With the Government now in the capable hands of Peter Mandelson, the reformed Prince of Darkness, the news this morning that there will be no major review of public spending before a general election comes as no surprise. It would hardly be a vote-winner in Labour heartlands to announce that government spending is heading for a squeeze. But it’s a squeeze that is inevitable, given that next year the Government is planning to spend £4 for every £3 it takes in tax. The alternative is us all winding up in the IMF poorhouse.

There’s no doubt that this tightening is going to hurt. Just how moribund the private sector has become in parts of the UK is revealed today by the Centre for Economics and Business Research. Around two out of every three pounds spent in the North East and Wales will come from the taxpayer next year. The continuing basket case that is Northern Ireland expects 69.2% of its GDP to come from government in 2010/11. No doubt there’ll be a few extra million for more Youth Workers to help explain to those Belfast charmers from last week that stoning and burning Romanian gypsies from their homes isn’t a very nice way to behave.

I’ve just interviewed David Nicholson, the CEO of the NHS and the boss of the largest organisation in Europe by a mile; it has 1.3m employees and is the biggest spender of our money. Understandably, Nicholson acknowledges there are going to be some tough times ahead, although no Government minister has the spine to admit as much. The BMA (the doctor’s union) is already spreading panic by issuing a poll this morning saying that 77% of the public believes that cuts should be made in other government departments to protect NHS funding. They even go as far as to state that four out of ten members of Joe Public believe taxes should be increased to maintain the growth of NHS spending, which has been running at an extraordinary 11% per annum.

When it comes to a mixture of craftiness and emotional blackmail to support its members’ interests, the BMA has no equal. Not even Bob Crow or Scargill at his most strident come anywhere close. The pay deal with which it managed to blindside Patricia Hewitt, the then Health minister, was breathtaking in what it got away with – but you’ll find no talk of clawback. 

It’s been said that coming in on budget for the NHS is akin to trying to land a 747 on a postage stamp. Indeed, after the overspend disaster of 2006 which claimed Nicholson’s predecessor, Nigel Crisp, the NHS has run a surplus. It’s true that there are colossal amounts of waste in less vital parts of government activity than health. But it’s also true that within an organisation that burns its way through £120bn a year, it must be possible to make savings when times turn very nasty, as they have done now. In 90 seconds of browsing NHS jobs this morning, I found a Deputy Director of Performance and Informatics for Bournemouth and Poole PCT, for which Nicholson is willing to shell out £79,000 a year. Who’d notice if this went unfilled for 18 months?

In today's bulletin:
MT's '35 Women Under 35' 2009
Vodafone sniffing around T-Mobile's UK arm
Government bail on Royal Mail sale
Editor's blog: Time to cut the £120bn NHS budget?
MT Expert's Ten Top Tips: How leaders should communicate in a recession

Yesterday's 'revelations' about the expense claims of senior BBC management show what a total non-story the whole thing has become. Such is the righteous, Puritanical fervour that has been whipped-up over MPs with their fingers in the till that any vaguely taxpayer-supported organisation is now fair game for what amounts to little more than a prurient sift through a stranger’s underwear drawer. 

The fact is these things are private. You could argue that they are commercially sensitive. Sky isn’t going to tell you if they send Beefy Botham a case of brown ale as a thankyou if he puts in an especially tight performance commentating on the 20/20 cricket final at Lords. We may pay the licence fee, but that doesn’t automatically make it our business to get involved in the ins and outs of the Director General and the unhappiness his family must have felt when he had to bring them home from a holiday early because Russell Brand had been effing and blinding on the radio again. Of course it’s right he should be reimbursed for this. 

We may pay the £120bn annual bill for the NHS but it doesn’t give us the right to question every last detail of the working practices of a neurosurgeon performing a trepanning operation - telling him or her which cost-effective drill bit to use. The NHS has its own mechanisms to do this and we take them on trust.

The reasons why it’s entirely reasonable that Mark Thompson should send Bruce Forsyth a £99.99 bottle of Krug Grand Cuvee on the occasion of the old boy’s 80th birthday are many. Firstly, this is show business and Brucie is a luvvie ('alright, my luvvie?') - and that’s the way showbusiness works. Performers are desperately insecure people who needs their egos constantly massaging. Look at how Spinal Tap reacted to the green room sandwiches being the wrong shape. Secondly, the old boy has worked for the BBC since about 1837 and any organisation large or small makes such gestures. It’s the way the world turns, even during recession.

