Tuesday, 2 December 2008

Public expenditure - the Zanulabour years

If we are to believe Alistair Darling, public expenditure is going to save the UK economy.

Last week, he presented his revised budget plans, and he didn't hold back. By the time of the next election, the government should be spending at least £630 billion. When Labour elected back in 1997 (what I prefer to call year zero), public expenditure was just £290 billion. That is a hefty 110 percent increase.

I know that that inflation will have influenced these figures. However, I thought Brown has sorted out that problem within a week of becoming Chancellor when he made the Bank of England independent.

So did public expenditure really double, or did the UK economy suffer from a prolonged period of hidden inflation?

14 comments:

Markbaldy said...

I wouldn't care if this idiotic government actually used public money wisely.
They should be looking to invest in renewable energy, rebuild our railways, make the UK more self sufficient - employing BRITISH firms and workers to achieve this... but NO, they give handouts to wasters so they can buy more fuc*ing plasma screen TV's and take the brats to Eurodisney!

sobers said...

There was a massive inflationary boom in public services, no doubt. If you hose that amount of money at unreformed public sectors you are going to get little increased productivity, and a lot more unneccessary activity at higher wages to soak up the money. No department will ever say 'actually we can't use that amount of money productively right now, give us less now, and we will plan how best to spend more in future'. You just get spending for spendings sake. Read Parkinson's Law and all will be revealed.

Mark Wadsworth said...

That's an excellent chart.

In layman's terms "Are you getting £10,000's worth of 'public services' from the government each year?"

Nick von Mises said...

Whether it contains inflation or not is important analytically but not for apportioning blame, seeing as inflation is entirely created by the government and its cronies in the BoE

Mitch said...

And nothing works.

Rod said...

In my humble opinion, unbridled spending is what has gotten us into the position we're in today - I kind of fail to see how doing more of the same is going to save us.

electro-kevin said...

They lied to us about tax and inflation all along.

Why the need to put up MPs' expense allowances if the truth were otherwise ?

electro-kevin said...

http://www.telegraph.co.uk/news/uknews/1558649/MPs-costs-rise-at-twice-inflation-rate.html

roym said...

these are certainly eye popping sums. i think whoever the next regime will have their work cut out increasing productivity in the public sector with little or no pay rewards in return. take the £30bn in salaries for the NHS for a start.

i agree with MarkB's first comments about investment, remember that 10bn was set aside for railways, but disappeared as soon as we realised that no one had replaced so much as a sleeper for 30 years!

as for handouts to wasters, we spend approx 40bn on housing, disability, incapacity benefits,and jobseekers allowance (in decreasing order of amount). i dont think it unkind to suggest there are more than a few undeserving cases that could be put to work instead.

Anonymous said...

Alice,

Could you show a graph showing Government expenditure as percentage of GDP and also taking into account the effects of inflation. When expressed thus the increase is nothing like 110%

You may also like to consider that the Government was elected three times on a clear mandate of raising public expenditure in order to improve public services. In other words, the public got what was on the tin.

I notice a number of posters have claimed that the increased expenditure was entirely wasted. Where is the evidence for this? The Wanless report into increased NHS funding certainly did not draw this conclusion.

Young Mark

fajensen said...

I notice a number of posters have claimed that the increased expenditure was entirely wasted. Where is the evidence for this?

It's pretty obvious:

The Game of Politicians is to under-fund something the electorate actually care about, then use the dilapidated state of the underfunded service to ask for more resources. The service you think you pay for will not get improved in order to preserve the goose that lays the Gold Eggs!

Besides *If* public services such as "welfare" actually solved the problems it claims to solve there would over time be a dwindling need for it.

The opposite does indeed happen!

Anonymous said...

The budget for Haringey's childrens services was £100M and even after the Victorie Climbie (Spelling?) enquiry they were still shit.

Whats the bet that the solution is more mid level auditors, adminstrators checking that processes are followed and boxes are ticked; and that after the next poor kiddie gets murdered by chavscum they'll be another enquiry exposing poor processes so they'll bring in auditors to monitor the auditors and so on..

Does anyone think if Haringey spent £200 million it would make a blind bit of difference?

Nick von Mises said...

Fundamentally a big problem with Labour (and socialists generally) is they all subscribe to the Labour Theory of Value. Roughly put, it means value is the sum total of inputs.

That is crazily wrong and ignores the past 100 years of economics because as any clown should know, value is a subjective assessment of the buyer and the closest way to measure it is in the price they are prepared to pay.

That's why Labour drone on about how much they've spent when they should be interested in outcomes.

But they can't make the intellectual shift because then they'd have to face the Problem of Economic Calculation. And then their entire ridiculous Socialist theory would collapse in a puff of logic.

Anonymous said...

Labour always fail because they can't take responsibility for the consequences of their policies. They opened the floodgates on immigration, and places like Haringay became giant revolving doors of humanity: modern Victorian hell-holes where abuse was and is the norm. No organisation can manage a population as fluid as that. Especially when it has no cultural or social connections.