"Also can you really talk about the public sector as though it is a single entity?"


Btw just in case any readers here missed a news item a year ago and think I'm exaggerating the scale of potential downstream consequences of "enlightened" self-care regimes for chronic conditions like diabetes:

"Around 100 people a week in the UK have a limb amputated as a result of diabetes, a charity has claimed.

"Diabetes UK highlighted the statistic to raise awareness of the 'life-shattering' impact of the illness.

"People with diabetes are 15 times more likely to need a lower limb amputation than people without the condition. . . There are currently 2.3 million people in the UK with Type 1 and 2 diabetes."

This recent news item graphically illustrates the limitations of self-care regimes:

"When Anna Levis developed blisters on her feet she was worried, but doctors told her it was simply a case of wearing the wrong shoes.

"Anna, who has diabetes, had her wounds treated and dressed. But it was not until after she had part of her foot and her little toe amputated, that she was finally referred to a podiatrist."

All of which goes to show that those who prattle on about simple ways of cutting public spending by "redesigning" delivery systems are talking cods.

Rob C

Hi Chris,

Not related to this topic but I'd love to hear your thoughts on China's calls for the SDR to supersede the dollar as the world's reserve currency. Particularly as it could dramatically change the US's consumption based system.

Bob B

Back to spending taxpayers' money?

How about the continuing concerns about adult literacy skills? Does that have a sufficiently pressing claim for maintained public spending?

According to this source: "Up to 12 million working UK adults have the literacy skills expected of a primary school child, the Public Accounts Committee says. . . The report says there are up 12 million people holding down jobs with literacy skills and up to 16 million with numeracy skills at the level expected of children leaving primary school."

But then: "A drive to boost adult literacy and numeracy is failing to offer improved teaching and doubts remain over the likely cost, a report by MPs says. . . The government has spent £3.7bn since 2001 on the scheme."

Bishop Hill

I had a look at the accounts for Wellington College, which has day fees of the same order as Chris is talking about ~£18k p/a.

If you apportion the costs, it looks as though something like a third of the fees can be attributed to premises costs. I wonder if a large measure of the difference comes down to running a school in a historic building. The costs per member of teaching staff are circa £50k which would suggest an average salary of £40k (ie plus pension and NI). I don't know how this compares to the public sector.


Bob B

Why don't you start your own blog?

Tim Worstall

"This is Baumol’s cost disease; it happens because wages, a big part of public spending, tend to rise faster than prices."

Don't forget though that Baumol applies to all services, not just publically provided ones. And the reason is that it's much harder to innovate (ie, increase productivity) in services rather than manufacturing.

Which leads to the thought that if we want to reduce the cost of publically provided services then we need some method of increasing innovation....you know, decentralisation, markets, etc.

Tim Worstall

We also learn that I should gin up on my spelling....

omega watches

This is just one idea, and perhaps displays no more than my limited imagination. If there are better ideas out there, that amount to more than "implement something called "market socialism" and then - alacazam! - full employment!" then I'd love to hear them. http://www.watchgy.com/ mostly bank deposits, fell by £143.2bn in Q1. And of course there’s no guarantee such buying will continue.

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