BURNING OUR MONEY

NHS: doubled spending still hasn't delivered

New Labour has doubled NHS spending in England from £34 billion in 1997-98 to £69 billion now, and the Sunday Times has a long piece on where all this extra money has gone. They report an audit carried out by the King's Fund that concludes:

The bulk of new funding for the NHS is being eaten up by pay increases for staff and other “cost pressures”.

The funding increase left for new hospital services in 2004- 05 was only 2.4% despite an overall increase of 12%.

Figures for new doctors and nurses are overstated because more NHS staff are working part-time.

Waiting lists are coming down but some waits for diagnostic tests for cancer and other diseases are increasing.

MRSA infections are still a “significant problem” for the NHS.

This is no surprise to those of us who believe we need a completely different approach based on privatisation, competition and choice. And with health spending now heading for 9 per cent of GDP, we simply must switch over.

But how do we get there? How do we convince the electorate that breaking up the NHS is the only long-term solution?

Of course, in an ideal world, the Tories would adopt the policy and then use all their powers of persuasion to win the argument.

Hmm.

Unfortunately, my experiences on the doorstep show that, despite everything, the public still believe the NHS can and should be saved.

The Tories may be wimps, but hell, they want to get elected. So they have to confine themselves to generalised attacks on bureaucrats and their promise to revive Hattie Jacques. Well, there is that thing about meeting half the cost of private operations, but even that is interpreted by some as an attack on motherhood.

Public choice theory explains why it's so difficult to shrink the state. Out there on the doorsteps I'm discovering people may want lower taxes, but they sure don't want us to dismantle the NHS.

Wastewatch: Ken pisses away another £100,000

Mrs T and I were perambulating through Trafalgar Square earlier this week when we noticed that the water in the fountains had turned a rather distressing shade of urine. Initially we put this down to severely incontinent tourists, but then we picked up one of Ken's many propaganda leaflets at the Tube station.

'St Patrick's Day parade and festival, opened by Ken Livingstone. A free day out for all the family.'

We'd missed the festivities, but the green dye dropped into the fountains had lingered on.

One, this was not 'a free day out'- it was funded by London's taxpayers, at a cost of at least £100,000 (assuming it was no less than previous years).

Two, even setting aside the bombing of Harrods, Bishopsgate, Canary Wharf etc, why exactly do London taxpayers need to 'celebrate the Irish Community's unique contribution to life in the city'? We don't do the same for the English, say. (Mrs T agrees- even though she's half Irish).

Three, why does Ken get to throw all these parties at our expense anyway? It was only a couple of weeks ago that he threw that party where he laid into an Evening Standard reporter.

Grrr.

Making it up as they go along: £5 billion City Academies

The  Labour dominated Commons Select Committee on Education and Skills has issued its report on secondary education. It says:

'We are concerned that some of the Government's flagship policies are based on unexamined assumptions and are not accompanied by measures to test the relationship between cost and effectiveness. The Government hopes that its commitment to diversity and choice will raise standards in secondary education. This cannot be achieved without a rigorous assessment of what works and what does not. Many of these initiatives are expensive (for example, the projected £5 billion that will be spent on 200 Academy schools), yet the evidence that emerges from these programmes is not always properly evaluated and lessons learned before further public funds are committed.'

It's a pretty good commentary on the whole New Labour government. A blizzard of half-baked intitiatives, most of which have to be later abandoned or hacked beyond recognition. But not before taxpayers have parted with another huge pile of cash.

Wastewatch: £259 million on duff Chinooks

The Ministry of Defence has been severely criticised over an order of eight Chinook helicopters, costing £259 million, which remain grounded because of technical problems.

MPs on the Public Accounts Committee said the affair was "one of the worst examples of equipment procurement that the committee has seen".

In truth, this is just the latest in a long line of arms procurement fiascos, for which nobody ever seems to carry the can.

Confessions of a doorstep virgin

Look, out here in the Blogosphere we know all about the Tories- they’re the stupid party, right? They’re the ones that should be so much bolder about cutting taxes, privatising health, education and the BBC, and cracking down on the EU and all those other bad guys. They’re the ones blessed with the one true philosophy of life and liberty, so why the hell don’t they exploit it?

