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August 19, 2007

Timmy Elsewhere

In tomorrow's (today's?) Times:

The squeals of indignation last week that greeted John Redwood’s policy proposals have been most amusing. Those who gorge at the State’s trough greeted the idea that perhaps we don’t need quite so much regulation, possibly we might slow down the taxation juggernaut, with all the outrage of piglets having their swill withdrawn mid-feed. We even had the Chancellor of the Exchequer claiming that to reduce taxation would be to take money out of the economy: as if leaving money in people’s pocket is to destroy it. Apparently this is the economics they teach lawyers these days.

But over and above such joys I am left with a deep sadness: where is the sense of ambition in today’s politics? Present spending plans are that the politicians should spend more than £500 billion of our money each and every year, with the amount increasing remorselessly into the future. Even the proposals put forward would only slow this growth; no one seems to be suggesting an actual cut in the amounts extracted from us. So allow me to do so.

The Economic Research Council has found that quangos � those 883 bodies that provide relief for the bureaucratic classes � swallow £167.5 billion a year of your and my money. A quarter of that comes from fees on business, something that we as consumers eventually pay; the other £127 billion or so comes directly from our wallets as taxation. The Milk Development Council, the School Food Trust, the Thames Gateway Development Trust and other such bodies. Let’s abolish them. Daisy and Farmer Giles can pay their own advertising bills, Jamie Oliver has the second well in hand and after this summer, who wants to build on a flood plain? The other 880 can be euthanised as well.

In return for this euthanasia we have the opportunity to be radical on the taxation side of the ledger. Income tax now pulls in £147 billion a year, so we can’t quite pay to abolish that: perhaps raising the personal allowance to £100,000 would suit, so that only the rich pay it? National Insurance and VAT raise £88billion and £77 billion respectively: either can go. If we choose VAT for the chop, we would have change left over to eradicate corporation tax, too.

If we decide to be a little more populist, we could eradicate vehicle excise tax, capital gains, inheritance, council tax (yes, and business rates), stamp duty and bring fags and booze back down to reasonable prices by not paying HMG every time we sup or puff (the grand total of these taxes: £85 billion).

If all of that is indeed too extreme, can I just remind you of the most important point about budgets? The humorist P. J. O’Rourke’s Law of Circumcision says that you can take 10 per cent off the top of absolutely anything.

Ambition, that’s what we need in politics today.


August 19, 2007 in The Blogger Himself | Permalink


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Absolutely right, Tim. What I've been saying to anybody who'll listen for years. Why is there no desire to be radical? To push ideas that may actually enthuse our most apathetic population?

Let's just hope somebody listens...

Posted by: Alan | Aug 19, 2007 10:59:46 PM

Nice one...this Liberal Democrat felt that Redwood's ideas were too timid for a Libertarian last week...:)

Posted by: Jock | Aug 19, 2007 11:19:20 PM

If we returned the Government budget to its 2001-2 level we could abolish income tax entirely. Just imagine the instant improvement in people's lives - not least the poors'.

Posted by: Mr Eugenides | Aug 19, 2007 11:35:50 PM

You may be onto something there.

Euthanasia of pensioners is a quick way to cut back on the rising costs to the NHS in caring for an ageing population. That should certainly look compelling in a Conservative election manifesto.

Throw in a bit of eugenics policy as well and we're almost there.

Posted by: Bob B | Aug 19, 2007 11:52:15 PM

We leave that to the MRSA riddled NHS.

Posted by: AntiCitizenOne | Aug 20, 2007 12:02:15 AM

"We leave that to the MRSA riddled NHS"

I have my own personal issues with the local NHS administration so I have few illusions. Besides that, I'm far from being an unqualified admirer of the monolithic, Stalinist structure of the NHS. No other healthcare system in Europe goes around boasting that it employs 1.3 million people.

For a news report on the ranking of healthcare systems in Europe from a neutral source:

"The Euro Health Consumer Index 2006 identifies the most consumer-friendly health care system in the European union, as rated by 27 Index indicators. The 2006 Index includes all the 25 EU public healthcare systems plus Switzerland for reference.

