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!
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