Try Cutting Out Waste, Rather Than Vital Services:

As we head towards the next British General Election in May 2015, it is becoming increasingly clear that the two big legacy parties, Labour and Conservatives, have decided to engage in an economic arms race with one another, in an attempt to try and persuade the great British electorate, just which of them is more fiscally responsible when it comes to the subject of the nation's money; and perhaps more importantly to the dreaded subject of the country's growing debts.

 

As I am always keen to point out in these various personal ramblings, I do not consider myself to be any sort of financial or economic expert, otherwise I might be a wealthy man, rather than being like many other British citizens, just struggling to get along financially. However, that having been pointed out once again, just because I'm not a wealthy financial genius, doesn't mean that I can't balance a budget, or even see the basic logic of cutting out unnecessary waste, when you're seriously threatened with drowning in debt.

 

It seems to me, as a moderately intelligent person living in the UK, that a major part of our economic problems, at least from a governmental point of view, is that our politicians, ministers, advisers and even some supposedly professional economists; and those others who are charged with looking after the nation's finances, often overlook one of the most obvious tenets of economics, that is that it's all about the numbers, the maths, or in other words, the basic sums. Like it or not, you have to make your books balance; and if you can't do that then you probably shouldn't be in charge of a budget, or better still maybe you should hand the job over to somebody who does know how to do it properly.

 

Of course in most instances, part of the problem with running a local council, a government, or indeed any other organisation that is entirely publicly funded, is that the money being used to run it hasn't actually been earned or freely given, but has been taken from the public's pocket through one of the various forms of tax; and therefore is not as highly valued or best employed, as might normally be the case had the recipients had to work for the monies in question. As a consequence of the public purse (through taxes) being generally regarded as a constantly available "cash cow", or "magic money tree", (please feel free to use your own epithet), then should any of us be really surprised that successive governments and various politicians have regularly squandered billions upon billions of pounds of taxpayer's money, in the certain knowledge that more is available should they, the public bodies, actually need it?

 

It is precisely because governments have unlimited access to this endless pot of unearned income (unearned from their particular perspective) that they seemingly continue to regard it as "unreal" money, with no real explanation as to what each government's specific spending intentions are, with little real accountability as to how or why the money has been spent; and with no real independent oversight as to whether the taxpayer has ever actually received any "value" for the billions of pounds that have been spent in their name. How often have we all heard the old refrain "Oh, it's only public money"? The fact that such an expression has become so commonly ingrained in the public's consciousness and is so widely accepted as normal, perhaps best sums up one of the reasons why our country's economic fortunes have become so abysmally stretched over the past few decades.

 

As is my own personal habit, when thinking in terms of our own country's national economic state, it often helps to see things through a much smaller prism, rather than trying to imagine the multitude of costs that are inevitably involved with a large national economy such as ours. I often try to draw a comparison with an individually indebted household when considering the seemingly overwhelming financial plight that is currently affecting our country, an exercise that often helps cast light on the sheer financial lunacy of our supposed leaders and betters.

 

As an example, just how sane would it seem for a single indebted household to borrow money from a bank, only for them to then use that same money to feed their neighbours, while they themselves went without the basics of life? How mad would it be for a single indebted household to borrow money from a bank, only to then use it for an annual subscription to an elitist club, even though they had no need for a membership of that particular club in the first place? What would be the reaction if a highly indebted household were to borrow money from a bank, only to then use it to purchase an overpriced and largely unnecessary family car, when they have a slightly weather-beaten, but perfectly adequate vehicle sitting on their driveway? How sympathetic would people be if a highly indebted household were to borrow money, only then to spend it on frivolous and completely unnecessary luxuries, which they couldn't afford, or didn't actually need?

 

But aren't all of these things exactly what successive governments do on a regular and much, much larger basis. At 0.7% of our country's national GDP, the Coalition government is currently borrowing between £11-12 billion every single year, simply to give it away in Foreign Aid, in an act of extravagance they'd like to impose on every future UK administration as well. Just how insane do you need to be, to borrow billions of pounds from the international money markets, only to then hand that same borrowed cash over to some of the most questionable regimes in the world, just so their leaders can then use it to finance military insurgencies, to purchase private jets, to build themselves private palaces, or even to hide it away in a Swiss bank account, in readiness for when they are finally forced from power? Just how many homes in the UK could that same £11,000,000,000 build? Just how many doctors, nurses, teachers, policemen, soldiers could that money employ every single year? Just think that one year's Foreign Aid budget could pay down almost the entire outstanding debt that the last Labour government incurred as a result of their ill-fated NHS computer system, which was cancelled having amassed a debt to the public purse of around £12,000,000,000. 