"France emerges as the 2006 winner of the Euro Health Consumer Index, 'with a technically efficient and generously providing healthcare system'. France scores 576 out of 750 maximum points. 2005 years winner, the Netherlands, now takes the silver position, followed by Germany. Estonia and Slovakia gets the highest ranking in the category 'value for money'."

Euro Health Consumer Index 2006:

However, we should also note that France spends a larger percentage of its GDP on healthcare than does Britain and also that France has a higher overall tax burden than Britain does. Despite that or because of it, the DTI (as was) laments:

"The UK has a long-standing productivity gap with its main industrialised competitors. The latest ONS data shows that French productivity is 29 per cent higher than the UK on an output per hour worked basis, while the gap with both the US and Germany is 16 per cent. On an output per worker basis, US productivity is 27 per cent higher than the UK, while French productivity is 11 per cent higher and German productivity is the same as that in the UK."

In the last resort, productivity is mostly what determines comparative living standards - according to mainstream economics.

Btw try to get your facts straight on the NHS - clostridium difficile is now a far more lethal threat to NHS patients in hospital than MRSA:

"The number of deaths linked to the hospital bug Clostridium difficile has outstripped those due to MRSA, latest figures show. Deaths involving Clostridium difficile rose by 69% to 3,800 from 2004-05, the Office for National Statistics said.

"In the same period, MRSA mentions on certificates increased by 39% to 1,629."

Posted by: Bob B | Aug 20, 2007 12:36:43 AM

Bob B,

I'd just like to opt out of having to pay for or receive any "services" the NHS has to offer.

My personal idea for NHS replacement is to use (some of) the money from a citizens dividend (raised by property (physical + intellectual) value tax) and provide the amount needed to purchase insurance for a fit person (matching age + sex).

This would
1/ stop NHS treatment tourism (which BTW massively skews the UKs AIDS figures).

2/ End the moral hazard of subsidising poor health choices.

3/ Stop funding the NHS by fining workers directly.

4/ End national bargaining that messes up pay in different UK regions.

5/ MOST IMPORTANT! treatment would be better, as it puts the patient back in charge.

Posted by: AntiCitizenOne | Aug 20, 2007 1:14:38 AM

"MOST IMPORTANT! treatment would be better, as it puts the patient back in charge."

The patient is in charge in the French system of healthcare, which is funded by a social insurance system combining the state with occupational and mutual schemes. By many ranking exercises, France is regularly rated as having one of the best healthcare systems in Europe, if not the best. And it seems to manage that without dubious citizen dividend schemes founded on obscure property valuation systems - doubtless to the perennial benefit of property valuers.

The NHS usually comes out of these international healthcare ranking exercises with a mediocre rating. One important reason why France has a better system of healthcare is probably because it has had getting on for twice as many qualified physicians per head of population as we have had. However, that, like spending per head on helathcare, still reflects inputs whereas patients, if they are sensible, should be concerned with outcomes rather than with the magnitude of inputs. But then average life expectancy in France is longer than in Britain - which, again, has longer average life expectancy than in America.

Posted by: Bob B | Aug 20, 2007 1:50:20 AM

God, Bob, you don't need much of a prompt to go off on one. The original topic was about cutting taxation. However, if you are concerned with the magnitude of inputs into the NHS (I think more people are concerned with efficiency of resource allocation within it) then consider that that quango payload could be spent on healthcare. Or alternately, split it between health, education and policing/prisons and we'd have increased safety, security and health, rather than just lower levels of sickness.

Based on the figures you present, if you ask me, we ought to be looking to Estonia and Slovakia for tips because value for money is what we need first and foremost in the NHS.

I find the crude comparisons of absolute funding or %GDP funding of health systems often unenlightening. I'd like to know how the % spent on various aspects of the service, e.g. staff, drugs, administration, etc. match up between countries like France and the NHS. It might highlight some dubious decisions.

