Honours and the Trade Deficit

In the two days before the Queen’s birthday parade – Trooping the Colour, on Horseguards’ Parade in London on June 16th – two lists were published.  One of these was the list of those receiving an award in the Queen’s birthday honours.  The second list was the trade figures for May 2012 and previous months and quarters.

While everyone – retired, working in the public sector or the private sector, unemployed, families, the government – buys imports, only the private sector exports products and services to pay for those imports[1].

Imports continue to flow in, but fewer exports flow out

The UK goods trade deficit is the figure which nobody seems to want to talk about.  Yet it is the single biggest factor in the two most vital external features of the UK’s loss of national power and well-being: the pound sterling exchange rate with the Deutsche Mark[2] and the net financial worth of the United Kingdom[3].

Figures released by the UK government’s Office for National Statistics (ONS) including the adjusted figures for 2010 showed that:


£ billion 2012 months

£ billion 2010 year

April World

March World



Rest of world


UK Goods exports to







UK Goods imports from














UK Services exports[4] to







UK Services imports from














UK Goods & Services Balance













A number of things stand out from the table.  When allowance is made for the fact that in modern manufacture, on average one person per year creates about £100,000 of added value, then the goods deficit of £98 billion, which is approximately equal to added value, means that 980,000 skilled or semi-skilled people are not being employed for a year, more than half the claimant count.

The 2012 monthly figures indicate that these adverse trade figures are set to continue as even in a recession imports continue to rise.  A more detailed look at the figures reveals that the biggest single items are consumer goods and food products, principally from the EU and China.  The major retail chains are the chief culprits here as they spend next to no time working with British manufacturers to see how they could design and make products for their stores.  (This especially applies to textile manufacturers where large quantities are imported from high wage economies such as Germany and Italy.)

The annual goods deficit is comparable at £100 billion with the UK’s internal fiscal deficit, to which the present government is giving massive attention (rightly) but without a coherent growth strategy.  Yet halving the goods trade deficit through increasing exports by about 20%, or £50 billion, would create around half a million new jobs, stop the increase in the UK’s external debt accumulation, and add 3% to GDP.

Honours continue to flow to the public sector

Given these ominous figures one might have though that any rational society would honour and reward those trying to correct them.

The actuality is the reverse.  Excluding awards of the Royal Victorian Order, which are made for services directly rendered to the Sovereign, there were 140 senior awards carrying titles or CBs and CBEs to what may be expected to be the leadership sections of British society.  This is repeated every six months!  Of these 140, 23 or 16% were made to the private sector (generously interpreted) and 84% to the public[5] and charity sectors who up to now have exerted little or no effort towards the absolutely vital objective of increasing exports or import substitution.  Put another way, the private sector with three and a half times the number of employees as the public sector, received one sixth of the number of senior honours, i.e. the worthiness of senior people in the private sector was deemed to be one twentieth that in the public sector.  If you extend the analysis to the junior orders (OBEs and MBEs) the private to public disproportion is even greater.  Indeed it is difficult to discern any private sector workers amid the welter of employees of local authorities, quangos, education, social and health services, many on salaries and final salary pension schemes which private sector employees can only dream of[6].

What is to be done?

Given the figures in the table above, increasing output, predominantly in goods, and therefore growth and employment, is the only way to provide the standard of living which people assume to be the prerogative of a first world country like the UK.  The state services generally, and the education, health and social services systems in particular have been pampered, and excuses have been made by and for them for the last 20 years at least.  Now is the time for them to shape up, shut up and deliver.

One of the striking features of British society – as observed by the writer – is the total disconnection between the outlook of those in the public sector from those in the private sector.  Generals, admirals, air-marshals, chiefs of local authorities, the civil service, the National Health Service, university staff, head-teachers and so on routinely say that the balance of trade, exports and imports, are nothing to do with them – that’s the responsibility of the private sector.  But it’s not true.  These groups are responsible for billions of pounds of goods and software purchases each year – most of it imported.

If it were made clear that no senior honours at all would be made in the banking and public sectors, including of course the Civil Service, until both the trade and fiscal deficits had been eliminated by increased exports and import substitution, businesses and exporters especially would be overwhelmed by offers to help clear away the obstacles to achieving these goals by increased home production.  State schools would begin to ensure that every young person could read, write and speak properly.   Public sector labour costs and therefore budgets would be reduced at all levels, especially at the top, by reducing paperwork and time-wasting meetings.