 

These figure of course don't include the hundreds of millions of pounds that are paid to the European Union each and every year by way of our membership fees for access to this overly bloated and ultimately failing customs union, which is estimated to cost British taxpayers around £10 billion, not including any associated regulatory costs, which are thought to add on many billions more to the cost of doing business in Europe. On top of these fees, there are also the hundreds of millions of pounds in welfare benefits that are regularly being paid to the stay-at-home dependents of those EU migrants who come to the UK for work; and who receive working tax credits, child tax credits, housing benefits, along with free healthcare and education, in exactly the same measure as their British born counterparts.

 

Now although nobody doubts that some migrants do make a positive overall contribution to the UK economy; and are not in reality the sorts of spongers and scroungers that some would have us believe, it has been estimated that only those migrants who earn in excess of £26,000 per year, around the level of the mythical average wage, actually make a positive net contribution to the financial costs of running of the country. In other words, most migrants probably don't add any substantial economic value to UK Plc; and in fact, all things taken into account, most probably represent an overall net cost to the economy, rather than any sort of net benefit. Based on that same £26,000 per year, the average person would pay around £3200 in Income Tax, which contributes towards meeting the costs of running the country, but takes absolutely no account of any additional benefits received by that individual, including child tax credits, healthcare, education, defence, governance, transport costs, any or all of which might essentially wipe out the relatively small contributions they have personally made through tax.

 

In the case of child tax credits alone, it has been estimated that around 50,000 children living abroad regularly receive payments via their parents who are working in the UK, with roughly 25,000 of these children residing in Poland alone, at a direct cost of millions of pounds to the British taxpayer. Just consider this one fact alone, a working migrant with three young children in their home country, who earns an average salary of £26,000 per year in the UK would pay £3200 in tax, but would receive around £5000 in child tax credits, turning them into a net beneficiary rather than a net contributor. 

 

On top of these highly expensive and fiscally crippling outgoings from the public purse, we also have the current coalition government committing itself and the country's highly stretched exchequer to financing a £50-80 billion pound train set in the form of the proposed HS2 line. Almost before a wooden railway sleeper or a length of rail has been laid, or an earmarked property purchased, tens of millions of pounds of public money have been spent to carry out reports, feasibility studies and campaign propaganda to persuade the British people that the project is both economically necessary and financially achievable. Putting aside the more obvious fact that this proposed project is nothing more than 19th century technology for a 21st century Britain, the basic argument that such a railway will encourage investment in the north of the country is highly questionable at best, given that cutting journey times would almost certainly undermine the basic need for northern based offices or factories, if goods and services can be shipped more quickly from already existing southern based facilities.

 

Then of course there is the more mundane question of costs. If, for the sake of argument the HS2 project ends up costing the best part of £100 billion, as some parties have suggested, just how is that public investment going to be recouped and over what time scale? If one assumes that the new rail line is handed over to the private sector, to a "for profit" company, then how much more will be added to the daily running costs in order for the shareholders to see a reasonable return on their investment; and for the initial public investment to be repaid? Is it too fanciful to suggest that once it was finished the HS2 would become little more than a hugely expensive "white elephant", only being used by those who can afford the price of the ticket, or perhaps more likely being used by the already much put upon daily commuters who will be forced to pay whatever exorbitant passenger rates the company and government decide between themselves?

 

Apart from such "vanity" projects, often favoured by the likes of Tony Blair, Gordon Brown and now David Cameron, there are also the multi-billion pound job creation schemes that political parties of all stripes like to leave behind, in the form of the Quango. Although I have been unable to put a total figure on the annual cost of these various quasi-autonomous government organisations, it is probably safe to say that they cost taxpayer's hundreds of millions of pounds every single year, simply to duplicate work that is being done elsewhere, or that probably doesn't need doing in the first place. In fact it's sole purpose appears to be to act as a well paid job creation scheme for retired or failed politicians, who have otherwise failed to find themselves a better position in the private sector. 

 

Along with the annual running costs of these ministerial job creation schemes, several more billions of public money have been promised to helping create "northern" power houses, centred around larger cities such as Manchester, Leeds and Sheffield, whilst at the same time billions extra are thought to have been earmarked for various road improvements schemes around the country. In total, it has been suggested that long term infrastructure planning has identified a variety of schemes that might well total some £450 billion worth of central government spending in the years to come; and all this from a government that claims to be "economically competent"?

