Insouciance about Public Sector’s Colossal Overspending

Barely 8 months ago, the three main UK parties, Labour, Conservative and Liberal Democrats, fought a general election campaign more or less on the issue of which of these parties had the best policy for dealing with the enormous internal deficit of £170 billion, one-third of the government’s entire tax revenues, or 14% of the 2008 Gross Domestic Product (GDP).  Some part of this deficit was due to a reduction in tax revenues attributable to the bank crises particularly in the US and the UK.  The bulk however was (and is) due to the profligate expansion after 2001 of the public sector wage bill permitted, even encouraged, by Gordon Brown first as Chancellor and then as Prime Minister from 2007-10 (with his own hapless Chancellor, Alistair Darling, vainly trying to slow the tide of public sector bonbons).

Altogether in the Labour years around 900,000 extra people were taken on to the public sector payrolls, with more still in private companies dependent on public sector contracts.  Around £35-40 billion per annum was added to the direct public sector payrolls (for wages and pensions) in these years, with no-expense-spared refurbishments of accommodation or new buildings for councils, schools, health centres, along with a vast increase in social security benefits in the region of £30 billion per annum.

For this General Election candidate it was (and is) clear that no significant reduction in this vast deficit could be made without pretty much reversing the volume of public sector hiring in the 2001-2010 years.  At the same time, the enormous unfunded public sector (defined benefit) pensions liabilities, accumulating at £5-6 billion each year, would have to be capped immediately and replaced with the defined contribution system now common in the private sector.

Yet what do we see today, but demands for yet more benefits and services, with a disregard for Britain’s plight bordering on insouciance.  Two recent examples catch the eye: in pursuit of its egalitarian objectives, the LibDems are insisting that fathers can take over a part of the mother’s paid baby leave, a period recently extended to 10 months.  At the rate some families have babies, some people will hardly ever be at work, yet employers will have to hold their jobs open and pay someone else to cover for them.  Moreover, if this paid leave sharing arrangement for two working parents goes through, how will employers know in advance how this leave is to be shared?  Potentially two jobs will have to be held open and temporary staff recruited. That many in the private sector – well aware of their employers’ precarious financial position will not take their entitlement is clear – but equally clear is that those in the public sector, where sick-leave at 10 days per year is twice the private sector’s, almost certainly will, driving this sector even further into debt.

The other recent example of indifference to the realities of life, is the demand in a government-commissioned review by Graham Allan, a Labour MP, for a costly new service of ensuring that state monitored education begins at birth.  This again springs from the egalitarian ideology which is the chief driving force of socialists in the Labour and LibDem parties.  Having had to reluctantly concede that middle-class type upbringing is an important ingredient of later success in life, the (socialist) state is to be directly tasked with ensuring that poor parenting (as assessed by the state) is to be supplemented or even replaced by an overarching national scheme of parenting from birth or even during pregnancy, complete with nationally set targets for cognition, speech, reading, social skills, etc.  What might this new scheme be called if the phrase hadn’t been used before?  National Socialism?

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