Of course we know why- because they’ve been scared witless by the triumph of Third Way niceness, and the risk of being branded I’m Alright Jack NHS trashing nasties.

Drained of conviction, they really didn’t deserve to win in 1997 or 2001. And we don’t really think they deserve to win this one either.

It’s just that…God, can you seriously contemplate another five years of this lot? Another five years sitting here in pyjamas railing against the enveloping chaos, but having absolutely zero power to do anything?

No, I’ve decided I’ve got to do something practical right now. It can’t wait. So for the first time in my life, I’m getting involved in the grubby compromises of the formal political process.

But exactly what to do? Join the Lib Dems, like so many others round the leafy glades of Surrey? Hmm…more tax than even New Labour, sinking further into the dark protracted abyss of the European project? Etc, etc. I don’t think so.

UKIP? Kilroy? Not without some serious drug abuse.

Which is why I’ve bitten the bullet. I’ve been out doorstep canvassing for the…yes, yes, OK, the stupids.

And you know what? It’s riveting. Much more upbeat than I would ever have imagined.

To start with, it’s much more organised than I’d expected, and the widely trailed Voter Vault, provided free by the US Republicans, really seems to do the biz.

The reception on the doorsteps is generally quite warm. Most people are very willing to tell you what they think, and I definitely haven’t been shouted at, spat at, punched, or had attack dogs set on me. I even got a cup of tea.

So what do the real flesh and blood people say?

First, and encouragingly, there is a universal loathing of Tony and the legions of New Labour. I know I was in the Home Counties and being targeted by the Vault, but even people who admitted voting Labour last time can now barely bring themselves to discuss them.

Second, the issue that comes up most often (by far) is not that tax and spend thing I’m so concerned about, not health or education, not even law and order.

It’s immigration.

For a sensitive soul like me, that’s a shock, reinforced when the old hands tell me that immigration was not an issue in any of the last few elections. This is the bitter legacy of New Labour’s incompetence in totally losing control (notwithstanding the contrary result from the packed studio jury on last night’s Channel Four debate).

Other hot issues are school discipline, and law and order. But I’m pleased to find that tax is bubbling under, just outside the top three. Especially the highly visible Council Tax.

All of which chimes very well with the Tory ‘pledge card’ that we handed out. It says:

‘Lower Taxes
More Police
Cleaner Hospitals
School Discipline
Controlled Immigration’

The pledges didn’t do much for me when I first saw them, but there’s no doubt they hit the top four doorstep issues. Someone’s been thinking about all this.

The only bad news for the Tories seems to be poor old M Howard. Why anyone should think Chuck Kennedy would make a better PM is beyond me, but that seems to be the way quite a few people see it. Others just say they ‘have a few questions’ about MH, without always being sure what they are.

My fellow canvassers were circumspect. There’s loyalty to Howard, a man who took the controls when the ship was disappearing into a black hole, and who has at least got them heading in the right general direction again. Even if the speed is only warp factor 0.000001.

Anyway, I’m no longer just sitting alone in my pyjamas.

For good or ill I’ve lost my virginity.

Art for the economy's sake

Last night I snuck into the ippr debate on ‘why should government support the arts?’ It was held in the super-salubrious top people’s fun palace, the Royal Opera House (cost well over £200 million of mainly public money). Under the chairmanship of Nick Pearce (ippr chief), the heavyweight panel comprised Tessa Jowell, Sir Christopher Frayling (Arts Council chairman), Tony Hall (ROH boss), and Ferdinand Mount (rubicund Times columnist).

Audience members were mainly dressed in arts black, although there was an excellent range of unusual yak skin footwear. Few were paint spattered and it eventually became clear these were not artistes at all, but two or three hundred bureaucrats from the subsidised arts industry (cost £500 million pa direct government funding plus a couple of hundred mill more from the lottery).

Tess kicked off by saying the BBC licence fee would protect us from ‘content becoming prey to unfettered market forces’. We needed only to look at the US to see where that would take us. I could tell she wasn’t a fan of the Simpsons, South Park, West Wing, ER, Desperate Housewives, Pimp My Ride etc, but wondered why she was focussing on the BBC (cost £3 billion pa), rather than the question of arts subsidies generally.