And there’s a third, more important point here. Maybe Mark Thompson is actually fond of Brucie and the work he does for the BBC. Maybe he’s genuinely grateful on behalf of Auntie that Bruce is still the old trouper doing his bit, hairpiece and all. It’s actually a human and civilised mode of management to send a token of appreciation to a contractor who’s done well on the corporation's behalf. It’s civilised and there is nothing whatsoever to be ashamed of.

The central current problem for the BBC, under attack from those who wish it ill, is that it appears to be on the verge of losing its nerve entirely. If it continues to capitulate and don the hair-shirt whenever anyone seeks to question or have a pop, it’s finished. In those immortal words of our last Prime Minister, it is always at its best when at its boldest. At the moment, the corporation is being reduced to a nervous wreck.

Expenses are a ludicrous distraction. They’re no more important or interesting than office Health and Safety regs or annual interest-free bus pass loans. For the record, I shall be entertaining two MT contributors for lunch today. They have served us well for many years and although our monthly expense budget of £595 for all seven editorial staff is modest I shall be taking them for a small plate of something. Who knows - as it’s Friday, we may even have a 175ml glass of wine each. Possibly a rose - which sells at £3.60 per glass - if the sun is out and the fancy takes us. This is of little or no consequence to you, and I hope by regaling you with these tedious details I’m boring you stiff. We’ve all got far more important things to concern us. 

In today's bulletin:
Share out your best stuff, Ofcom tells Sky
Jackson death slows web to a crawl
Pidgley moves upstairs as Berkeley profits slump
Editor's blog: BBC expenses just another distraction
Avoid unpopularity in your new job, with YouTube

Air travel is a wretched experience at the best of times. But Michael O’Leary of Ryanair is going out of his way to increase its hellishness to the point where it becomes completely intolerable. It’s six weeks to go before my Summer break to Italy and I’ve already got a sick feeling in the pit of my stomach about the prospect of actually getting there. If I didn’t have three kids in tow, I’d be tempted to hitch the 1200 miles, or get me and the wife fired southwards off the white cliffs from a powerful human cannon.

This morning O’Leary announced that Ryanair is set to end baggage check-ins at airports completely. This means his customers will be forced to carry all their luggage through security and onto the tarmac in front of the aircraft, where they will be charged for performing the role of pack mule before loading into the 737’s hold. It’s claimed that such methods are common in the US for travellers flying into main hub airports and will help to reduce Ryanair’s costs by €30m. O’Leary also claims that only 30% of his passengers check in bags anyway.

Either he hasn’t thought this through, or he doesn’t care about the consequences. Anyone who has been unfortunate enough to spend a Saturday or Sunday morning at Stansted trying to get onto a plane during July or August will know that the experience is already utterly wretched. Having to drink baby’s formula milk in front of stroppy, gloved BAA staff; suffering the appalling queues; having Italian exchange students slicing through your Achilles with their trolleys; being treated generally like a cow off to the slaughter.

If you add carrying suitcases through this scene of damnation, things are going to get far worse. Ever tried taking a trolley up an escalator while carrying a toddler, Michael? No, I didn’t think so. Maybe like the great Dean Swift in his ‘Modest Proposal’, he'd rather I just dispense with the two-year-old and his month-old sister by turning him into something nutritious to feed the Dublin poor.

I’ve used O’Leary’s airline dozens of times in the last ten years and have always been broadly supportive of his mission, which has shaken the old school flag-carrying airlines out of their complacency. When I first started travelling to our bit of Italy in Le Marche 15 years ago, it was either Rome or Bologna followed by a four-hour drive and you lumped it. Now, thanks to Ryanair, you can choose Ancona, Pescara or even Rimini and Perugia for your arrival. He’s eagerly aided in the destruction of Alitalia and is to be applauded for this. His cabin crew may be helpless muppets, the Bullseye Baggies they serve vile, his phone lines organised theft and his Euro scratch cards may drive you crazy, but I’ve paid my money and taken my choice. And only once have I been seriously delayed – at Pescara (albeit for nearly twelve hours).

