The public sector shows real growth and the private sector is squeezed – it’s official

 

           For the last eighteen months I have explained how the government’s strategy has been  based around a private sector squeeze – more taxes and higher public sector fees and charges – and continued real expansion of   public sector spending. Most people write about big cuts to the public sector, without accepting the overall position is as I have described.

            Today I can point them to the official figures in yesterday’s OBR book. On page 28 Table shows that government consumption increased real GDP by 0.5%, whilst private consumption decreased real GDP by the same amount. In other words, in the year to June 2011, people were taxed more to pay for a further real increase in public spending.

 

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120 Comments

  1. Antisthenes
    Posted November 30, 2011 at 8:26 am | Permalink

    It’s a pity that Labour and the unions were voted out of government. It would have been better for them to have completed the destruction they had started and get it over with. Millions of public sector workers would then know what the real world is like as millions of them would be thrown out of work or receiving their pay and pensions only infrequently. The unions unable to destroy from within are now bent on completing the destruction from the outside and gaining the benefit of blaming it on the coalition.

    • Posted November 30, 2011 at 10:55 am | Permalink

      I know Antisthenes.

      It was so irresponsible of our union to proactively contact the government to recognise the rising costs of pensions and to work with them to put in place systematic devaluations to ensure that they continued to correctly fund.

      That agreement that further devaluations would be accepted if circumstances changed and the reductions agreed were not sufficient, further reductions would be accepted provided the government product the calculations to justify them……. CLEARLY THEY ARE SO IGNORANT THEY NEED TO BE COMPLETELY DESTROYED.

      AND THOSE OF USE WHO SPEND OUR LIVES WORKING WITH THE MOST DEPRIVED FAMILIES IN SOCIETY RELENTLESSLY TRYING TO BUILD A FUTURE WHERE YOUNG PEOPLE CAN WORK CONSTRUCTIVELY IN SOCIETY RATHER THAN RIOT. WE HAVE NO JOB SECURITY EITHER. THIS IDEA OF THE JOB SECURITY IN THE PUBLIC SECTOR IS 30 YEAR OUT OF DATE. Clearly we need to go and live in the real world.

      So the public sector want the longstanding agreement that part of their wages will automatically go into pensions (to ensure that people provide for their retirement) to continue and would rather take other devaluations in the cost of employment instead. And they are really quite frustrated at minister’s lies about schemes being in crisis when this is not the case and the real crisis is about the need to reduce costs overall.

      (CONDEMN THEM -ed) FOR THEIR IGNORANCE. DO THE ALTERNATIVE CUTS SUGGESTED AND ALSO SHUT DOWN THEIR PENSIONS BY SUDDENLY MASSIVELY INCREASING CONTRIBUTIONS WHEN MANY HAVE NO MONEY TO PAY THOSE INCREASES.

      DESTROY PUBLIC SECTOR PENSIONS NOW.

      Do remember Antisthenes – you could always go and talk to them at a rally today and begin to properly understand the issues. Or if you’re working perhaps you’re to selfish to give up a day’s pay to get involved in the discussions about the future construction of society. You just want to spam out this blog by posting random, anonymous, meaningless anger.

      I’m wondering if perhaps you read yesterday’s Evening Standard and actually thought that this headline:
      “Michael Gove launched a ferocious attack on “hardline, militant” union barons today”
      was even vaguely related to reality. Our union leaders are deeply intelligent, quite people who don’t want a fight at all and just want to be able to negotiate with intelligent people.
      We’re all wondering whether the Minister quoted here is just trying to whip up hatred of the public sector or whether he actually believes what he’s saying in which case it would appear he’d having a mental meltdown.
      Check it out for yourself if you like:
      http://www.youtube.com/watch?v=F6sAWgyHF6I&feature=related

    • Martin C
      Posted November 30, 2011 at 11:29 am | Permalink

      I believe that was precisely the Labour strategy. If the economy were totally wrecked along the lines of Greece or Italy, we would have no choice other than to surrender independence to our rescuers and lose all control of our own affairs, to become merely a satrapy of the EU (as has now happened in Greece / Italy).
      Thus the communist revolution in the UK would be complete; we would henceforth be run by a satrap appointed by that Maoist, Manuel Barroso, and his politbureau, the European Commission.
      Unfortunately there is no way back from that situation, it would be irrevocable. We do not have the vote in any meaningful way in the EU. At that point I would have no choice but take up a gun and prepare to become a martyr.
      Labour’s treason needs to be ruthlessly exposed – not encouraged.

      • wab
        Posted November 30, 2011 at 8:56 pm | Permalink

        Of course, how did we miss that brilliant insight? Labour of course intentionally wrecked the economy because they want us to be subservient to the EU master race.

        Meanwhile back on Planet Earth…

        • Martin C
          Posted December 1, 2011 at 12:38 pm | Permalink

          You seem surprised at my suggestion that one of the, if not THE primary political motivation behind those on the Labour front bench is revolutionaly marxism.
          Why? they all used to openly espouse it at university or at least they did where I went to university. They no longer openly admit to it of course, as they seek to get elected (marxism is “entryist” in its approach).
          The difference between us is, I dont think they have changed fundamentally; I believe if you scratch the surface of Milliband, Balls etc and you will find committed marxists.
          You however seem to know differently.

          Reply: they deny it and do not follow Marxist policies.

          • Martin C
            Posted December 2, 2011 at 12:26 am | Permalink

            “They deny it” true enough but “and do not follow marxist policies” cobblers. The destruction of capitalism, and the consequent creation of a truly socialist state is the objective. Massive uncontrollable debt will acheive precisely that. And that is the motive I ascribe to most if not all of the Labour front bench. Marxism is “entryist”, which basically means lying through your teeth about what your true objectives are, to get power, to thus acheive your aims.
            You should read ‘Das Kapital’ you wuld find it very instructive. If you haven’t already.

    • lifelogic
      Posted November 30, 2011 at 12:23 pm | Permalink

      Indeed and thanks to the abject failure of the coalition to address over regulation, employment laws, bank lending and the over large state sector quickly enough Labour and Unite will, perhaps, be back in power very soon indeed.

      I see today that Cameron has said he will stop the taxpayer, paying a reported £130M PA wages to staff actually on union business. Why on earth was this ever being paid at all and why is it only now being stopped?

      • Jose
        Posted November 30, 2011 at 3:39 pm | Permalink

        It’s quite ‘amusing’ that only 130m saving is small beer in government finances so, the thought has probably been along the lines of ‘it’s not worth all the bother’. And yet in your business just think what you could do with this sort of money, and this is just one simple example of government profligacy.

      • uanime5
        Posted November 30, 2011 at 3:40 pm | Permalink

        Were they paid this during the Thatcher and Major years?

      • rose
        Posted November 30, 2011 at 4:27 pm | Permalink

        And then we will be paying political parties instead, to please the liberals.

        • A different Simon
          Posted November 30, 2011 at 7:03 pm | Permalink

          So long as it is in proportion to votes in general elections , not seats .

          Might that not be preferable to having them paid by vested interests ?

        • Posted November 30, 2011 at 8:45 pm | Permalink

          …and how long before we need state approval to form a political party?

          We are slowly occupying the space being vacated by China, comrades.

          • rose
            Posted December 1, 2011 at 8:54 pm | Permalink

            Slowly? And don’t you mean Superstate Approval?

      • Posted November 30, 2011 at 5:43 pm | Permalink

        If that figure is as accurate as anything else any ministers have sad about this strike then it’s actually what the Camerons pay in wages to their personal staff.

        Why do I suspect he won’t have provided a source or reference for that figure? I suppose if pushed he can always say it was invented/written in a thoroughly researched report by the think tank ‘Reform’.

        • David Price
          Posted November 30, 2011 at 7:06 pm | Permalink

          Not sure about the £130m but a recent report by the TPA (Research Note 97 dated 25-Nov-2011) identified £113m of union funding from the taxpayer in 2010-11 which was up from the previous year. They believe that is an underestimate because some bodies don’t record the time spent while others won’t give the data.

          The Union Learning Fund created by the LAbour government in 1998 is one recipient of this funding. Why should the taxpayer pay for union traning courses when the unions should be funding them from their own dues? More to the point, why wasn’t this nepotistic practice stopped 18 months ago?

          • Posted December 1, 2011 at 1:29 pm | Permalink

            Indeed – I agree. But what is this money? We pay fees which fund our unions. By money from the taxpayer do they mean the union subs of the people who pay in and classify these as being ‘money from taxpayers’ because we also pay tax?