Then she stared at us intently, and slowly intoned ‘what the arts do, and only the arts do, is most important.’ She carried on staring, and said it again, even more slowly. I could tell it was important from the grave nods around me, but…well, what on earth did it mean? Was it perhaps Dada-ism?

I decided it probably was, when she went on to say we need to ‘embed arts subsidies in a more complex narrative of value.’

Much of the debate was similar in tone, but what I gleaned was that there are five key arguments for subsidies:

1. Arts are good for the economy. The creative industries apparently employ two million people and are ‘worth £118 billion a year’. They are growing either twice or four times faster than the economy generally (opinions seem to vary). 29 per cent of overseas visitors come here to see the performing arts.

2. Arts ‘slay the sixth giant- poverty of aspiration, what Bevan called the poverty of imagination.’ It’s reckoned that the arts can motivate underachieving kids, and reform criminals. Tess stressed this is ‘not social engineering, but a social mission.’

3. Arts provide ‘a shared experience’, and are therefore ‘central to our identity and aspirations.’

4. Arts can regenerate inner cities, like the Lowry in Manchester and that converted satanic mill place in Gateshead.

5. It’s the will of the people- “opinion polls” show 70-80 per cent support for the arts.

6. Subsidies permit experimentation.

Umm…you see, the problem with most of these arguments for subsidies is that…er, well, they’re not actually arguments for subsidies. For example, the finance industry is growing faster than the general economy, but nobody thinks we should subsidise that. Why should the arts industry be different? Some guy from the advertising industry said it was because subsidised arts were necessary to feed the…funnily enough, the advertising industry. And there was I thinking admen were fed quite well enough round the plush watering holes of Mayfair.

As for “opinion polls”, and using our taxes to fund impenetrable new dance troupes…

I eventually worked out that the underlying argument is the old public good thing- although we won’t pay individually, we’re all better off with a motivated honest citizenry bound together with those shared experiences etc. So we must pay collectively through taxes. Just like defence or law and order.

Of course, the problem with this approach- ‘mere instrumentalism’ as speakers scathingly called it- is that it leads on to asking whether the arts actually deliver what’s claimed? And even if they do, are they the most efficient way of doing it? For example, we could reduce the social cost of criminality just by banging up more criminals. Teaching villains to hold up sub post offices in blank verse sounds sort of superfluous.

The two best questions from the floor highlighted the non-existent foundations of instrumentalism. A clearly well informed researcher from the University of Kent noted that the evidence was purely anecdotal. To which Frayling reacted like a scalded cat, reading out some waffle that he reckoned proved the evidence was hard. Of course, he was the one who kicked up a terrible fuss just before Christmas when philistine Gordo froze Arts Council funding for three years.

Then- and I never thought I’d find myself saying this- a guy from the ippr asked the excellent question ‘how do you tell how much arts support is enough?’ The by now seriously rattled Frayling blurted out ‘there’s never enough- it’s like the NHS!’

So there we are: even though we can’t measure- or probably even agree on- any of the outputs, the arts need infinite amounts of taxpayers’ money.

Overall, I was struck by how little confidence these people have in their ability to survive in the private sector. As explained in a previous post, Mrs Tyler and I would still go to quite a bit of stuff, even if we had to pay more. Why should everyone else have to subsidise us?

But of course, last night’s bureaucrats are not the guys we actually pay to see. I have no doubt most of our performers and artists would survive and even prosper. However those girls in the yak boots might need to get themselves proper jobs.

Public sector jobs boom

As has been widely reported, the ONS has revised up its figures for public sector employment. It says:

‘From 1991 to 1998, public sector employment fell every year, with an overall reduction of 815,000 for that period. From 1998 to 2004, public sector employment rose every year and is now 583,000 (11 per cent) higher than in June 1998. It is still, however, below the levels of 1991 and 1992. In the year to March 2004, employment in the private sector rose by 119,000, compared with a rise of 146,000 in the public sector.’

The ONS numbers are a year out of date: I estimate another 150,000 public sector jobs were created in the last 12 months, taking the total increase since 1997 Q2 to 725,000 thousand.

We hardly need to spell out again why this is the road to ruin, but it is interesting to compare New Labour’s achievement with the job creation record of previous socialist governments.

Amazingly it turns out they’re already streets ahead of both Wilson and Callaghan. The dismal 1964-1970 Wilson government managed just 550,000, and even the almost terminal 1974-1979 Wilson/Callaghan lot only clocked up 570,000.