Posted by: Philip Thomas | Aug 20, 2007 9:35:56 AM

Seems a comment on an earlier post points out that the bulk of the quango spending is on health already, the bulk of the remainder being on education. Somebody stole my idea ;)

This does raise the question of why we need major functions run by quangos? What do they add? How accountable are they? My only real experience of them locally has the use of them by Labour to get my local hospital closed but wash their hands of the blame for it. "The quango did it." comes the cry. So I've little love for them.

Posted by: Philip Thomas | Aug 20, 2007 9:52:59 AM

Are we sure that £170 billion figure is right? It does seem incredibly high.

I've not been filled with much confidence by visiting the Economic Research Council's home page, which has no details and seems to have been last updated in June.

Tim adds: Yes, it is correct: includes rather more than I thought it did though, like the NHS.

Posted by: Smidgeon | Aug 20, 2007 10:08:59 AM

You mean the whole NHS, or just the NHS quangos?

Tim adds: The quangos, but there's been some reorganisation so that it includes more of the NHS than the earlier numbers would have,

Posted by: Smidgeon | Aug 20, 2007 11:24:31 AM

"God, Bob, you don't need much of a prompt to go off on one. The original topic was about cutting taxation."

C'mon. David Cameron is leading on the NHS in today's news:

"The Conservative leader, David Cameron, today promised a 'bare knuckle fight' with the prime minister over government plans to downgrade local hospitals.

"The Tories said 29 district general hospitals were under threat from service cuts as part of government plans to reorganise local NHS care."

And my local hospital is under threat.

Not for the first time, I've been ahead of the news and not behind it.

Posted by: Bob B | Aug 20, 2007 12:06:49 PM

You mean the whole NHS, or just the NHS quangos?

Yes, "just" the quangos, but let's put that in perspective. Govt funding of NHS quangos: £88.5bn. Total gross expenditure of NHS quangos: £112.3bn. Total managed expenditure of the Department of Health in budgetary year 2006-7: £96bn. In funding terms, the NHS pretty much is the NHS quangos.

Ambition, that’s what we need in politics today.

Yes, but even more importantly, we need careful and rational analysis. PT is bang on about the real reason to scrap most of the quangos, plus the removal of the sclerotic effect of a vast bureaucracy looking for ways to justify itself.

Sure, we can save some money, and whatever genuine savings we can make are worth having. But this is a giant bear-trap waiting for anyone who tries publicly to claim that they can save £167.5bn by scrapping the quangos. Public funding of the quangos comes to £123.8bn. Just to save that much, you've got to publicly espouse privatizing the NHS and a part of our education system, and doing away with all regulation (I don't disagree with that, but politically...). And even then, you haven't really "saved" the money, because a lot of the money you've put back in people's pockets from privatizing these services and reducing taxes, will have to come back out of their pockets to pay for the privatized services. It's still worth doing, in principle, for the various economic reasons that hopefully don't need stating here (though the Michael Moore objection on overheads is a counter-argument that needs addressing seriously), but politically it's cloud-cuckoo land, and it's certainly not a saving of anywhere near this scale in terms of the net impact on household budgets (which is what really matters to people).

And that's just to save the first £123.8bn. To save the remainder, you've got to show that all of those charges levied by the various quangos will vanish once the quangos are abolished. Yes, there are plenty of cases of quangos charging their "customers" for "services" that those customers don't want (anyone who has dealt with the Environment Agency and carried out yet another OPRA calculation will know that feeling, for starters). But what about health? That's where over half of those charges are levied. Do we think that prescription charges will be a large part of that? And do we think that prescription charges will be abolished as a result of the privatization of healthcare?

It's no good seizing uncritically on numbers that suit us. If it doesn't stand up to critical examination, it will damage the credibility of the case that it is being used to support, and of the person presenting the argument (Dan :-( ). There are more than enough good arguments for smaller government, without having to resort to bad arguments.

Posted by: bgp | Aug 21, 2007 12:09:35 AM