            Any chance of a web reference for that report David? Then it might be possible to analyse this point.

      • A different Simon
        Posted November 30, 2011 at 7:32 pm | Permalink

        Cameron’s arrogance is a liability .

        Today he unnecessarily called the public sector strike a “damp squib” .

        In one fell swoop he needlessly alienated any public servants who may have had reservations about the strike .

        Osborne at least said he had “sympathy for the whole country” .

        Looks like number 11 is outshining number 10 again .

    • Bazman
      Posted November 30, 2011 at 6:44 pm | Permalink

      The banking failures and subsequent crash were the fault of the average worker public or private and the withered unions? Lies and fantasy.
      We are supposed to listen to businessmen who have given themselves massive pay rises/pensions/tax scams/expenses/share options and many other ways or rewarding themselves for failure telling us that pensions of the public sector worker are to generous and should be brought into line with the private sector of whom 65% do not even have one? Even when anyone does have a pension it only pays a few grand a year. Where is the average persons share of the wealth created in the last decade? Lower wages, no pensions from large companies obtaining higher bills through rises in the prices of commodities.
      Had a Labour government not distributed this wealth through tax and spending the average person would have seen nothing but bosses telling everyone how poor they are. With apologists/fantasists like lifelogic blaming over regulation and high wages as the cause of their poverty. The answer being lower wages/conditions and payment by the people who use the services or else, laughably the rich will leave!
      Which employment regulations lifelogic? I will continue to ask you this every time you mention them. What are all these agencies doing?

      • JimF
        Posted December 1, 2011 at 12:08 pm | Permalink

        Employment regulations, to name but 2:
        An employee can walk out on their employer with a notice period but the reverse isn’t possible without lots of aggro for the employer. Tell us why that is fair please.
        Agency Workers Directive: Gives temps the right to know permanent workers’ wages and benefits, even though the reverse isn’t true. Gives temps who have just walked in with 12 weeks’ work the right to demand equivalent conditions to somebody who has been doing the same job diligently for 20 years, just because it is deemed an equivalent job. Does this sound like flexible working?

        • Bazman
          Posted December 1, 2011 at 8:23 pm | Permalink

          It is fair because there cannot ever be more cleaning jobs than cleaners and the cleaner is in less able to exploit his position as an employee than as an employer.
          The second point sometimes works the other way with companies employing temporary workers on higher rates of pay than their regular staff in order to create discord with the regulars who now have worse pay and conditions after 20 years loyal service. Is that flexible working?

    • Electro-Kevin
      Posted November 30, 2011 at 7:43 pm | Permalink

      Antisthenes – I agree. The Coalition have been handed a poisoned chalice.

      • Posted December 1, 2011 at 1:31 pm | Permalink

        ….and have decided to add cyanide, organophosphates and concentrated nitric acid to it.

  2. Brian Tomkinson
    Posted November 30, 2011 at 8:47 am | Permalink

    As has been said many times here the government has created an illusion of cutting spending when their main tactic was to increase taxation. In the process they have created the consequential illusion that because their plan is not on track that “savage cutting of public expenditure” was the wrong thing to have done. As with so many things this was entirely predictable but we can take no satisfaction from the fact that we saw it coming.

    • lifelogic
      Posted November 30, 2011 at 6:08 pm | Permalink

      Indeed the Government claimed cuts but delivered the opposite. What they should have been doing is quietly delivering real cuts starting May 2010.

      They could perhaps have started with all the quack medicine and similar that is pointlessly practised in the NHS. I also see that in the wonderful “free at the point of use” NHS has very many more deaths at weekend. Is it not possible for them to provide services according to need rather than to suit the medics – as most business do. Thus preventing these deaths?

      Free at the point of need so long as it is Monday to Friday.

      I suppose they are to busy with all the homeopathy and the likes or perhaps just dealing with the legal claims from the excess weekend deaths they caused.

      • Bazman
        Posted November 30, 2011 at 6:55 pm | Permalink

        What will be paid for and who will pay should free at point of use be abandoned? An NHS system like toll roads? As you have no answer to this I suggest you think why we should get getting rid of it and many other services you propose to abandon or be paid for by those with their spare money, the rest can just presumably just ram it or pay from it from their low taxed below minimum wages. Your race to the bottom will only end at the poor house which will of course be to expensive and needs to be charitable and privately run without regulations. As if you would last five minutes there.

    • Posted November 30, 2011 at 8:51 pm | Permalink

      It’s not as if we (and many others) are being wise after the event.

      It is so frustrating to see these lemmings getting closer to the edge and taking us all with them.

      It’s not rocket science: cut down the size of the state and get rid of the anti-jobs regulations.

      • lifelogic
        Posted December 1, 2011 at 9:10 am | Permalink

        Indeed.

        It’s not rocket science: cut down the size of the state and get rid of the anti-jobs regulations.

        I would add stop transferring money to the feckless and get some cheap non Huhne energy sorted.

        • Bazman
          Posted December 1, 2011 at 8:26 pm | Permalink

          Which anti jobs regulations? More mindless propaganda that has no basis except in your own cult like beliefs.

  3. James Reade
    Posted November 30, 2011 at 8:55 am | Permalink

    To quote the Queen from Alice in Wonderland, “Why, sometimes I’ve believed as many as six impossible things before breakfast.”

    That’s certainly what you’re feeding your avid fans here, John.

    (1) You mention the public sector “growth” and private sector contraction as if they are totally related – if one didn’t happen, the other couldn’t have either. You believe in an unproven economic theory called “crowding out”. Impossible thing number 1.

    On numerous occasions when you trot out these figures about government spending, I point out a couple of things:

    (2) Where’s the detailed data on which parts of government are growing? You never indulge me and instead ignore my posts. Is it because the data in detail don’t support your prior prejudice, but in aggregate they do? Impossible thing number 2, perhaps?

    (3) We are in a recession, essentially. How many more are unemployed in the last year? Plenty more. Thus, how many less are paying various kinds of income and consumption taxes? Why is it thus any surprise that the public sector is growing as a proportion of GDP as the private sector contracts in a recession, and automatic stabilisers (something you don’t seem to believe in) kick in? I’d say here is impossible things 3 and 4.

    (4) You conveniently ignore the other big announcement from the OBR yesterday, that of a near doubling of the public sector jobs they expect to go from 400k to 710k. Now, even if they are wildly wrong, the point is this: You constantly say how you believe that financial markets are affected by expectations, specifically related to QE. Now that’s not an impossible thing (the degree to which it matters is another thing entirely), but if you believe that, why don’t you think that such announcements and cuts in the public sector have no expectational impact? Why don’t you think they have a heavy negative impact not just on the spending on public sector workers but also on the spending of private sector workers, and on the investments they make? Impossible thing number 5: One group is affected badly by expectations, the other isn’t.

    Can’t think of the sixth just yet, I’m sure it’ll spring to mind.

    To John’s followers who like to penhole me as Labour, Keynesian, leftie, a nutter, a troller, etc., before you penhole me, respond to the above points. I write them because I dislike all politicians (left or right) who try to pass of an idea they know something about economics. They are the classic vested interest, and are using it to support their prior prejudices, rather than to learn more about the world around us. The latter is called research, the former is called a sham.

    Reply: Various programmes are showing sharp real growth, led by overseas aid and the Eu contributions, with more modest real growth in NHS and educaiton spending.
    Private sector employment has been rising and is forecast to continue rising over the next five years.

    • The Realist
      Posted November 30, 2011 at 10:31 am | Permalink

      James – one simple question who creates wealth – the public sector or the private sector? Couldn’t resist it sorry, a second one, could the Public sector survive without the wealth creating private sector ? Correct answers, the private sector and no, just in case your prejudicial mind could not come to the correct conclusion.

      • uanime5
        Posted November 30, 2011 at 3:47 pm | Permalink

        Well without the public sector the private sector would have to pay to educate its employees, and provide them with healthcare and welfare. This would prevent them from ever making a profit.

        If the public sector took over everything the private sector does then they should be able to survive. It is the private sector who would flounder if they took over everything the public sector does.

        Also I noticed that you weren’t able to rebut James’s argument that the public sector is only seems larger because the recession has caused the private sector to contact.

        • lifelogic
          Posted November 30, 2011 at 6:20 pm | Permalink

          The point is the state sector is just too large relative to the private (and hugely inefficient too) and is putting the private sector out of business or making it uncompetitive or just pushing it abroad.