What’s more, we know that Blair’s existing spending plans will give us at least another three years of expansion. At the end of which they will have created at least 1.2 million public sector jobs.

Revolutionary heroes everywhere must be proud.

Three strikes

The Tories are promising to revive their three-strikes plan for sentencing persistent offenders. The Telegraph reports:

‘In 1997, Howard introduced legislation that laid down a mandatory minimum sentence of seven years for those convicted for a third time of a drug trafficking offence involving a class A drug and… three years for those convicted for the third time of burglary.

However, Labour secured an amendment to the Act that stated that mandatory sentences should not be imposed if the judge considered it "unjust".

Of course, this is the same Labour whose early release scheme has already resulted in 3,500 additional crimes- 500 of them violent- being committed by people who hadn’t served their original full sentence. The Tories have also undertaken to end that nonsense.

There has been the usual outcry from the usual people- including the mandatory BBC platform for some wide-eyed loon from the Institute for Public Policy Research. Their argument is that recidivism is rife, so prison doesn’t work. But neither do expensive rehabilitation programmes, and I’d rather sleep soundly in my bed knowing at least the three-strikers are out.

Forever, if necessary.

And neither does it wash that we already have a ‘shamingly’ high number of prisoners by international standards. The UK currently has about 70,000: if we had the same number as the US, relative to population, we’d have well over 300,000.

Costs? As noted in a previous post, at nearly 40 grand a year, prison accommodation is not cheap, and Tory plans envisage another 20,000 places. That could be…gulp… three-quarters of a billion more every year. No wonder there are people round our way- rough uncaring people- who point out that a length of rope from B&Q only costs a fiver.

Obviously you wouldn’t start from here, but protecting us from bad guys is one of the state’s genuinely unavoidable responsibilities. And the cost of more prison places has to be weighed against the cost of crime, which even the mushy Home Office puts at some £60 billion pa.

In an ideal world I’m sure we’d all like to believe in the redemption of miserable sinners. It’s just that we don’t actually know how to arrange it in this less than ideal world.

All we can do down here is bang 'em up.

Either that, or hang 'em up.

Minister for Europe

Is this job a deliberate wind-up? It used to be filled by the pompous vacuity that is Peter Hain. Now we’ve got New Labour europhiliac Denis MacShane, a man whose main distinction, according to the Almanac of British Politics, is that he bears a passing resemblance to Bugs Bunny. If I were Bugs I’d sue.

I’ve just heard him pontificating on BBC5 Live about the euro-constitution. Pretty well unchallenged, he told us if we rejected the constitution we’d be shown up as isolationist, europhobic Little Englanders, turning our backs on the future, certain to go green and scaly, blah, blah, blah.

Then he was asked to identify the single key advantage to us of the constitution- a gently underarm delivery you might think. Alas, once asked for a specific, all he could come up with was ‘jobs’.

Say what?

Jobs?

Are we talking about the same euro-sclerotic hulk that’s condemned Germany to those scary Weimar Republic levels of unemployment, etc etc? Jobs?

Maybe he meant jobs for the boys. Like the ones we saw in that fly-on-the-wall about Kilroy at the eurowaffleshop. Those jobs like their graces the Lord and Lady Kinnock had.

He probably didn’t mean jobs at all but more that business about the EU constitution being the only thing standing between us and the panzers rolling again. Unfortunately when asked the specific question, he panicked, and his brain stylus jumped a groove onto the next track- about Labour’s economic miracle.

Anyway the underlying idea seemed to be that if we vote against the constitution, and if everyone else wants to go ahead anyway, and if they decide to kick us out, and if they ban our beef, and if we don’t retaliate by banning their surrender-cheese and cars, and if we can’t join NAFTA, and if the polar ice caps melt, and if the Da Vinci Code turns out to be true, and if those crop circles…oh man, we’re in deep shit…you know what I’m sayin’?

