The Adam Smith Institute
The Adam Smith Institute is the UK's leading innovator of free-market policies. Named after the great Scottish economist and author of The Wealth of Nations, its guiding principles are free markets and a free society. It researches practical ways to inject choice and competition into public services, extend personal freedom, reduce taxes, prune back regulation, and cut government waste.

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Only a billion
By Dr Madsen Pirie

The cost of running the UK government machine rose by £1b last year according to Treasury figures. A million might seem pretty small beer these days. It corresponds to a 7% increase, or four times the rate of inflation.

The depressing feature is that it contrasts sharply with savings in government costs identified and announced. The Taxpayers' Alliance sees £81b of waste to be trimmed. The Conservatives spotted £35b, and even the government’s own enquiry revealed £21b which they duly promised to cut.

Gary Duncan reports that the departments controlled by the Chancellor rose by an even higher 10%, attributed by the Treasury to the costs of merging Customs with Inland Revenue, and bringing in child tax credit. Mergers in private firms are usually accompanied by savings rather than increased costs, however, and other departments lacked even that excuse.

…its figures showed steep rises in running costs in other departments, with increases of more than 30 per cent at the Department for Environment, Food and Rural Affairs, and the Department for Culture, Media and Sport. Costs at the Cabinet Office, which supports the Prime Minister's work at 10 Downing Street rose 16 per cent.

The rise of 6,000 in Civil Service posts in the first quarter of last year contrasts with Treasury plans for a cut of 100,000 Whitehall posts, as well as cost savings of 2.5% a year, rather than a 7% increase. In the early days of his Chancellorship, listeners would have hailed announcements of cuts and savings as a breakthrough to offer better value for taxpayers.

In fact his announcement was treated with scorn and general skepticism, which the latest figures suggest was not misplaced.



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Adam Smith (1723-1790)
Adam Smith was the great Scottish philosopher and economist best known for "The Wealth of Nations", his pioneering book on free trade and market economics.

A wide selection of material about Adam Smith is now available on the Adam Smith website. This includes the full text of his two major works, The Theory of Moral Sentiments and The Wealth of Nations.