But slowly and surely he’s pushed a loyal and supportive customer to breaking point. I can cope with his cynical disregard for the basic hygiene needs of his customers no longer. If he goes ahead with this baggage folly that will be it. He can kiss goodbye to my Brit behind and my business for good. I’ll be back to British Airways. And that’s a promise.

In today's bulletin:
Woolies goes online - and it still has pic'n'mix!
Treasury Slaughtered for £22m in legal fees
Undercover Boss tells MT why he took the risk
Habitat twit errs on Twitter
Editor's blog: Ryanair's hopeless case

I went to the Register Office this morning to record the birth of my latest child. I was on the doorstep at twenty to nine, we were seen at nine precisely and I was on my way by 9.15am, having signed on the dotted line. Not bad - except my daughter was born nearly a month ago, and it’s taken me this long to get a slot. Now it’s a panic to order her passport in time. (By the way, in the age of obsession about ID, I’ve seen little more ridiculous than the identification photo that babies have to have stuck inside their own passports. They all look like anonymous bewildered blobs.) Incidentally, the birth registration, which is done by the local authority, costs £3.50. Getting a passport, which is 'outsourced', costs £123 - the most outrageous rip-off ever. Clearly 'efficiency' is an expensive business.

Speaking of which, I’ve just interviewed the head of the NHS David Nicholson – the result is in July’s MT, out soon. It’s been boom time in health budgets in recent years, but thanks to the recession, the NHS gravy train is heading for a major derailment in the next few years. When you’ve got a government that is next year planning to spend £4 for every £3 it receives, something is going to have to give. Many in the private sector feel they’ve borne more than their fair share of the pain so far. They’ve endured wage freezes, redundancies and, at a business like British Airways, even been asked to work for nothing. One doesn’t see much evidence of that yet in the pubic sector where, for all the increase in costs, the Office for National Statistics reports that productivity actually fell by 3.2 per cent between 1997 and 2007. There were declines not only in health and education, but also in public order and safety.

It’s inevitable that taxes are going to have to rise steeply to pay for this deficit, and public spending will have to move in the opposite direction - although few politicians of any description have the moral courage to admit this. This is going to leave Joe Public in a seriously lousy mood. Indeed, I predict that the issue of public sector final-salary linked pensions - now a rarity in the private sector - will become a very sore point over the coming years.

In today's bulletin:
Hester courts controversy with £10m RBS pay deal
What's mine is yours: Xstrata woos Anglo American
Editor's blog: Public sector pain ahead
Proof that bosses are nastier than their staff?
MT Expert's Ten Top Tips: Effective fundraising in the workplace

The first is the case of the redevelopment of Chelsea Barracks by the Qatari royal family, who put in an application to build 552 homes in a modernist development designed by the celebrated Lord Rogers. The Prince of Wales has torpedoed the project by writing to his Gulf-based royal friends saying he didn’t want another monstrous carbuncle on the beloved landscape - and they have acquiesced by withdrawing their project, just before it was due to be considered by the relevant planning authority.

We have well-defined laws and rules when it comes to planning in the UK, which have been developed over many years. They should not include complying to the taste criteria of the heir to the throne. Rogers, who has been plagued by royal interference throughout his career, is so cross that he’s thrown his drawing board right out of the pram.

'The prince always goes round the back to wield his influence, using phone calls or, in the case of the Chelsea barracks, a private letter,' he rages from his River Café office. 'It is an abuse of power because he is not willing to debate. He has made his representations two and a half years late and anyone but him would have been shown the door. We should examine the ethics of this situation. Someone who is unelected, will not debate but will use the power bestowed by his birth-right must be questioned.' (Not that Lord R has ever shied away from throwing his unelected weight around when he wants his way). 

Even if it weren’t thoroughly unconstitutional, I have to admit that I’d still find Charles’s interference distasteful, because his taste in architecture is thoroughly backward. Look at the model village of Poundbury in Dorset, where his toytown vision has been turned to a grim reality.

