The never ending rise of public spending


There was an interesting piece over on Douglas Carswell MP's blog this week, asking "Why does government spending increase no matter who's in office?" Looking at the graph he produced using (left) it's easy to see his point. Whether the government has been Tory or Labour, spending has just gone up, up and up – albeit with an occasional (minor) dip or pause.

Douglas' suggestion is that the rise in spending mirrors the decline in Parliament's power to check, scrutinize, and hold the government to account. He argues that the UK's whole budgetary process should be overhauled, with Select Committees given the power to approve or reject annual departmental and QUANGO spending.

Well, I'm certainly in favour of greater parliamentary accountability and a more constrained executive, and I agree with Douglas that the UK's budget day is a 'charade'. But would giving MPs more people really reduce expenditure? I can see how it might, but I can also see that some MPs would soon be selling their approval in return for funding of their pet projects – pork-barrel politics, as the Americans call it.

The other problem is that cutting out waste can only take us so far. Now, I think the state could probably carry out all the functions it does now for around 30-35 percent of GDP – if they did things really efficiently – rather than the 45 percent or so they spend at the moment. But as long as we have a full-blown welfare state we're not going to be able to get it any lower than that. Indeed, with a growing and ageing population, welfare statism pretty much condemns us to ever-higher public spending.

The only way to escape that upward spiral, in the long run, is to move whole services out of public funding, and into the private sector economy. Getting people to save for their retirements (as in Chile) and their healthcare (as in Singapore) would be a good start. An education tax credit, like the one advocated by the Cato Institute, is also worth investigating.

Douglas Carswell's excellent new book,
The Plan – Twelve Months to Renew Britain, is available here.