Now look Den, every serious analysis of our EU membership shows the economic costs and benefits are now pretty well a wash. Yes, we would suffer some disadvantage from being outside the EU tariff wall, but world tariffs are much lower now than when we joined. And we’d escape the CAP with all those budget contributions and inflated food prices. Not to mention all that social chapter style anti-market nonsense. And of course, if we lost our rebate or we were forced into the one-size-fits-all Euro, the economic balance would swing heavily in favour of leaving. (For a good analysis of the economic costs and benefits, see ‘Better Off Out?’ an IEA paper by Brian Hindley and Martin Howe).

So Den, do yourself a favour mate- when you’re next asked how the constitution benefits us, for gawd’s sake, don’t mention jobs. In fact don’t go anywhere near the economic balance sheet. Stick with those panzers, or some major arm waving about our place at the top table, or our freedom to live in Tuscany, or crop circles, or…well, just think of something.

I’m sure Bugs would have done a lot better.

Monbiot grapples with Swedish model

When it comes to burning taxpayers’ money, Sweden is in the Champions’ League. Tax and spend runs at around 60% of GDP, compared to our 40%. But big government is surely bad for your wealth, so how come those Swedes have such a high income level? It can’t all be Abba’s royalties, surely.

Anti-market types always like the Swedish model, and good old George Monbiot is no exception:
‘The surprise, for anyone who has swallowed the stories about Britain’s unrivalled economic dynamism, is that, in terms of gross domestic product, Sweden has done as well as we have. In 2002 its GDP per capita was $27,310, and the UK's was $26,240. This is no blip. In only seven years between 1960 and 2001 did Sweden's per capita GDP fall behind the UK's.’

As always you have to check George’s facts, and the latest OECD figures (for 2003) actually put us on $29,000 with the Swedes on $28,100. And those seven years he mentions were actually the most recent years, which kind of suggests their success is waning. But still, they’ve only fallen a bit behind so let’s hear him out:

‘For countries hoping to reach the promised land, there is a choice. They could seek to replicate the Swedish model of development - in which the benefits of growth are widely distributed - or the UK's, in which they are concentrated in the hands of the rich.’

Ah.

Well, where to start?

Let’s look a bit more closely at the history. Up until the sixties, Sweden’s public spending (as a percentage of GDP) was actually lower than ours. In the thirties it was only about half, and in the forties they saved loads more by contracting out of the fight against fascism. Even in 1960 they were only on 31% compared to our 32% (source: Public Spending in the Twentieth Century, Tanzi and Schuknecht).

And guess what- it was during that period that Sweden overtook us in terms of GDP per head. The crossover year was 1957.

Of course, in the swingin’ sixties, most western governments started binge spending, with the appalling Wilson ramping us up to 37%. Even so, by 1970 Sweden was still ‘only’ on 42%.

It wasn’t until Abba came along that things really started going haywire. Guided by the insights in Money Money Money (‘ah-ha, ah-ha, there’s a lot I could do, if I had a little money- it’s a rich man’s world’), Swedish tax and spend soared through 60% by 1985, eventually peaking at almost 70%! Only the Soviet Union was higher.

And that’s when the bills started to come in. By the early nineties the fiscal position was collapsing, growth had slowed and unemployment was rising.

It was no passing aberration, but a crisis of a kind that Britain had faced two decades earlier. The Swedes were forced into an anguished public debate, and all credit to them, they decided to confront reality. A savage programme of fiscal retrenchment began. Cash limits were imposed, and welfare payments cut.

But history shows the debilitating effects of fiscal indulgence last for years. The body economic becomes very fond of its welfare diet. Arteries get clogged, and the desire for ten-mile runs or even just getting off the butt dims. Wriggling back into those electric blue sateen culottes takes a superhuman effort.

Sweden had a quarter century of world leading tax and spend. During that period it enjoyed the fruits of its strong industrial base, which had actually been built up during an era of much lower taxes. It apparently had its cake and ate it.

Now the process has gone into reverse, it will be very interesting to see whether Sweden can stick at 60% or will need to get down closer to the European average. I wouldn’t want to be Swedish and poor.

In any event, for George or anyone else to hold us up as the model of small government, to be compared to redistributive big government Sweden, is grossly misleading. Predictably, Britain under New Labour is muddling along somewhere in the middle, quite possibly getting the worst of both worlds.

The real choice is between the Swedish model, with 60% tax, and the United States with 30%. Sweden certainly has much lower income inequality, but only at the cost of per capita GDP that is 25% lower. And that gap is growing.