          • Bazman
            Posted December 1, 2011 at 8:32 pm | Permalink

            Takeaway economics again with most of the population eating from bins if implemented.
            The private sector cannot provide the services required for the population at a reasonable price affordable by all and never can. I take it you are a massive fan of toll roads? If not why not?

        • Jon Burgess
          Posted November 30, 2011 at 11:07 pm | Permalink

          “Well without the public sector the private sector would have to pay to educate its employees, and provide them with healthcare and welfare. This would prevent them from ever making a profit.”

          Where do you think the money for education, healthcare and welfare comes from? The magic Government money tree? No it comes from tax payers – individual and corporate. Don’t you think that there is just a chance that the individual tax payer might spend his/her money more efficiently and more wisely if left to his/her own devices? Why should a Government make better choices than an individual?

          “If the public sector took over everything the private sector does then they should be able to survive.”

          Tried and comprehensively failed in Russia and Eastern Europe. ‘Nuff said.

          “It is the private sector who would flounder if they took over everything the public sector does.”

          Not sure I’d agree with you there, but then again, I do agree that some services need to be provided by centralised Government – national defence, the criminal justice system, the emergency services, a national rail network, power generation… but that’s probably about it.

          “Also I noticed that you weren’t able to rebut James’s argument that the public sector is only seems larger because the recession has caused the private sector to contact.”

          The Public sector (as a % of GDP) has gone up and down over the years but generally increases when the UK has a socialist Government – this link shows the year on year figures, and its from the Guardian, so I guess that should be an Ok source with you:
          http://www.guardian.co.uk/news/datablog/2010/apr/25/uk-public-spending-1963

          Notice the peaks – 49.7% in 1975-6, 47.5% in 2009-10 – when Labour were at their economic worst.
          Despite inheriting a relatively healthy 38.2% in 1997-8, and despite a boom economy in the noughties, public spending as a % of GDP steadily grows as Golden Gordon goes on a spending splurge. The public sector got larger under Labour (and continues under this socialist coalition) because this is what a socialist governments want to promote and not because the private sector contracted over this time.

        • Winston Smith
          Posted December 1, 2011 at 12:15 pm | Permalink

          “If the public sector took over everything the private sector does then they should be able to survive.”

          That is called communism. I think the only nation that practices a 100% command economy is North Korea, where millions are starving and they execute those who try to escape.

      • rose
        Posted November 30, 2011 at 4:32 pm | Permalink

        You should have heard the comments in the Farmers Market this am. It was generally felt that a weekend working with a herd of cows might bring home a few truths in certain quarters. Where food comes from for a start, and then what long hours and paying all the bills oneself are like.

      • Sean O'Hare
        Posted November 30, 2011 at 5:38 pm | Permalink

        When the private sector finally fizzles out and there is no wealth creation the leeches will start to feed off assets. Expect to see property taxes skyrocket.

      • James Reade
        Posted December 8, 2011 at 12:07 pm | Permalink

        Hi Realist, glad again you can see what is correct and not, from your Realist position.

        Who creates wealth? Well, what is wealth, first of all? Provide me a definition, let’s see if we agree. Because I suspect the correct answer to your question really depends on how you define wealth.

        Let’s see if we can have a conversation without you insulting me, penholing me, etc.

        I do have my prejudices, since we all do, but as an academic I try my best to put them aside to understand more about the world around me. Do you?

    • norman
      Posted November 30, 2011 at 11:25 am | Permalink

      I’m with you in that we should distrust all politicians. The corollary of this is surely that we should limit their power, and the best way to do this is limit what they can interfere in by restricting governments scope and so leaving as much of the decision making in our own hands. So I doubt we’re a million miles apart on fundamental beliefs, unless you believe in a system like Plato’s Republic where an unelected self-appointed intellectual elite lord it over us, but I doubt anyone really thinks like that nowadays.

      As to your points, from the point of view of an ‘avid fan’ (as stated above, the thing I’m an avid fan of is a politician who tells me he’ll leave me to run my life, and finances, as I see fit), here’s how I see your arguments. I can’t back this up with grand sounding theories or footnotes to academic papers, just the view of a man in the street.

      1) Isn’t every economic theory basically just that, a theory? If there were fixed determinate rules then we could all just follow those and everyone’s a winner. Instead, economies are so fluid, complex, and irrational (to a degree) that theories can never be said to be proven or unproven so while you may disagree with a theory put forward here and say it’s unproven then it’s not simply the case that yours becomes proven by the same measure. That’s why we have debates and weigh the evidence (such as it is and will always be distorted by both sides).

      2) Speaking for myself, I feel that the private sector is taxed too much to be globally attractive to new businesses, and to allow our businesses already here to thrive. Again, you may disagree, which is perfectly fine and a valid point of view. What government does with the money it gets from the private sector to a certain extent I don’t care whether dept. A gets a cut and dept.B gets an increase. I stand to be corrected but I believe a panel of prominent economists was commisioned in the 80’s by Reagan (so take it as read they were right leaning and biased that way) to look at how much government should spend and they came up with an optimal figure of 19% GDP. So it’s aggregate that worries me more than detail.

      3) From my point of view you’re putting the cart before the horse. I’d argue we’re growing less than we hoped/ in recession precisely because government is taxing, borrowing, printing and spending too much.

      4) I agree that bad news depresses people and their decisions but then we’re in a bad place. Should the message be that we should all be rushing out and spending / borrowing extravagently just now? Or that things are bad and going to get worse? Or what? It’s an almost impossible position to know what to say.

      5) If the two groups you mean are worker bees like me and financial markets (hedge funds and the like) then they’re affected differently because they are in different positions. Large financial institutions can still make money when people in the public sector are losing their jobs, and in fact may be encouraged to invest more in a country if they think that it is too big, in other words they may think they can pick up a bargain or two when things are at the bottom and starting to turn a corner. People like me won’t think like that, I’m too worried about how I’m going to pay my mortgage next month, macro economics mean very little to me, just my personal position.

      Sorry for the long post but you did ask for a response and I’ve tried to give one.

      • James Reade
        Posted December 8, 2011 at 12:05 pm | Permalink

        Thanks Norman – do appreciate the response, and very much appreciate the pleasant tone of it compared to many of the other responses here!

        I haven’t got much time to respond to everything, but…

        On (1), sure everything is a theory, but some theories have more empirical backing than others. The ECB paper someone linked up below was classic economics: For different countries, crowding in/out effects differ – but ideally in time, with learning, we work out what the factors are that cause the differences between countries. John, on the other hand, asserts crowding out exists and is terrible, and we must do something about it. That is not learning from the world around us.

        I’ll have to be brief as I have too much to do today, but on (4) I don’t think we should try to just believe we’re in a good place when we’re not – was just pointing out the contradiction in John’s position – he believes expectations matter in one context, but not in another. Again, that’s a pitfall when you take particular positions before looking at the evidence and thinking things through. I’m glad I don’t have to do that – one reason I’m not a politician, out of many.

        Finally, what do we believe on the size of govt and what it should do, and do we agree? My feeling is that the political game means that governments will always have a tendency to grow. People want protection (workers, firm owners, etc), and so they appeal to those with the power to protect them – governments. So I do wonder whether we can limit the govt to what it should do while it’s elected. But I’m not a politicial scientist so I don’t know what people there understand. What I know is there is a role for govt – genuine, legitimate, and that is to enforce the rules of the game to ensure markets function properly. Once you get beyond that statement though it becomes very hard then to put limits on the size of government to arbitrary numbers like 10/20/30/40% etc.

    • Kevin Dabson
      Posted November 30, 2011 at 11:55 am | Permalink

      (1) You mention the public sector “growth” and private sector contraction as if they are totally related – if one didn’t happen, the other couldn’t have either. You believe in an unproven economic theory called “crowding out”. Impossible thing number 1.

      That’s why economics is mostly an art not a science.

      Do you beleive direct/indirect public sector taxes paid into the economy (say 40-50% per person) is real tax income to the treasury or mostly notional ?

      This all seems to me to get mixed up with taxes paid by exporting companies and their employees as if there all the same. What is the difference in the multiplier effect on additional jobs/revenue ?

      Does this country with it’s own central bank and currency even need to export ?

      Do you think people who trade goods and services internationally with sterling paper are perhaps more important to the economy strictly speaking (negating obvious society benefits of the public sector like the police) than the public sector ?

      At the end of the day you cannot export schools, hospitals and so on can you…

      Would be interesting to read a serious analysis on public versus private sector contributions to the economy. Anyhow, I have given up on GDP as a measure. The markets also use other measurements. It’s meaningless. It’s doesn’t even measure the banking sector and financial system for example.

