Wednesday, 11 May 2011

Where's the sense in paying more for less UKuncut?

A report from the IFS looked at public spending between 1997 and 2010 pre election last year.

In it, as you can imagine, it shows that the growth of spend on public services, rose tremendously under the Labour government. This shouldn’t surprise anyone that has looked at the figures, but I think it best we look at it in more detail and quantify it before moving on.

In 1997 when Labour was elected, as a percent of national income, spending on public services was 39.9%, when Labour left office it was 48.1%.

The growth in real terms of this spend is 4.4% year on year. Under the Conservatives between 1979 and 1997 the figure was 0.7%.

 So we can safely say that we are spending a lot more on services than we were.

Out of the 28 countries that we have comparable figures from we went from 7th lowest spend on percent of National income to the 6th, in 2010. This represents the biggest % jump out of all the 28 countries,

“… BUT” I hear you cry “we had to bail out the banks”. Yes, we did. So if you like, we’ll look at the figures from 1997 to 2007, a year before the recession. Our % increase spend was the 2nd largest out of the 28.

I think we can safely say we have established that we have spent more, however this isn’t necessarily a bad thing. I spend more at the supermarket sometimes too, especially if there is an offer, because although my weekly spend has gone up, I normally walk away with a bigger increase of value to money spent, or ‘Bang for buck’ as the calculator jockies call it.

So, did things get better proportionally to our increased spend?
Well, our public services have got better, the social security funds and eligibility for them have grown almost every year since the end of the war, this is a good thing, but has it got 8.2% better?

The ONS aimed to calculate this based on output figures and input figures from 1997 to 2007. They found that the ‘bang for buck’ had actually gone down by 13.4%.
In other words if efficiency and productivity had remained at the levels in 1997, for the extra money injected into the system, we should have had a 15.5% bigger output.

Philip Hammond doing a similar comparison, this time in ‘bang for buck’ growth in the Private Sector VS Public Sector concluded that the same services, if 1997 levels of efficiency were kept, should have cost £60 billion less than it actually did (if you compare it strictly Public Sector VS Public Sector we would have benefitted from the same output but for £42.5 billion less).
ONS Graph

So I think it is very important we keep this in mind before we go barrelling off to stand still in front of a shop we believe should pay more tax than it has to by law and the like UKuncut style. What really is the point in protesting over a few 10’s of £million’s when we have a £60 billion a year short fall on services as it is?

Surely all that is doing is throwing more money at an obviously failing system.
Firstly, let us address all the reasons why £1’s worth of spending on public services does not equal £1 of ‘bang’. Until then all we are doing is becoming ‘busy fools’ with a lot of input and not much more to show for it.

Somewhere in the public purse, there is a hole, no matter how much money you throw at it, even if you ignored the huge risk in scaring away the top 1% who pay for 25% of all tax, the extra money doesn’t give you the correct value.

We need to cut this out of the public services system, if that means jobs, then I am afraid that is what is needed. The public sector is not a charity and cannot afford to keep them bloated for the sake of it.

We need to get our house in order before we invite extra guests.

When we achieve that, you may find me calling for Tesco’s to pay an extra £60 million a year on top of the billions paid already, until then those actions seem quite pointless.

I would encourage UKuncut to treat each waste of our money on a level playing field instead of cherry picking which bit of lost money is a good loss and which is bad loss.

Anyone striving for a better, efficient country should be at the Rally Against Debt on the 14th of May.

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