The furore about MPs expenses is the tip of a very large iceberg of public spending. The MPs expenses scheme was too generous, and laxly enforced. It is important that Parliament puts in place a cheaper and tighter system for the future, that gives better overall value for money. No-one can now say that public spending has been cut to the bone, when you read of what has been spent.
Whilst MP expenses naturally attract more publicity, there is waste, undesirable spending and excess costs elsewhere in the public sector. The level of public borrowing is now very high. On current plans the government intends to borrow another £3000 for every man, woman and child in the country this year, on top of a similar increase last year. It is going to become more and more difficult to borrow so much without pushing up interest rates, and without taking too much money away from businesses and families who are already hard pressed by the recession.
The political battle usually revolves around claims that any call for less public spending means damaging cuts to essential public services. No-one I know goes into politics to supervise such cuts. We all go in because we want our communities to enjoy better schools, hospitals and public protection. The party divide does not extend to disagreement about the need to be generous to those in need, or to spend on decent services.
The divide is about how many other things governemnt should do, and how much it needs to spend to do it. In Parliament’s case, we could do the job with fewer MPs and fewer supporting staff. Do we need all those expensive computerisaiton schemes in the public sector, ranging from the Identity computer database through to the centralsied NHS computer system? Do we need unelected regional government in England? Do we need so many quangos? Does the BBC need to pay high six and seven figure salaries to people to appear on a public service channel? Do we need to expand the civil service further, as the present government has been doing? Do we need to pay for civil servants and for outside consultants to do the task that one of those could do alone?
We need to apply the techniques of audit and cost control more widely throughout the public sector. We can do more for less. We need to do more for less, as public borrowing is out of control.
June 21, 2009
“It is going to become more and more difficult to borrow so much without … taking too much money away from businesses and families who are already hard pressed by the recession.”
I remember this being a concern historically. The country had a certain savings rate, and so government borrowing took money away from other potential borrowers.
Recently it has been assumed that there is a global capital market, and so any good investment opportunity will attract funds. If our domestic savings rate is too low, it is assumed that we can borrow from abroad.
I wonder what will happen now. The Icelandic government was unable to rescue its banks because their foreign exchange losses exceeded the country’s reserves. To guard against this possibility, banks may be prevented from doing so much international business, making the capital markets less global. If this means that Britain becomes more dependent on domestic savings, it’s true that government borrowing may crowd out private investment. We would also have to address the low British savings rate as a matter of urgency, or it would be hard getting investment for anything at all.