      I have serious doubts about CPI and RPI inflation measurements also, as a means of measuring inflation. But that’s a different matter.

      Agree with John’s views on the banks, that new banks urgently need to be setup out of existing public owned infrastucture. Mervyn King said the same in treasury select commitee meetings and has been saying this for a few years now – the lack of lending and crucially low cost lending. Lending has falling off a cliff. Forget credit easing, they can supply that money to SME’s in the form of tax cuts if they wanted, instead of selecting winners and losers.

      Personally I feel that setting up new retail only banks would of been better.

      That’s the first thing the coalition should of done. How people expect high growth rates/recovery with a semi functioning banking system is beyond beleif. Even the good ones are re-capitalising so are lending out less. There are getting taxed much more now which could be counter productive. Someone on the ICB said that in the FT.

      Economists without banking expertise or a realisation of their importance plus the dire state they were/are in, have been seriously shown up in my opinion. Hence all the wrong predicitions.

      Regards

      Kevin

    • Bryan
      Posted November 30, 2011 at 4:34 pm | Permalink

      All I know about economists is that they are never wrong – even when they are not right.

      A bit like politicians (some anyway)

      • James Reade
        Posted December 8, 2011 at 11:54 am | Permalink

        Thanks Brian. The art of pointing out where someone else is wrong is that you don’t commit yourself to any other position. There is a vast gulf between “right” and “wrong” with the economy because it’s so damn complicated. But the thing is, it’s quite easy to spot where someone is wrong, but hard to ever prove yourself “right”.

    • Caterpillar
      Posted November 30, 2011 at 10:22 pm | Permalink

      To James on your point 1:

      See ECB working paper series No 864, February 2008 (Afonso and Aubyn)

      (Obviously as a professional economist you’ll know more literature than we mortals out here in amateur land, but the conclusion section on page 22/23 of above gives some concern about crowding out in UK. )

      • James Reade
        Posted December 8, 2011 at 11:57 am | Permalink

        Thanks for the link.

        I’m sorry you feel somehow that I present myself as superior to you. I try to only point out where those that don’t study economics often get things wrong, just like if I sat here trying to talk about physics, I’d get things wrong. My aim is not to sound arrogant and above the rest of you, it’s just to point out where John is wrong, because he presents himself as knowledgeable on the economy hence may be able to pull the wool over the eyes of his followers.

    • Posted November 30, 2011 at 10:34 pm | Permalink

      James I find John’s figures completely mad too.

      Can I offer this logic:

      If inflation runs at 5% for 5 years
      but public sector pay rises are 0%, 0%, 0%, 1% and 1%
      and 10% of public sector jobs are cut (which seems to be happening – I’m one of them),
      YOU CUT THE COST OF THE PUBLIC SECTOR BY 24.5%

      Surely this is what’s happening so why on earth is government spending rising?
      It must be all these pet projects of ministers? A billion here to impress Bill Gates, an expensive way of getting a letter from Gove that schools would feel uncomfortable burning there……. more socially divisive faith schools…..

      Reply: My figures are the official published figures, not mine. A large portion of public spending is transfer payments, which have just been increased by 5.2%. Public sector pay is still rising through promotions, automatic seniority and responsibility payments, and pension contributions etc. Public sector energy and property bills are rising.

      • Caterpillar
        Posted December 1, 2011 at 9:45 am | Permalink

        To first part of RH’s comment: I think your (presumed) implication that the Govt/BoE’s policy is all about high inflation is spot on. As Allen Mattich said in The Wall Street Journal (http://blogs.wsj.com/source/2011/11/30/british-struggle-to-live-within-their-means/)

        “With official estimates for the U.K.’s long-run potential growth rate at little more than 2% and with just a 2.5 percentage point output gap seen in the economy, it is hard to see how, over the long run, much of a dent can be made in the U.K.’s debt load without a hefty bout of inflation.
        This is where the Bank of England steps in. Its all-but-stated intention is to devalue sterling further, thus eroding the value of U.K. debt held by foreigners, and to keep inflation well above 2% to ease the burden of debt and to protect nominal house prices.
        The U.K.’s adjustment will come from a decline in household consumption, a decline in government consumption and a transfer of wealth from savers to borrowers. But because the economy has been so out of whack for such a long time and because none of these adjustments can be allowed to happen quickly for fear of big economic dislocations, the British will take a long time to relearn how to live within their means.”

        • Posted December 1, 2011 at 4:47 pm | Permalink

          Thanks for this contextual information Caterpillar – yes it makes perfect sense to me.

          So this announcemenT: http://www.dailymail.co.uk/news/article-2067639/George-Osborne-caps-public-sector-pay-rises-1-year-2015.html means public sector wages are being devalued by more than 8% (assuming inflation of 5%). Although this will be painful people can, at least, plan their budgets coherently in advance. It seems a sensible substitute for shutting down public sector pensions (which will of course be devalued by about 20% though the same process).

          Is a 24.5% decrease in the cost of the public sector in 5 years not enough?

          • Posted December 1, 2011 at 5:51 pm | Permalink

            So John – my calculations show the cost of the public sector will be cut by 24.5% in real terms during this parliament without the pension reforms and all this stuff about cutting the wages of people who have relocated out of London.

            You say the public sector is showing real growth. Why the contrast?

            My calculations are:
            Public sector 3 years at 0%, 2 years at 1%, lose 10% of staff. (100 x 1.01 X1.01 x 0.9) = A
            Inflation 5% for 5 years. 100 x 1.05^5 = B
            100 – A/B

            Reply: The difference between us is I use the proper numbers taken from government accounts and forecasts. You invent back of the envelope numbers of just part of the spending and come up with a very silly answer.

          • Rebecca Hanson
            Posted December 6, 2011 at 1:52 pm | Permalink

            John I’m convinced you are intelligent enough to correct my logic and assumptions should they require correction.

            I wonder why you are choosing to comment in a generally derogatory way instead?

            I’m sure we’ve all heard enough ‘government facts and figures’ recently understand the importance of questioning them with clearly expressed ‘back-of-envelope’ calculations.

      • Posted December 2, 2011 at 2:19 pm | Permalink

        What are these transfer payments John?

        Please could you the figures for your assertion that there are suddenly a larger proportion of people in more senior positions in the public sector?

      • Credible
        Posted December 4, 2011 at 2:03 pm | Permalink

        John,

        Please tell us which sector you work in? Who pays your salary? Please tell us how big your pension is and whether it is going to be cut? Please tell us how much money you will receive from the taxpayer when you are no longer an MP?

        Reply: As you well know my MP’s salary is paid for out of taxpayers’ money in the public sector. I contribute to a pension fund to acquire a final salary based pension on retirement. The MP contribution rate has been raised twice in recent years to 11.5%, and there will be further changes to cut the costs of the MPs’ pension scheme as part of the current pension reforms. I do not know what my final pension will be yet, as it depends on how many more years I work. I support raising the retirement age and intend to carry on working myself, health permitting.

        • Posted December 6, 2011 at 2:08 pm | Permalink

          Back on an envelope…

          £65738 * 29/40 = £47660/annum
          Are MPs pensions not capped at half salary like the rest of the public sector?

          Meanwhile the average worker in the PCS gets a pension of £4200 a year. http://www.bbc.co.uk/news/uk-politics-13772326

          An MP gets about double that after just one term in parliament.

          • Posted December 6, 2011 at 2:27 pm | Permalink

            Hmmm, thinking about it I’m not sure the rest of the public sector are capped at 50% but in practice when they’re in a post graduate qualified profession and you’re on your feet all day and your pensions is in 1/80ths it doesn’t make much difference does it? Especially if you’re a woman and you have to stop working when you have children because your salary doesn’t cover childcare costs.

          • Posted December 6, 2011 at 3:55 pm | Permalink

            Sorry should also have explained that of course that calculation assumes retirement now and I have no desire to see that and would like to wish you a very long and successful future career in politics John.

      • James Reade
        Posted December 8, 2011 at 12:10 pm | Permalink

        AHA! A number, and something on transfer payments! And low and behold, they are a big factor! It’s just what I’ve been saying all along John.