 

At present Britain's total debts are reported to amount to £1.4 trillion pounds, which if I'm right with my number of noughts, is £1,400,000,000,000 currently owed to our various creditors; and yet our economically "competent" chancellor, George Osborne, would rather save a couple of billion here and there, by depriving some of our most vulnerable citizens of vital services, whilst at the same time borrowing tens of billions of pounds to spend on Foreign Aid, EU membership fees, maintaining unnecessary government Quangos and building outdated life-sized train sets.

 

Our country's annual deficit, the money we borrow from the markets to make up the shortfall between what we spend and what we earn as a nation yearly, currently stands at £90-odd billion pounds, which Mr Osborne plans to cut over the next five years through reducing public spending, principally on the nation's vital welfare benefit and services. For me that would be akin to my highly indebted hypothetical homeowner, borrowing money to feed his neighbour, paying his club membership fees and purchasing his new car, while his family starved, their utilities were cut off, their roof blew off and while their old, but perfectly serviceable car stood idle on the driveway. It would be complete and utter economic madness, one driven entirely by an insane ideological zealotry; and if any real person were to attempt it, they would be locked up and the key would be thrown away!  

 

Of course, all of these big budget items worth tens of billions of pounds tend to overshadow what at first glance would appear to be the rather small and unimportant areas of local government spending, which most of us doubtless believe is not as wasteful as that undertaken by central government in London. Clearly though hundreds of millions of pounds of local taxpayers money is regularly frittered away by local chief executives and councillors every single year, either in the form of personal rewards, foreign fact-finding trips, feasibility studies of one sort or another; and of course the much more common council expenses. It used to be the case that serving as a local councillor was purely regarded as a legitimate form of public service, carried out by those who had themselves benefited from their local communities and were keen to offer something back through giving their personal time and efforts to improve and enhance their home communities. Clearly though, nowadays public service is an entirely outmoded concept and it is not uncommon for some local councillors to have turned their elected positions into a reasonably well paid employment post, sometimes in addition to any full-time job the individual councillor might have outside of the council itself. Bearing in mind that such local councillors are said to be responsible for a combined national budget of around £150 billion per year, one could almost take it as a "given" that the likely amount of waste, graft and outright theft within these combined local government budgetary systems would be shocking and alarming to the general public, whose pockets are regularly being picked by these very same local public service politicians. 

 

Common sense would suggest that there are several recurring reasons why our country currently finds itself in such a highly restrictive financial bind, not least of which is that we have people holding the nation's purse strings that shouldn't be trusted with running a bath, never mind a major world economy such as ours. It is probably also worth making the point that only someone with reasonable economic experience, a banker, a book-keeper, an economist, an accountant, or even a mathematician should be allowed anywhere near the nation's finances, in order to ensure that they can at least understand what they're doing with the public's money.

 

All too often governments of all flavours seem to use the public chequebook to pay for their own particular party's ideological beliefs, whether it's schools, hospitals, universities, airports, foreign aid, international intervention, defence, or whatever, but without the courtesy of ever discussing such things beforehand with the British public, who are after all the lenders of last resort. The truth is that politicians, both local and nation, are not necessarily better at managing money than the people they purport to represent. In fact, given a choice I would much rather put an everyday housewife in No.11 Downing Street than the degree-holding halfwit towel folder who currently inhabits that particular property, as I'm reasonably confident that an average housewife cum budgeter would probably do a better job of managing the country's finances than the present incumbent has thus far.

 

Just as a final note on the subject, according to the Guardian, there are said to be 1164 Quangos in the UK, employing 715,000 staff, costing the British taxpayer in the region of £63 billion and responsible for budgets totalling £100 billion per year. Now clearly some of these non-governmental departments are necessary for the efficient administration of the country, but just how many could be cut entirely, or amalgamated together, to produce sizeable fiscal savings is unclear, but obviously there appears to be scope for that. Even if one assumed a 20% saving across the board that would save the country an additional £12 billion pound per year, to be added to at least £10 billion from the Foreign Aid budget, plus a further £10 billion saved by exiting the European Union, which comes out at around £32 billion pounds per year, or £150 billion over the lifetime of a five year parliament. In other words the current deficit of £90 billion would be gone at the end of year three and any subsequent year's savings could be used to pay down some of the country's still existing national debts. Like I said, I'm not an expert, but clearly there is an alternative to cutting down vital services; and that is to cut down on the waste instead. After all, there's evidently plenty of it there to be cut!