Where did it all go?

On the Today programme this morning, Alastair Darling was practically boasting that public expenditure today was three times what it was in 1997. Three times! No wonder that even after years of stealth taxes the budget deficit stands as £175 billion and the national debt is spiralling towards Italian levels. Most worryingly of all, perhaps, most of the deficit is said to be structural. It will not disappear with the return of growth. It may never disappear.

Is the NHS three times better than it was a decade ago? Are school leavers three times better educated? (They may well have three times as many A-grades, but that's not quite the same thing.) Does the Royal Navy have three times as many ships? (Closer to a third, I fear; it does, though, have a lot more admirals.) Are there three times as many dentists? There might have been; and they might have offered their services free, too, if the government had had the vision to make it happen. But in this, as in much else, there has been no vision, just a vast and unaccountable profligacy. Spending on the NHS has been astonishingly lavish, but it has been expenditure without care or thought: spending in itself, rather than actual improvement, seems to have been the aim. Never in history can so much money have been spent to achieve so little real benefit.

Where has all the money gone? Everywhere and nowhere. Vast sums have simply vanished into the ether, from the loss sustained when Gordon Brown sold off the national gold reserves at the bottom of the market to the billions poured into rescuing insolvent banks. More billions were meekly surrendered to Brussels when Tony Blair handed over the long-standing British rebate. But more, much more, has been deliberately and systematically wasted. It has gone on lavish capital expenditure projects - shinily rebuilt schools and hospital wards that may look impressive but are often unnecessary. It has gone on enormously increased salaries for doctors and other public sector workers. It has gone on newly-invented jobs without which society managed perfectly happily for centuries and which only exist because the government decreed them into existence. It has gone on advertising such posts in the Guardian. It has gone on "awareness campaigns". Government spending on advertising has more than quadrupled since Labour came to power. Without the public sector, large parts of the advertising industry would disappear.

It has gone on fake charities. It has gone on ruinously expensive, philosophically objectionable and inefficient IT projects, including the ID register and its siblings, the NHS spine (£12.7bn and rising) and ContactPoint. It has gone on employing armies of people to enforce EU regulations that other EU countries are happy to print and ignore. It has gone on over-generous pensions for government employees. It has gone on complicated cash-recycling schemes such as "tax credits", which expensively return their own money to people cunningly disguised as government largesse. £3.5 billion has gone on fighting a war against domestic terrorists so few in number they could safely be ignored. A billion pounds were spent on a useless Dome. At least ten billion will be spent on an equally useless Olympics. Then there were Blair's wars, which continue, at huge expense and for little obvious return, in Afghanistan.

It has gone on paperwork, targets, and the consultants whose recommendations often seem to include the need for more consultants. In 1995, the then Tory government spent rather more than £100 million on management consultants, a figure that was widely considered ridiculously large. By 2005-6, the figure was £2.8 billion. Almost thirty times as much. Why? What has all this money achieved? Terminating the contracts of all government-employed management consultants would instantly remove almost £3 billion from the national debt. It would be a start.

It has, not to put too fine a point on it, been wasted. Not all of it, of course: with so much money being splashed around it would be remarkable indeed if some improvements had not been achieved. But there is still huge public dissatisfaction at the state of the NHS, schools or the police. Money has been spent out of all proportion to the returns made. The squandering of resources is difficult to comprehend. The recession has revealed in stark terms the cost to the national finances of all this public expenditure. But the recession did not cause this crisis. A binge-spending, obese state is wholly and entirely to blame. It would not have occurred under the Conservatives. New Labour has taxed and spent, and it has borrowed and spent. But, what is far, far worse, it has not spent most of this money to our collective advantage.

A government that had the will to turn off the taps on all these wasteful projects and unproductive employees would find itself suddenly in the black. This would, perhaps, be indefensibly brutal, even ruinous, since so many jobs, and so much of the economy, is now dependent on the state. When Labour came to power, not much more than a third of the British economy depended directly on the state. Today it is almost half. We are fast returning to the nationalised state of the 1970s - with the difference that, sclerotic, unproductive and useless the old state industries undoubtedly were, they did at least make something. Today's state-dependent economy pretends to productivity but is actively parasitical, hollowing out and devouring its host.

It has become a commonplace to claim that Britain is "living beyond its means". But it is the government that is living beyond its means - or, to be more accurate, beyond our means. No wonder they are yearning for the Opposition benches. It's almost worth putting them back in power just so they are forced to clean up their own mess.