    • Winston Smith
      Posted December 1, 2011 at 4:22 pm | Permalink

      1) Every time you post a rant on here, I and others respond to you and pose questions, which you never reply to. So, it’s a bit hypocritical to accuse JR for not reply in detail to you or the other 100 or so posts on a individual thread.
      2) In point 2 you are implying that if one area of Govt spending is falling then it is wrong to say overall Govt spending is increasing, even when it is. Govt statistics are available for to provide evidence to support your theory, but you don’t; instead, preferring to spout economic hyperbole.
      3) Yes, if the private sector shrinks then the public sector will increase as a proportion of GDP if there is no reduction in State expenditure. However, we are continually told there are drastic cuts in Govt spending. We are spending more in cash terms and after removing inflation than we were the year before. This is the point JR is making.
      4) The OBR predicts State employment to fall by 710k over 6 years, with the market creating 1.7m jobs, which you conveniently leave out, The OBR discovered strong average earnings growth in the public sector, higher than predicted. This means the State is shedding the Indians and keeping the chiefs, as JR has already shown in the armed forces. The OBR also tells us that the State refuses to supply data on department employment. What are they trying to hide?

      Let’s just cut half-truths and name calling and be honest. You are a well-paid State worker, with a generous pension and working benefits. You would like this to continue. You believe in a large State, where self-serving bureaucrats think they are better placed to spend our money than we are. You think you can run a successful economy like this. JR and most others on here disagree, history supports us and we prefer freedom and self-determination.

      • James Reade
        Posted December 8, 2011 at 11:53 am | Permalink

        Hi Winston. My apologies if you feel neglected. I don’t have the time to respond to so many posts, but I don’t own this blog and moderate it, so I don’t have the implied responsibility to respond, and neither am I a elected and paid servant of this nation either. If you do trace back though, you will find I very regularly do reply.

        Your point on my point 2 is wrong. I’m not implying that. Please show me these statistic then, if they prove me wrong. I’m eager to learn, but nobody every does this on here.

        I actually don’t see the point in responding to anything else you’ve written. As I asked you not to, you’ve button holed me. I’m not a state worker, I’m not a believer in big govt either, but you can’t help it can you? I don’t respond to zealots like yourself since you don’t respond to anything I actually write.

    • James Reade
      Posted December 8, 2011 at 11:48 am | Permalink

      “Various programmes” hardly really cuts it, neither does the lack of numbers. I want to know how much spending that is cyclical (benefits etc) is going up, and how much govt receipts that are cyclical (income tax etc) are going down. On health and education, well I believe they were election pledges weren’t they?

  4. Mick Anderson
    Posted November 30, 2011 at 9:02 am | Permalink

    Mr Osborne will claim that it is a matter for regret, but that there is nothing that he can do about it.

    Mr Balls will counter-claim that the differential is still not biased enough towards Public spending, and that the reaming of Private earnings should have been more sever and started sooner.

    All the while, those of us who actually fund the debacle continue to endure, with no effective good news for probably the next decade.

  5. Andy
    Posted November 30, 2011 at 9:04 am | Permalink

    Ah yes so no cuts them. You were right all along.

  6. JimF
    Posted November 30, 2011 at 9:10 am | Permalink

    There will be real dissatisfaction when private sector workers see their kids losing the precious few school days they actually have, they queue at the airport after long-haul business flights (not normally suffered by public sector workers) and so on. These people are creating their own vicious spiral of mutually assured destruction by striking.

    • uanime5
      Posted November 30, 2011 at 3:49 pm | Permalink

      1) Public sector workers also have children at school.

      2) Just because public sector workers can’t afford to fly doesn’t make it wrong for them to strike.

      • Bazman
        Posted November 30, 2011 at 6:57 pm | Permalink

        Yes it does.

      • lifelogic
        Posted November 30, 2011 at 7:02 pm | Permalink

        Yes but their strike day is the same as the school strike day conveniently.

        Of course they can afford to fly they are, on average, far better paid and pensioned than the rest who carry them – anyway there is always those climate summits,conferences and fact finding exercises in exotic locations for them to fly to (on expenses).

    • Andy S
      Posted December 1, 2011 at 9:10 am | Permalink

      Most non-public sector organisations (perhaps not including banks) no longer fly employees business class. Most do not even allow their employees to collect air miles (They go to a central company account).

      Just an anecdote here, a few years ago I flew to Chennai in India (economy) for my company. In the airport at the other end I met and started chatting with 4 guys who worked in the public sector, they had been flown business class and were getting paid overtime for the duration of their trip. They were there to “evaluate” an offshore IT development organisation.

      I wonder how many “evaluation” trips they had to make before they selected a supplier?

  7. Robert K
    Posted November 30, 2011 at 9:16 am | Permalink

    Out of crisis comes conversion. Surely now is the time for the Chancellor to recognise that the fiscal mess we are in can be resolved by a radical change to the relationship between state and society. There is still time for a radical and reforming Parliament to allow Britain to be the enterprise capital of the world. We have the language, the timezone, the business and financial infrastructure, the history, the culture and, roughly speaking, an educated and healthy workforce. All that we need is a government to say “okay, we can’t do everything – it’s over to you, the people. We, the government, will remove the obstacles to wealth creation that the state has swamped you with – the taxes, the regulation and the pettyfogging planning”.
    We don’t need a row with the Eurozone. We simply need to be clear that the state makes a lousy businessperson, a lousy parent and a lousy bank manager. Cut taxes, create a business friendly environment, introduce a sound currency and all these seemingly insurmountable problems will solve themselves.
    Such prosperity as was enjoyed in the UK from the mid-80s to the mid-2000s can be attributed to the notions of free market economics introduced in the early 1980s. It is not coincidental, in my mind, that that prosperity of the 1990s was followed the UK being busted out of the ERM and a period of weak political leadership under the Major government. There was so much infighting at Westminster that the government was mercifully uninterested in public policy. Under the Blair regime that changed for the worse, with a micro-managing media-obsessed government convincing the populus that their economic well being was entirely down to the state. Well, the state has had its go at running the economy and has messed up. Time to put the private sector where it belongs – first.

    • uanime5
      Posted November 30, 2011 at 3:54 pm | Permalink

      ‘We, the government, will remove the obstacles to wealth creation that the state has swamped you with – the taxes, the regulation and the pettyfogging planning”.’

      What are the top 10 things that need to be removed and why?

      “Cut taxes, create a business friendly environment, introduce a sound currency and all these seemingly insurmountable problems will solve themselves.”

      Can you name any examples of when this had worked?

      “Such prosperity as was enjoyed in the UK from the mid-80s to the mid-2000s can be attributed to the notions of free market economics introduced in the early 1980s. ”

      I seem to recall that there was a lot of hatred towards Thatcher and how she was destroying the UK during this period. Very few enjoyed this prosperity.

      “Time to put the private sector where it belongs – first.”

      The welfare of the people is paramount, not the welfare of the economy.

      • stred
        Posted November 30, 2011 at 8:01 pm | Permalink

        Canada.

      • Bob
        Posted November 30, 2011 at 11:39 pm | Permalink

        Without a healthy economy, who will pay for welfare?

      • Winston Smith
        Posted December 1, 2011 at 10:44 am | Permalink

        Yeah, so few people benefitted from the policies of the Thatcher Govt.s they kept voting her back in. I fear you are yet another socialist indoctrinated youth, unaware of the facts and fed lies making you unable to form independent, reasonable opinions.

        Thatcher’s biggest failure was inaction on the infiltration of marxists within State education, who have created a champagne socialist middle-class and a semi-literate, failing underclass.

    • lifelogic
      Posted November 30, 2011 at 7:08 pm | Permalink

      Indeed the UK could indeed be the enterprise capital of the world as you say – we have the language, the timezone, the business and financial infrastructure, the history, the culture and, roughly speaking, an educated and healthy workforce. In Hong Kong we did it very well.

      All we need is a smaller efficient pro business government, less EU and fewer/better regulations.

      Alas we have just Cameron & Clegg and soon Labour and Unite.

  8. javelin
    Posted November 30, 2011 at 9:28 am | Permalink

    Urg – Government keeps getting BIGGER !!

    Even the Bullingdon boys can’t help themselves bribing the tax payers.

    It’s not Government its politics.

    So sad that we dont have REAL Government, making REAL decisions and understanding they are spending REAL peoples money.

    • lifelogic
      Posted November 30, 2011 at 3:24 pm | Permalink

      Indeed falling over them selves to create new silly half baked training and employment schemes using money extracted from companies and thus preventing them employing more.

      Jobs will come is they just stopped taxing, regulating and kicking employers and tax payers so much.

      • Bazman
        Posted December 1, 2011 at 6:05 pm | Permalink

        Lots of jobs, but most people are unable to do them for lack of experience and training.

