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.


Martin said…
Some important points, but why have you not mentioned the PFI £ billions give away to the City.

Rather naïve to claim nothing of this sort would happen under the Conservatives. All the Targets, Management and Centralisation stuff started with them: perhaps you think they did not believe in it really, and sold it to NuLabour as some kind of black joke.

"I'm Tory plan B" = anagram for: Tony Blair PM

Of course NuLabour have got up to stuff that the Tories would have scarcely dared to do.

Nonetheless - 'Where did the money go?' is always a good question. The other way to put it is 'Who made money on it?'
It certainly saved Pa WML's life. Looks like money well spent from where I'm sitting. Under Tory levels of NHS spending Ma WML would probably be a widow.
Anonymous said…

Jeez what on earth was wrong that it cost £175 BILLION to save his life?

Does he live on Mars?
Heresiarch said…

There just wouldn't have been time to list it all...

On the broader point, I've no doubt that public spending would have increased under the Tories. With the economy growing healthily for years, of course it would have done. But the growth would have been within sustainable limits. In recent years this government has gone spending crazy.

This has had two effects. First, and most obviously, the debt. More serious, though, is the structural change in the economy, with the state employing, directly and indirectly, an ever larger proportion of the population. And what are they doing, exactly? They're not all doctors and teachers. This is, ultimately, the economics of North Korea. It's mad. Reversing it will take a generation, and be horrible.

Woolly, not knowing your personal circumstances, I'm not sure how doubling doctors' pay and pumping billions into PFI contracts saved your father's life, or how you can be so sure that he would have died under the Tories. Do you have any evidence for this assertion? Do you have proof that a Conservative government would not have boosted spending in the particular area concerned? Or are you just making a lazy assumption that money spent on health translates neatly into lives saved?
Mr. Miaow said…
Those who are of Tory sympathies (I am not one) should concede that much of the problem began with them, as much as New Labour have made it worse.

I hope they've learned from the folly of the last 11 years to reject schaith like centralisation as manifested in the National Curriculum and other shyte which was presented in conservative terms.

But they will have to reject, not only New Labour's ways, but also things they themselves did which have now been pushed to their logical conclusion and found wanting.

I am not very optimistic re: this. It might happen and I know some in the party have got it, but I doubt it.
racheinderbys said…
Well I was not living in the UK in 1997, but I was living in Surrey and working in the NHS until the end of 1995, and have been back here (and working in the NHS again) since 2002 and I agree with WML both as an employee and as a patient, that the NHS has improved immeasurably since 1995. Look at the improvements in survival rates.

I also feel that education has improved a great deal, although I am talking here about schools not universities. (Not that I don't think universities have improved that much, but that my contact with higher education is almost exclusively on the research side, not the teaching.)
WeepingCross said…
But is Government spending really three times what it was in 1997? I reckon at about 4% inflation a year it should be 160% of the 1997 figure to keep up, so 300% would really be quite something.

Subjectively, I think the schools and medical facilities in my part of the world are incredibly good. Even when I visit the museum which was my former workplace I marvel at the standard of displays they're able to produce when only six years ago I was managing on cutting captions out of bits of card. Part of this is technological advance which isn't necessarily more expensive to employ, but it does imply that when the cash actually falls into the hands of those who do the work and produce the services, they do use it properly. Something, perhaps, to do with that antiquated notion of public service which Mrs Thatcher derided so much.

Yet the overall point still stands; and, as we have touched on before, I think, this ballooning of the State doesn't seem to have been driven by any principles but by a shambling, barely-conscious process, generated by one initiative after another, each designed to produce a headline rather than achieve anything real. An administration which has governed by fantasy, a perfect reflection of a popular culture focused on the veneration of empty celebrity and an economy powered by baseless asset-inflation. Gosh, I didn't intend to go there when I started. But you see what I mean.
Sean said…
I think its all good, for the second time in my life the government has not got any money, whats not to like?
Martin said…
The suspicion is that much of the money has gone the way of the banks through PFIs and the like.

Management consultants, what do they do, apart from getting paid pretty well? (If I seem ignorant on this subject, it is because I am)

The 'Target' obsession is surely a fraud: never mind how disastrous an 'initiative' is, so long as it can be shown to have met its TARGETS then in the eyes of politics it is GOOD. Whether it is health, education, the police, social services etc achieving the targets is more important than getting the job done: they are held to be synonymous even when they are transparently not.

The 'targets' obsession is Utopia for the jobsworths and, for some reason, as I write this the chilling image of Jackie Smith plants itself in my head, closely followed by recall of the Dr Who episode where cabinet ministers turned out to be vicious alien monsters.
DiscoveredJoys said…
It would be churlish to deny that some good has resulted from the expenditure, particularly in highly visible areas.

But it would also be dishonest not point out that there are some areas that suffered. The number of old people's homes and nursing homes has fallen. Children in care often get poor treatment. Legal Aid has been trimmed savagely. There are other areas too. Strangely all less visible, out of sight, out of mind, out of funding.

I don't care for the type of government that throws money at headlines.
Heresiarch said…
Well that's it, precisely. This post isn't attacking public spending per se, just this government's peculiar combination of lavishness and poor prioritisation. You're right to draw attention to headline-chasing. They've also been astonishingly susceptible to the blandishments of "experts" coming up with "solutions" which invariably involve hiring large numbers of experts and unworkable technological fixes.

A general good rule, I find, is that a solution should never cost more to implement than the cost of the problem it supposedly fixes. Under this government, the opposite has too often been the case.
"a lot more admirals"

G&S were right!

My pet beef is the destruction of manufacturing and agriculture (the only things that really generate wealth) on the apparent premise that financial services brought more money in for far less effort and would continue to do so for ever. Cretins.

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