Spending cuts

[andrewducker]

If the government follows through on this spending review, public spending in 2014-15 will be spending 4% less, in real terms than it is today, but roughly the same amount, as a share of the economy as it was spending in 2005-6.
...
Labour is right to stress that economic growth will be crucial to how tough these spending cuts feel - and, indeed, whether cuts of this magnitude are even necessary.
...
But, the coalition is right that this is not about turning Britain into Hong Kong. It is about reversing a small-ish part of the relentless upward march in government spending since the war. The fact that it should take such a gargantuan effort to achieve even this merely demonstrates quite how relentless that upward march can be, in a rich but now ageing modern economy.

from The BBC

Comments

[andrewducker]

For extra credit, are the commas in that first sentence correctly placed? And if not, where should they be?

[drplokta]

"If the government follows through on this spending review, public spending in 2014-15 will be [spending] 4% less, in real terms, than it is today, but roughly the same amount, as a share of the economy, as it was [spending] in 2005-6."

But that's really ugly, so I'd rewrite the sentence, or use brackets instead of commas.

[gonzo21.livejournal.com]

Yep, that's where I think the Tories have missed a trick. they should have sold these cuts not as cuts, as such, but a return to spending levels of 5 years ago just before New Labour went mad and started with the profligate and unsustainable spending spree.

[communicator.livejournal.com]

A crucial issue is not how much is being spent but what it is being spent on. Laying half a million people off removes their productive capacity, and requires us to support them in idleness, which makes a further drain on resources, and so on in a downward spiral. That's why people on both sides of the political fence talk about the danger of a 'double dip' recession.

If money is directed at enriching a small number of already rich people, this may be the same level of 'government spend' as providing welfare or education for poor people, but the impact on society is very different.

[communicator.livejournal.com]

Ah, as I was typing this it was actually leaked

http://www.guardian.co.uk/politics/2010/oct/19/spending-review-document-job-cuts

You will see that we are not returning to 2005 levels of employment or wages in the public sector. Now, you may think that this is good - but it is not a simple retrenchment to previous positions, it is a change of approach which will have a profound effect on british society.

[iainjcoleman.livejournal.com]

You will see that we are not returning to 2005 levels of employment or wages in the public sector.

This is correct. A reduction of 490,000 public sector jobs (as identified in the article) brings us back to 2002 levels of public sector employment.

[communicator.livejournal.com]

It's not going to be like 2002 either. I sincerely hope you and yours escape any hurt, but plenty of other people won't. And I'm not talking abotu myself - I can duck and dive and get by.

[communicator.livejournal.com]

It is not just about raw number of jobs or raw amount of money spent. In the context of high unemployment, total public spending will naturally rise as it did under Thatcher despite her cuts. To keep spending at the level is was under high employment means massive cuts in other areas.

On the subject of public sector employment, once again it is a question of how people will be deployed. In the central DfE there are I think about 500 civil servants. Currently more than 100 of these are working to implement Michael Gove's 16 'free schools', leaving the remainder to administer the entire British education system.

Incidentally here is an account of the numbers of civil servants employed in recent years and this shows that the deficit was being more successfully addressed by a policy of high employment and a wide tax base in the early part of this decade.

[pete stevens (from livejournal.com)]

"Laying half a million people off removes their productive capacity, and requires us to support them in idleness."

That depends on your view of the public sector. Anyone who deals with government red tape would take the view that sacking half a million people in the public sector would free up their productive capacity, decrease their tax bill, increase their free time and might make their recruitment problems easier. It'd also allow them to sack the HR consultants, the filling in forms for the government grant consultants[*] and possibly the accountancy bill.

[*] I've only just come across this one. It turns out that the various quangos and departments have all sorts of grants for encouraging businesses to do all sorts of silly things. Now any small or medium business doesn't have time to keep track of this, so you employ a bunch of grant consultants and periodically they ask you to alter your business slightly in order to qualify for a grant, and they only take 15% of the grant as a fee.

[communicator.livejournal.com]

I am glad this has been posted because it shows the quality of economic judgement and cool reflection which underpins these cuts. Now, some people may think that is high quality judgement, and others may have another opinion.

[missedith01.livejournal.com]

I deal with government red tape (the benefit system) in my work and would view any reduction in the number of civil servants available to administer the benefit system as a disaster. The system barely creaks by as it is, claimants often suffer significant delays in adjudication of their claims and in some cases claims are not properly investigated at the start or not properly maintained leading to significant levels of error and fraud.

"Government red tape" is an emotive term. It includes many functions which are crucial to the wellbeing of, well, most of us.

[pete stevens (from livejournal.com)]

HM Revenue employs about 85000 people. This is a bit over half the size of Barclays Bank at 145000. Barclays has 48 million customers compared to HM Revenue at about 28 million. The Revenue has to manage a couple of transaction per year per customer, Barclays has hundreds per year per customer.

Lets compare the customer service, Barclays has a call centre where they usually answer the phone, 75% of Revenue calls go unanswered. Barclays maintains branches in every town with multiple branches in larger ones, the Revenue does not. Barclays maintains automated machines that can tell you your details and carry out transactions at any time, the Revenue does not. Barclays has a convenient website that allows you to carry out transactions at any time, the Revenue is getting there slowly (in particular VAT & self assessment) so they're reasonably even on that count. Barclays offers near instantaneous transfers anywhere in the world via a card, the Revenue does not.

So it's not immediately obvious that the Revenue is understaffed compared to Barclays considering it provides far fewer functions.

However, the Revenue don't exactly have an excellent record for customer service, to take one such review off the internet about receiving tax credits,

"But now I am a claimant and can laugh in the sure knowledge that whatever random sum they pay me, I know too much about the system to make the error of spending it, since they will undoubtedly want it back at some point in the future."

http://missedith01.livejournal.com/480894.html


The Revenues own estimate is that 9% of child tax credits are wrong. They stuffed up 6 million tax codes this year. Before you blame this on the merger with Customs and Excise they stuffed up 1 million tax credits in 2003, hundreds of thousands in 2004 by deleting the tax records before they'd processed them, hundreds of thousands of pensioners in 2005,

They've already threatened to send the bailiffs round because I paid them the correct amount of tax early. It was incredibly hard to track down every sub department in order to completely change my company address. Responses from the Inland Revenue take weeks, whereas Barclays manage a couple of days.


Taking a cue from MySociety - who have built some of the best 'government' websites one of their board trustees says,

"Most people hate dealing with government. They fully expect it to be a painful experience. At a deep level politicians and civil servants simply see the world differently from normal people. They are the masters at constructing elaborately labyrinthine systems in which it’s easier to get lost than to make something happen."

http://agitagogo.com/abcedery/b/


I just don't believe that the solution for the Inland Revenue is to employ yet more people to administer yet more complicated systems incorrectly. There is a great deal of wisdom the phrase 'Perfection is not attained where there is nothing more to add, but when there is nothing more to remove.'

[missedith01.livejournal.com]

I don't think you can make a valid comparison between what Barclays do and what HMRC do.

[pete stevens (from livejournal.com)]

Quite. For any given client the Barclays tax avoidance team can calculate how much tax you pay, iterate through every single financial product they have and work out how much more or less tax you'd pay if you bought it in order to figure out the optimal set of services you should buy in order to minimise your tax bill. Maintaining a computer system that can accurately calculate tax quickly is a tiny part of their business.

Now Barclays do outspend HMRC on IT, they spend a bit over £1bn/year compared to about £800m for HMRC.