    • Mike Stallard
      Posted November 30, 2011 at 3:38 pm | Permalink

      Today at lunch time all the argument was about the vulnerable, the poor and child poverty.

      Do you know what?

      If you reward people for being poor and feckless, then guess what happens? You get a lot more of them.

      • Bazman
        Posted November 30, 2011 at 6:24 pm | Permalink

        Your argument being to make them more desperate?

        • lifelogic
          Posted November 30, 2011 at 7:11 pm | Permalink

          No just more self sufficient and less dependent and happier and more fulfilled as a result.

        • JimF
          Posted November 30, 2011 at 8:17 pm | Permalink

          Clearly you haven’t heard of or don’t believe in Pavlovian conditioning.

          • Bazman
            Posted December 1, 2011 at 5:58 pm | Permalink

            Which presumably be used to condition the wealthy to live in the real world too?

        • Jon Burgess
          Posted November 30, 2011 at 11:22 pm | Permalink

          No, the argument is that by offering a universal, bare minimum welfare package that does little to encourage self sufficiency, you get a growing underclass who gravitate towards this income level, amongst whom there is a feeling of automatic entitlement despite not having even contributed to the ‘system’.

          Wow, I’m on a roll tonight!

          • Bazman
            Posted December 1, 2011 at 6:03 pm | Permalink

            They are entitled to food shelter and medical care even if they are bone idle. This is the reality of modern Britain. If you look how the poor live more closely it is not a lifestyle to be envied. Poverty of ideas, education hope etc. If you think starving them will help you are wrong and will blow up in your face. The crime rate would soar. Indisputable fact. If there is undeserving rich then be default there must be undeserving poor.

  9. norman
    Posted November 30, 2011 at 9:53 am | Permalink

    I don’t think it’s fair just to say that the government is taxing the private sector more to pay for more public spending, although that is part of the grand strategy for growth (in government spending).

    They do have a couple more arrows to their bow – printing money to finance bond purchases, as well as externally borrowing massive amounts, so they are trying to spread the pain out over the next few years in the case of the inflationary money printing and in the case of the new bonds by the time they fall due the temporary politicians in charge just now will be long gone and making a decent living from giving speeches / consultancies / directorships / whatever and our children and grandchildren will be left to pick up the pieces.

    Still, at least public sector workers with their inflation linked, final salary pensions (that they typically contribute around 5-10% of the cost, the rest being financed by private sector workers who often can’t afford to put anything past for a pension) should be fine, so not all bad news.

  10. lifelogic
    Posted November 30, 2011 at 10:02 am | Permalink

    Indeed the fungus continues to grow to a size where it will shortly kill the tree that feeds it completely. Also this tree can get just on an aeroplane to Zurich or Hong Kong.

    At least today we did not have to put up with the weather girls over acting, waving their arms about madly and going on global warming and climate change – but without being able to forecast the weather, with any accuracy, for a few days hence.

    People with no pension should clearly not be bankrupted to pay for the higher paid, higher pensioned, fewer working hours, better working conditions, more sick days – state sector workforce.

    • lifelogic
      Posted November 30, 2011 at 1:22 pm | Permalink

      The public sector shows real growth and the private sector is squeezed and hugely squeezed too.

      20%+ drop in GDP and divided per capita amongst a rapidly increasing population too from migration. Virtually no squeeze in the state sector at all so all this 20%+ reductions has been taken by the private sector. Still Cameron heaps more nonsense regulations on business.

      Leave now seems to be the message for the rich and hard working of the UK free yourselves from the governments debts and the bloated state sector.

      Did many even notice that they did not work today – many probably even had an advantage from it – fewer parking tickets, fines, bills and similar.

    • If only...
      Posted November 30, 2011 at 2:19 pm | Permalink

      Quote:
      “At least today we did not have to put up with the weather girls over acting, waving their arms about madly and going on global warming and climate change – but without being able to forecast the weather, with any accuracy, for a few days hence.”

      You sum it up well. Compared to Physics, Climatology is a subject for second rate students and the data they present shows just that. Silly politicians for believing it.

      Get rid of all the ‘green’ wastes of money then perhaps we would not have to be cutting everything else in sight…

    • uanime5
      Posted November 30, 2011 at 3:57 pm | Permalink

      That tree should leave, it’s blocking the light to much more valuable trees which need room to grow.

      Weather and climate aren’t the same thing. That’s why weather forecasters predict the weather and scientists measure the climate.

      It’s not the public sector’s fault that the private sector abuses it’s employees. Maybe they should strike for better pay and conditions.

      • Adam5x5
        Posted November 30, 2011 at 6:48 pm | Permalink

        People striking in the private sector are far more likely to lose their jobs (either through being fired or the company going under).
        As it should be – if you sign the contract to do a certain job for certain pay, you can’t then turn around a few years later and say it’s unfair.

        Although I am curious, I was recently unhappy with my pay and conditions at my job.
        You know what I did?
        Found alternative employment with better pay and conditions.

        Why don’t the people in the state sector do that instead of holding the country to ransom?
        It seems to me that this is something they are unwilling to do.

        • lifelogic
          Posted December 1, 2011 at 9:15 am | Permalink

          Most are not able to get a better paid job they are over paid already.

      • JimF
        Posted November 30, 2011 at 8:22 pm | Permalink

        I think the point is that a strike against your customers in the private sector is counter-productive, as they will just leave. This doesn’t apply in the monopoly of the public sector. Do you understand why this might lead to a difference in perception of entitlements between private and public sector employees?

      • lifelogic
        Posted November 30, 2011 at 10:33 pm | Permalink

        Nothing much but government oppression will grow once freedom and enterprise have been fully driven out.

        Weather and climate are indeed the same thing just measured over a longer time scale.

        You say “It’s not the public sector’s fault that the private sector abuses it’s employees.” Well they generally do not abuse them anyway – they do their best under the tax and legal systems they are inflicted with. The employees can always get another job if they can find a better one and are not under cut through EU migration.

      • Jon Burgess
        Posted November 30, 2011 at 11:29 pm | Permalink

        Maybe most private sector employees realise that the best way to get improved pay and conditions is to work hard, provide a good service for their customers and help to ensure that their employer remains competitive and profitable.

        Perhaps not something most public sector employees on strike today thought about.

  11. Posted November 30, 2011 at 10:44 am | Permalink

    I suppose the chancellor has to speak the language of cuts to fool the ratings-agencies into thinking that we’re implementing austerity rather than spending more and more, and printing more and more money.

    • lifelogic
      Posted November 30, 2011 at 10:35 pm | Permalink

      The market are not so easily fooled by words they look at actions or lack of them.

  12. javelin
    Posted November 30, 2011 at 10:52 am | Permalink

    Today the City plans a huge co-ordinated cull of consultants and contractors – on a months notice for the year end (nothing to do with the strikes). In the Feb they will re-employ them at a lower rate. In Feb a cull of trading and operations staff is planned across the investment banks as more work is becoming automated on the trading floors. It’s is all being done in anticipation of a recession. It probably wont even make the news. The Conservatives should highlight it to show how the private sector is suffering whilst the public sector is cushioned. It shows how far Cameron is from creating a flexible public sector that can weather economic cycles.

    • Mike Stallard
      Posted November 30, 2011 at 3:40 pm | Permalink

      He is so cushioned. He listens to the wrong people – as they said of Tsar Nicholas II.

    • norman
      Posted November 30, 2011 at 3:42 pm | Permalink

      Try as I might I can’t see George Osborne at the dispatch box bemoaning the fact that people who work at banks in the City (regardless that they are IT / operations / admin contractors rather than bonus busting ‘casino traders’) are going through a hard time and having to take a cut in day rate so this shows the private sector is also suffering.

    • uanime5
      Posted November 30, 2011 at 4:03 pm | Permalink

      Consultants and contractors are usually employed on temporary contracts which are not immediately renewed when their contracts end, so what you described is a normal part of business in the City. Whether they’ll be re-employed and what their rate will be will depend upon conditions in February.

      Automation has been going on for decades, which is why manufacture is no longer so labour intensive.

      Both trends you mentioned have occurred in every industry over the past 40-50 years and should not be seen as belt tightening by senior directors in the City who will still earn substantial amounts of money.

      • forthurst
        Posted November 30, 2011 at 6:43 pm | Permalink

        “Consultants and contractors are usually employed on temporary contracts which are not immediately renewed when their contracts end”

        Why do you continually make stuff up? Your posts are full of leftie legends and spontaneous fiction. You’ve obviously never been retained as a contractor otherwise you would know that contracts are normally renewed before expiry in order to achieve continuity. Furthermore, when the finance industry faces a significant downturn, there is usually one big leaving-do.

