Tag Archives: Public Sector

The real cost of the ‘public’ sector.

In a moment of hilarious irony, The Guardian, king of the non-job advertisement market, has posted a map with accompanying figures showing the public sector workforce as a percentage of the total workforce throughout the UK, broken down by electoral region.

It just goes to prove what many have suspected for years – that certain areas of the country where Labour were ‘slashing’ unemployment were simply transferring the unemployed from benefits to a job that provides benefits: in some areas the public sector workforce is above 30% with Castle Morpeth’s public sector accounting for a staggering 48.7% of the total workforce.

It’s no wonder the UK is broke, not just broke though, broken is closer to the mark. Our politicians have created a generation that sees it as the state’s duty to employ them. The public sector doesn’t generate wealth, it simply leaches – and while there are services that clearly the state should pay for – there are many more it shouldn’t. These millions of jobs paid for solely at taxpayers expense aren’t putting teachers in schools, or policemen on the beat, they’re instead giving us ‘community street football organisers’, ‘regional diversity cohesion coordinators’ and a whole host of other non-jobs making people ‘feel happy’, ‘play safe’ or ‘integrate’.

The fact is that we’ve seen an explosion of bureaucracy in the last 10 years. Councils with ‘CEOs’ demanding money with menaces through debt collection agencies, community spies photographing your rubbish, a veritable sheaf of paperwork to even consider working near a child – I could go on and on.

While it’s unfair to tar all public sector workers with the same brush, many people’s experiences (often unfairly dismissed as ‘just opinions’) are that the public sector works to slowly, doesn’t communicate internally, wastes huge amounts of money, and doesn’t deliver to the man in the street – who it shouldn’t be forgotten is the embodiment of who the whole sector is supposed to serve.

This wasn’t job creation, this was block vote buying – pure and simple, and now it’s time to pay for that. Except I don’t think we’re going to slash anywhere near as much as we need to. Cameron promised the small-state, but the truth is he can’t afford it – he simply can’t afford the political price of making most of the North East unemployed again, and he can’t afford the economic reality of some of these people sitting on benefits claiming their is no work.

It made the Conservatives toxic for a whole generation after Thatcher dispatched the over-productive, state-supported job creation that was the coal mines, they formed powerful unions that chose who you voted for, they bankrupt businesses up and down the country, and they’ve proved to be a rallying call for the left ever since. Reinforcing the view that the state will provide come hell or highwater. Except it shouldn’t be like that.

Coal miners are the classic example; many to this day claim they never found work again – they were coal miners and that was that – but much of the real life experience of those that worked in these communities after Thatcher shut the mines proved that these men had learnt skills in the mines that could be easily transferred to construction, highway maintenance, machinery and automotive repair and a thousand other trades… many however chose to ignore this, bitter that they would have to consider a different ‘trade’ while others claimed that they were ‘incapable’ of travelling to find work.

They were dragged into a mentality that it was the state’s duty to employ them at any cost, and now we have a new generation of miners in our inefficient overly expensive public services.

The argument often used about public sector workers is that they’re contributing to the tax coffers: except they aren’t. It doesn’t matter how you spin the maths it doesn’t work – it’s black magic taxation that offsets incoming money against outgoing money and never looks at a correlation between where the outgoing money pays for the incoming money.

If we consider it using magic beans (which let’s face it may be all we have left soon) it looks like this.

I decide I’m going to be a magician. I work hard. I make and sell magic beans in a country which has 100 people in it.

In year one I make 10 beans and I sell all ten to people.

I’m taxed at 20% so that’s equivalent to giving 2 beans back to the state in year 1.

The state provides me with magical lanterns, giant killing services and so on that cost  50 beans a year so I have paid 4% of what it has cost to provide. That means that clearly not everyone has to pay meaning the state can afford healthcare, looking after old warlocks and saving unicorns.

However…

In year 2 the state decides that it’ll start providing a community street quidditch coordinator. This person costs 2 beans, the total cost of the state is now 52 beans. This means my contribution is now worth less. The total amount of incoming tax has reduced. The state justifies this with the fact that the community street quidditch coordinator pays 1 bean a year in tax. But the state now puts 1 bean away as well to pay for HR, insurance and an end salary pension scheme so the community street quidditch coordinator can retire fifteen years before I do to look after Mandrakes.

This means…

That the state now has 2 beans a year unpaid for, the community street quidditch coordinator will never actually generate new beans. The beans he is taxed never actually cover the full cost of his employment.

So eventually…

The state begins to run a deficit of beans. We have to borrow beans, and the more beans we borrow the more they cost to pay back. They have to take more of people’s beans, people with businesses leave the country – So eventually evil wizards from the IMF have to devalue our beans meaning that we’re all poorer, these wizards will make the community street quidditch coordinator unemployed whether the state likes it or not, and eventually someone will have to pay for looking after the ex-community street quidditch coordinator which eventually comes back to me.

Ultimately this means…

My beans are worth less, the state is taking more of them, and I’m looking at the border to a country where my beans aren’t wasted meaning that when I do move to a far-away land the state won’t get my 2 beans at all.

It’s a vicious cycle and what’s more it’s one that is unjustifiable however you look at it. But it’s one we’re currently stuck in. We’ve got to balance the books, we can’t afford to be stuck paying for people to be employed by the state simply so they have jobs. The private sector will eventually cover unemployment – Germany proved this with an affordable tax and spend plan that encouraged companies to train employees, generate wealth and exports and make it easier for the country to run without running a dangerous overdraft on the international bond market.

It’s not ‘nice’ – Cameron and Clegg know this. Whether they’ve got the political balls to be ‘nasty’ is yet to be seen. What’s clear is that the current cuts where nowhere near deep enough.