A basic systems principle is, “You get what you measure”.  No honours without measurable results is one way to make any country, especially a status conscious one like the UK, a much more productive society.

[1] Universities export educational services in the form of courses attended by overseas students. It is moot whether this is a private or public sector activity. Manufactures account for 62% of exports (see table). Non-financial services account for about 26% and financial services for about 11%.

[2] From 1960 the DM:£ rate reduced from 12 to 8 by 1972, to 4 in 1979, to about 2.4 today (translating the euro at 1.95 DM which was its value in 1999).

[3] Net financial worth is a country’s external assets in foreign countries less the foreign countries’ assets in the UK.  Since a high-spot of plus £86 billion in 1985, this figure has turned steadily negative as the imports of goods exceeded exports from 1984 onwards, implying net foreign borrowing by the private sector which has to be serviced.

[4] There are 11 categories of service used by the Office for National Statistics, of which technical and business services at £34 billion and financial services at £31 billion are the two biggest contributors by far to the positive trade balance in UK services.

[5] These remarks do not apply to gallantry awards which are a totally separate matter.

[6] Average wages in the public sector now exceed those in the private sector. The private sector million pound plus salaries which are quoted by public sector chiefs apply to only a handful of people. Most private sector senior managers and directors are on less than £120,000 – well below the senior levels of the Civil Service and local government.

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2 Responses to “Honours and the Trade Deficit”

  1. Ageing Albion says:

    You omit to say that the honours system has long been used for a substitute for paying public sector workers the sort of pay that they would expect at equivalent levels of seniority in the private sector (which in turn omits the fact that most of the people in the public sector are there because they cannot secure equivalent roles in the private sector). Yes Minister, as ever, was spot on in this regard.

    The excellent Francis Bennion has made this point many times, see eg http://www.francisbennion.com/pdfs/fb/2000/2000-050-rooted-in-dishonour.pdf

    In the military it also serves the rather more useful purpose of encouraging men to risk their lives in the course of battle.

    Whether any of the public servants would do anything better with their time if they were threatened with losing their gongs is a moot point, but I suspect that they would not. The state system would probably just be replaced by a private honours system offered in its place by some keen-eyed entrepreneur. Greg Dyke, for example, who ought to have won an award for being the person who personifies most that is wrong with Britain today, instead was given an “award” by a group calling itself “Empower Scotland” for saying that the BBC was “hideously white”, Dyke evidently being of the opinion that the only Englishman the BBC should have hired was himself.

    Labour famously increased the public service by more than 750,000 people. This was if nothing else a very clever election ploy. No government would sack them en mass without losing that many votes (plus those of their spouses or partners), and traditionally public servants vote Labour because they feel more secure individually in their jobs and consider Labour more likely to grant them a pay rise.

    The only solution is for a government to have the courage to pare the public sector back to what is actually needed. Cuts to budgets are not the way to do this – the public sector knows very well how to fight back. E.g. a local authority will trim frontline services, rather than middle management (or – perish the thought – dropping their top salaries to less than that of the Prime Minister). They will then blame it on central government and hope thereby that ratepayers will take out their annoyance at the ballot box and vote in someone who will keep the cash flowing in the right direction.

    We need, therefore, a government committed to reducing the size of the state. We had one once, not so very long ago, but the left-leaning press has spared no effort in the years since to ensure no-one tries that again.

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  2. Stephen Bush says:

    I excluded gallantry awards, military or civilian, from my comments. I also omitted a comment on the honours system being a substitute for pay because it is no longer true.

    Senior public sector workers in the Civil Service, Quangos and Local Government customarily compare their salaries of £150-£250,000 with the headline £1 million plus per annum salaries of FTSE 100 bosses and City fund managers. But these are very few in number and the jobs are not remotely comparable.

    Comparable jobs in industry are profit centre directors, as in factories and marketing departments, responsible for £100 million plus actual sales, where salaries are perhaps £70-£150,000 – rarely more. Overall the average full-time public sector employee is on £27,000 compared with £25,000 in the private sector. And then there are pensions . . .

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