  13. stred
    Posted November 30, 2011 at 12:24 pm | Permalink

    Re. Increased public sector fees.
    My Building Inspectors are on strike today instead of taking their generous leave allowance.

    The history of my little project is as follows:-
    Following planning delays I submit for BR appoval 12.10

    Approval obtained 1.11 s, subject to structural details of cantilevered hanging bay wall. As the job is delayed by 3 moths, we make a start on site. Foundation is approved without problems. The construction uses recently approved multifoil insulation but no objection is raised.

    My Stuctural Engineer has produced details which are late, done in one day, and do not follow my drawings or brief. His details are submitted to the LA with the wrong parts deleted and email notification of problems. There are wrong loadings, spans, blocked rooms, and unworkable expensive details as well as 2 steel beams and a frame which are not needed. Over the next months he denies the mistakes and sends an offensive letter. He has been paid in full. I dismiss him and ask for his registration number. He does not reply.

    In June, after finding covered up mistakes by the builders, the roof is rebuilt with correct levels and the structure is ready for inspection. I email asking whether structural details as built in accordance with approved drawings can be agreed on site with the Inspector running the job. this should be easy for anyone with a good knowledge of structure. Another B.I. appears on site and comments : ‘oh Christ is the insulation that french stuff we had to take out?’ I reply that it was approved with an Agrement Certificate given in late 2010. He decides that the cantilevered floor might tip up, with the house falling into the street. I think this is ridiculous and write to the other inspector.
    Inspector 2 also does not like the detail at the wall base as approved. He asks for it to be changed and, as it is acceptable, I agree and build it. He says he knows my Engineer, who is a good one and I should not continue until he sorts ou the structural details. Work continues. I write to the ‘Engineer’ and he agrees to recalculate the beams ‘in the interest of the client’. I am in fact his client. He recalculates and proves that timber beams cannot work he repeats the same loading mistakes and also blames me for the confusion over roof structure. He requires details of a future room in the roof, which are not necessary because it is not the future.

    July 12th. The original Inspector brings the Chief LA Structural Engineer on site.
    He measures spans and we agree to bolt the skirtin gto the wall to stop the floor tipping up. I agree to keep him happy despite the joists being securely fixed anyway. He comments that my Engineer must have used steel rather than timber’ to save himself time’. He sees a beam over the lounge, put in 38 years ago which deflects more that it should, and I point out that it was approved by his LA. He notes other details. I ask him to confirm matters. After a week nothing has arrived so I confirm the agreed points by email and continue work.

    August 19th. An email arrives just before we take a 5 day holiday. It forwards a letter from the LA Engineer sent on July 13th. He requires that the timber beams are replaced by steel beams as designed by my dismissed ‘Engineer’. He requires that the 38 year old B.R. approval should be checked and recommends that the beams and piers should be rebuilt. The new floor will still tip up unless the floor is replaced. The bolts in the roof, which he did not inspect, are unfit for purpose. Other snide remarks about workmanship are made which misunderstand the reason for varied joist spacings. We have a largely ruined holiday, worrying about the extra £35,000 worth of work, if they manage to stick this on us.

    Upon return I waste weeks writing to Councillors and refuting these claims. I appoint a new Structural Engineer and he proves that the beams as built are structurally sound. Calculations are sent early September.

    My client writes to the Chief Building Inspector after no reply, insisting that the LAs calculations are made available for us to inspect and that we are given a decision, as the job is now dalayed for months. He replies that ‘ After consulting his team, one thing is clear, the (sacked) Engineer has worked hard to obtain a conditional approval for you, but someone (ie. me) has come onto the job and made nunerous changes! We point out that I obtained the approval and the engineer has been dismissed for making changes to the approved drawings.

    He arrives on site on 21st October, in his huge new car, and complains that the job has overrun time allowance and he may have to charge an additional fee to the £800 due on completion. He says that everyone is confused because of all the changes and he thought the sacked engineer had done all the work because he had looked at the name on the engineer’s drawings. My client had her name on the application, when it should have been the architect. He needed as built drawings to end the confusion. His engineer had probably used the sacked engineers drawings and no calculations would be available. The calculations that I had sent had been objected to except the base of the wall, suggested by Inspector 2.

    However, all the points of objection in his engineers letter were overcome at the meeting. The requirement to rebuild the 38 year old extension were just ‘goodwill advice’. Unfortunately, he had seen the multifoil wall insulation and did not know about the Agrement approval of this in timber frame walls. After the meeting he reappeared with a copy in his hand. He pointed out an illustration of a detail showind timber frame with an outer brick facing. ‘You can’t pick and choose’ he said. The render on the completed wall would not be approved. Demolition appeared a possibility again.

    The manufacturer wrote pointing out that they provide many calculations that are different and brick is shown as an example. He replied that he is not interested in thermal calculations but require to see individual tests by the BBA. We have now written to the BBA and have a supportive letter. We have also had to employ a civil engineer and structural engineer to provide additional calculations.

    We need to agree matters urgently, as costs including Council Tax are mounting.
    The job should have been finished in July.

  14. sm
    Posted November 30, 2011 at 12:36 pm | Permalink

    As you mention above, public spending increases in a recession.

    So why don’t the coalition wax lyrical about the increased public spending priorities? Because its all vested interest stuff. EU spending,Overseas Aid,bilateral loans, indirect/direct banking subsidies etc. How much extra government spending is down to 250k net immigrants a year, just in very broad terms? How much extra CO2 emissions etc. Automatic stabilizer spend is absolutely needed but we dont need to add to it via unrestricted economic migration.

    So in a credit crunch, when the private sector is squeezed by the dynamics of a broke fractional reserve banking system, it is obvious that only sovereign governments have a limited ability to spend in the present system. In the Private sector the bankers say no and thats it. In the Public sector the UK central bank prints Yes and the Politicians spend it the EU/Overseas/bank bailouts both here and overseas.

    It beats me why we are fully and seriously considering a full reserve banking scenario. As the government creates cash for the economy by QE debt interest free. It should raise the capital requirements of the banks and interest rates.

    The money created could be given (indirectly) to all equally on the proviso that any debt should be paid off first and the remainder must be spent or deposited with a full reserve bank. ( Steve Keen promoted this earlier link)

    Why do we tax the little people to death and then allow 500k (250k net) into the country a year to compete in a very competitive labour market. When wages fall, taxes fall, demand falls except for musts which rise because thats where the speculative (probably created by leverage) first off the block hot money goes to feed distorting the price signals. We then appear to subsidize it when they get it wrong.

    Meanwhile cull the frontline and keep the senior and upper management levels.

    Employers still complain that workers are not available at the right price or standard. Its preposterous. Can we have government for the people please. I think a few binding referenda and direct democracy are absolutely required.

    Private pension investment seems crazy to me. I liken them to fish in a ball being squeezed tighter and tighter until they are all taken by the worst predators – a greedy man with no thought for the future.

  15. stred
    Posted November 30, 2011 at 1:04 pm | Permalink

    Sorrry about the rushed typing errors. I should add that this job is a one bedroom extension over a flat roof. One tender came in at £30k, which it should have been, in accordance with my drawings. Two others were at £50k and these included the extra unecessary steelwork, somehow obtained but not provided by myself.

    Over regulation puts the cost up and only the customer suffers- often without realising it.

  16. Richard
    Posted November 30, 2011 at 1:21 pm | Permalink

    The best opportunity to get the levels of borrowing down, came and went in the first 18 months of this administration.
    From my experiences in industry, unpopular cuts and radical changes needed for the turnaround of an unprofitable and overspending organisation have to be made very quickly and have to be more than the minimum required, because predicted decreases in spending are rarely fully achieved and predicted increases in income/revenue/sales always come in below the predicted level.
    So I am not surprised by Government figures showing just this result.

    Recent Government policies being announced all seem to involve extra spending at a time when there should be no extra spending.

    Is there any politician out there (apart from our host) who could make the argument that we need less not more, State borrowing, State taxation, State spending and State interference, actually in order to get the growth we need?

    • A.Sedgwick
      Posted November 30, 2011 at 6:48 pm | Permalink

      Agreed, had Cameron and Osborne gone to the electorate with a strong and robust plan for correcting our embedded economic problems and inbalances they would probably have won a majority. The manifesto, however,was a wishy washy, half baked, uncertain response to key questions so it is no surprise on reflection they managed to come to a deal with the Libdems and basically have achieved very little in 18 months, apart from putting their names in the history books.