Charles has been a thorn in the side of modernist architects for years. This matters greatly to UK business, because if he takes against a commercial development of any significance in the capital, the project is good as doomed. As anything tall or modern brings him out in hives, this is not good for the commercial future of London.

The second example of muscle-flexing comes from across the channel and is altogether more comical. It concerns the notorious micro-management of the dwarfish and Napoleonic French President Nicolas Sarkozy, who has fired the prefect of the Var region over a dispute in the exclusive Cap Negre, Lavandou enclave. Sarkozy’s in-laws, the Bruni-Tedeschis, have been involved in a row since 2003 with locals over the removal of individual septic tanks to be replaced by a communal sewerage system. Sarkozy even turned up last year at an owner’s meeting on the stinking subject with his battleaxe of a mother-in-law. 

Being the owner of a septic tank, I can vouch that if they are correctly installed and looked after they should emit no significant smell at all. (Although when they're pumped out every few years I wouldn’t recommend anyone of a queasy disposition being present to observe or sniff the proceedings.)

It’s not hard to see why this pair behave in the way they do. You could argue what is power for but to be wielded, as Sir Fred Goodwin clearly felt once he ascended to the RBS throne. One of the joys of those who exercise power in business or public life is the 'let it be so' syndrome. They command something will occur and those around them make sure it happens. They cut through the inefficiencies of due process, the endless faff of committees and they Get Things Done. But they often get up a lot of peoples’ noses in the process.

When the history of executive remuneration is written – ‘Fat Cats Who Gorged Too Long’ – it may well turn out that this week turned out to be when the greedy moggies’ supply of king-sized tins of Whiskas was withdrawn.

What has previously been a relatively united front of resistance and denial from the boardrooms of UK and US companies was broken by the bizarre musings of outgoing Shell boss Jeroen van der Veer, who admitted that how much he took home each year didn’t make the slightest bit of difference to his management performance. ‘You have to realise,’ he said, ‘If I had been paid 50 per cent more, I would not have done it better. If I had been paid 50 per cent less, then I would not have done it worse.’ You could hear groans all round the City at this desperate faux pas. What kind of a job would he have done for 90 per cent less? 

Over at British Airways, CEO Willie Walsh declined to take his annual bonus of £550,000 for the second year running, but still received a mauling for accepting 'an inflation-busting 6 per cent pay rise' (cf. The Times) taking his salary to relatively modest £743,000 this year (plus a possible £1.1 million in deferred share bonuses). When MT interviewed him last year, he said he worked so hard he didn’t have any time to spend his cash anyway.
 
At the same time, the knives are now out for the compensation consultants who are alleged to have connived in the orgy of executive pay. Mark Burgess, head of active equities at Legal & General Investment Management, told an Association of British Insurers investor conference this week: 'The compensation arms race that we’ve had in remuneration, driven by pay consultants, is neither viable, tenable, appropriate nor desirable.'

But the truly decisive move has occurred over the pond. Obama has kept true to his word and taken the decisive action of appointing a ‘pay csar’ to police the remuneration of the top 100 employees in each company in receipt of bail-out funds. The ‘special master’ is – surprise surprise – a lawyer, Kenneth Feinberg, who was previously head of the 9/11 compensation fund. His job is to align pay with ‘sound risk management.’ There will be some ugly haggling to be done in his office over the coming months. 

There is now a broad acceptance that excessive compensation and the bonus culture has played a large part in creating the mess in which we find ourselves. Politically something needs doing, because the public mood remains very ugly. There is one small caveat, though. How many bosses out there do you know who might be capable of sorting out the car crash that is General Motors? And how many of those sufficiently capable want their wage slips examined down to the last penny or cent by a hostile public? It won’t just be the money that puts them off, but the unhealthy opprobrium that business leaders seem to attract at the moment.

There are easier ways of earning a living – be a London tube driver, for one.  Plenty of days off when you throw your pay toys out of the pram. And the inspirational leadership of Bob Crow to keep you motivated on the dead man’s handle when you’re actually driving.

In today's bulletin:
The recession is over, says think-tank
Football crazy as United agree world record Ronaldo transfer
Sun shines on Homebase sales figures
Editor's blog: Fat cats who gorged too long?
Monster ray of hope for managers