  17. Bernard Otway
    Posted November 30, 2011 at 1:45 pm | Permalink

    It is now 1.30pm WHY no answer from James Reade to The Realist’s questions,I have another,When the Roman Empire had got so big in burocracy it was defeated WHY?,answer
    same as the current answer to The Realist’s questions.Last question to James,When the public sector has killed off the private sector,where does the money come from? presumably
    you think collective farms will work,just like they did in the USSR? and the collective appliance factories,and Steve Jobs and Bill Gates clones will come out of the same collective structures,and people like me who started with one little shop in 1986 worked 60 hour and more weeks built my organisation to 69 shops by 1996 and then sold out to enjoy the fruits of my labour,which IF I had done the same thing as a government employee
    I would have got nothing for,not to say the mind numbing box ticking INTERFERENCE.
    I used to have friends who were public servants ,not any more they could not take my
    SARCASTIC VITRIOL,GOOD RIDDANCE !!!!.

  18. Tad Davison
    Posted November 30, 2011 at 4:51 pm | Permalink

    I blame the ‘Woolies’ and those on the left of the Conservative party for not meeting this challenge head-on, and getting the pain out of the way quickly. That lack of courage and initiative might come back to haunt them. That it was caused by Labour’s excessive borrowing in the first place, seems not to have been noticed by some trades unionists. I heard one on the news this lunch time accusing the coalition government of ‘trying to plug the black hole at the expense of the poorly-paid.’ – and this was a teacher! Clearly not a teacher of modern history, or economics!

    Maybe that’s why history is taught so very badly in our schools, and why whole pieces have been conveniently omitted or re-written, so that they can pedal their own version of the truth, a la Soviet Union. Socialism and big, unwieldy government goes hand in hand. Somebody ultimately has to pay for it.

    Labour’s Michael Meacher made a speech in the commons recently, telling us how we ought to create more jobs in the public sector, and that doing so, would increase tax revenues. I’d love to know what he drinks, because it must be fantastic stuff! Who does he think pays the wages of public sector workers in the first place? Talk about fantasy politics!

    And it wasn’t just the last Labour government who were guilty of fecklessness and profligacy, their predecessors didn’t do a bad job of driving the country into the ground either, and many EU governments seem to have followed their lunatic precept. We need REAL growth from the private sector, exporting abroad to countries that have the money to buy our goods and services, to dig us out of this mess, not bigger government, to dig us further into it.

    Tad Davison

    Cambridge

    • Posted November 30, 2011 at 9:09 pm | Permalink

      Oh, the revisionism in the public sector unions is something else. I was always taught that communists are just as bad as fascists at school. Yet in the public sector, blatent communism is just kind of tolerated.

  19. Jeremy Poynton
    Posted November 30, 2011 at 5:05 pm | Permalink

    Meanwhile –
    Bonfire of the Quangos anyone?
    Great Repeal Bill anyone?

    Hopeless. They should have got a huge axe out immediately, and then used it. That would have given them enough time to bring things round. The odds on the next government being Labour again, even with the clearly totally out of his depth Edanoid grow larger by the day, and with the madder by the day Balls back in the Treasury, we will go the way of Greece.

    The Coalition is absolutely hopeless. I’m done with voting for any of the main three parties. None of them have a clue.

  20. Posted November 30, 2011 at 5:45 pm | Permalink

    In business if your forecasts are telling you that an event that could be described as being entirely possible would precipitate insolvency, you act on the assumption that if it can happen, it will.

    Given the state of the Eurozone the statement yesterday should have been based on such an assumption. The action taken should then be slashing overheads ruthlessly, not nodding through a 0.5% increase.

    • Gary
      Posted November 30, 2011 at 6:01 pm | Permalink

      A free market enforces the discipline that you speak of. Socialised money printing moves the risk onto the taxpayer and lets the failing business that make bad decisions continue on life support infinitely. This is the long and short of why we are in a hopeless mess.

  21. Bazman
    Posted November 30, 2011 at 7:12 pm | Permalink

    The private sector is being squeezed by rip off banking charges, sky high energy costs from rip off utility companies and their supplier rising prices. of which the government seems to be doing very little about. The private sector often resorts to the things they can control, falling over themselves to show the workforce how poor they are and saying they are unreasonable when business is bad However when profits are large and there is a lot of work telling the same employees that they are not a charity and the profits are non of their business and cannot be revealed as they are confidential. Can’t have it both ways and the job of the union and it’s members is to ensure it is not.
    The public sector is expanding due to the failure of the banking sector to finance the private sector. If this did not occur then the spiral downwards would be even faster, as they are sort of bypassing the banks which they subsidise and own. The private sector could not provide enough jobs in the boom years and not because of the fantasy of an over large state, which some ways it could be argued is to large. The truth is that the public sector finances the private sector too. Never hear much from the fantasist about private companies with only one customer, the government, on this site and how they should be closed down. Wonder why?

    Reply: Companies have to publish their profits. Sensible companies follow a policy of open book with their employees, and seek to achieve a common approach.

    • norman
      Posted December 1, 2011 at 12:06 pm | Permalink

      Leaving out the anti-capitalism rant of the first couple of paragraphs, let’s take a hypothetical private company with one customer, the government, and cast our eye over it for a couple of seconds.

      The government department / function it supports provides a necessary function or it does not. If it is not providing a necessary function would you say that this is a good use of our money, providing a service that is not needed? We may as well pay people to dig holes in the roads and then others to fill them, or train everyone as glaziers and ask children to smash windows for a couple of hours after school.

      If the service is needed then a private company will fill the need, if the government no longer does so, and if our hypothetical company can provide a good service at a competitive price (and he has a track record to back him up) he should be firm favourite to get the contract.

      If he can’t provide a good service at a competitive price but was given the contract because of who he knew, or some other vaguery (and I fully accept this happens in the private sector too), then is this a good use of our money, paying over the odds for a poor service?

      • Bazman
        Posted December 1, 2011 at 6:13 pm | Permalink

        I’m a capitalist believer that is why you do not get my skills and labour for free. You have to pay the going rate which is the going rate, not what you would like to pay, or what I expect to be paid. Many employers expect servants not workers in my experience.

  22. Posted November 30, 2011 at 8:41 pm | Permalink

    The public sector dead weight is dragging the economy down. The irony is the Labour Party message coming over the BBC: the government has cut too far and too fast. Nobody at the corporation has thought to question this.

    The ‘duty to inform’ part of the BBC’s obligations has not been fulfilled. In fact, we are being misled.

    I would love to see someone in public life risk their career to publicly shout about this!

    • Bazman
      Posted December 1, 2011 at 6:14 pm | Permalink

      As your silly anti BBC site is anonymous then you are a fine one to talk.

  23. Posted November 30, 2011 at 9:05 pm | Permalink

    Yes, yes, but

    a) Manager won’t sack their friends no matter how useless they are
    b) Middle manager / policy types like middle manager / policy type stuff and won’t get rid of it no matter how wasteful it is
    c) Councillors of all stripes love the new labour licensing systems (alcohol, houses of multiple occupation etc.) and smoking bans, so they are staying
    d) No one is doing anything about all the pointless EU regulation

  24. Frances Matta
    Posted December 1, 2011 at 2:29 am | Permalink

    ASDA was much busier this afternoon!

  25. Lindsay McDougall
    Posted December 1, 2011 at 8:35 am | Permalink

    Up to June 2011, we could make the excuse that public expenditure cuts need to be planned and that turning round the ship of state is difficult. In June 2012 and in June 2013, about the right time to put an end to the coalition, such arguments will be more difficult.

  26. Electro-Kevin
    Posted December 1, 2011 at 9:07 am | Permalink

    I disagree with the Public Sector strikes.

    However, the “Why should we pay for bankers’ mistakes ?” argument is a difficult one to answer. As is the corporate tax evasion argument.

    For Britain to pull through we’re going to have to redraw employment contracts and de-unionise many sectors. This (as a unionist) is where I find myself in a cleft stick.

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  • About John Redwood

    John Redwood has been the Member of Parliament for Wokingham since 1987. First attending Kent College, Canterbury, he graduated from Magdalen College, and has a DPhil from All Souls, Oxford. A businessman by background, he has been a director of NM Rothschild merchant bank and chairman of a quoted industrial PLC.
    Published and promoted by Thomas Puddy for John Redwood, both of 30 Rose Street Wokingham RG40 1XU
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