UK Soviet economy, further evidence

Economy overdependent on government spending.

Gordon Brown’ s Labour government is crowding out the private sector and in parts of the UK dependence on government spending  has now surged to more than 60% in some areas of England and over 70% elsewhere. As I tried to explain in this post the size of the government is far too large, we need smaller government and a much smaller public sector if we are to have any real chance of delivering the sort of output which will help us climb out of recession.

James Forsythe at Coffee House says:

State spending at this level crowds out the private sector and places a tax burden on the wealth-creating sector that makes it uncompetitive in a global economy. If Britain is to get itself back on its feet after this recession, it will have to do so with a far smaller public sector.

Here in the North-East as jobs are lost at Nissan, Findus, Northern Rock, it seems that the empire is growing in Newcastle, Washington, and Durham, has anyone seen the size of HMRC in Newcastle? It’s bigger than H-Block!

When Secretary Prime Minister Brown and his Labour government have completed the Sovietisation of the UK’s economy, when we are all employed by the government in one form or another (including some of the biggest charities) just who, exactly, will be producung the wealth that produces the taxes which pays for the gigantic public sector?

It’s not as if I’m alone in thinking this way, I’ve just been reading an interview with Lord Healey, the 92 year old former Labour Chancellor in which he has one or two critical and straight words to say to the man currently wrecking the UK.

We’ve got far too many people working in the public sector. I had a lot of trouble over that. You had the union barons then. Now, the mass of the unions reflects the opinion in the mass of the country. So it would be much easier to cut the public sector these days: but Gordon would have to watch carefully the areas he made them in. I agree with what Digby Jones [the former business minister] said. There’s probably twice as many people working in the public sector as is necessary. And the number has grown for institutional reasons, because institutions like to be as big as possible.

He also has a go at Labour’s current spouting on taxing the rich, thus driving the wealth creators out of the country:

When Lord Healey was chancellor the top rate of tax was 83 per cent, and the rate on unearned income was 98 per cent. Before becoming chancellor he had promised the Labour Party that taxes would rise and that there would be “howls of anguish from those rich enough to suffer”. Did he support Gordon Brown’s decision to raise taxes on the higher paid now?

“I have great respect for Gordon’s judgment, and I think he’ll do it OK.” But was this largely a gesture aimed at cheering up Labour’s core vote in difficult times? Lord Healey is disarmingly honest. “I think probably so. Because what I learned as chancellor was that the rich can nearly always find ways of avoiding tax that are legal, and in any case the amount raised is very small. And it does encourage people to leave the country.”

So did he regret the regime of penal taxation over which he presided? “I think so, yes. The main effect was to get people to invest abroad rather than in the UK, which was bad.”

So that’s it then, with Brown we are all screwed, the rich will leave taking their investment abroad, jobs will be created in other countries, the North-East and other regions will be left with the simple choice, work for the state or don’t work at all. Somehow we’ll keep borrowing the cash we need to keep us all afloat and pay out the wages and benefits! I suppose there will be some ready to scream that Healey is a geriatric pensioner who screwed up the economy and went cap in hand to the IMF to bail out the UK, and they would be right about that. But at least it looks as though he learned something from the experience, he also learned that there was little they could do to prevent a Thatcher victory at the election.

Thatcher had as one of her prime aims the rolling back of the state, unfortunately it was never a total success, the machine kept growing: never in our long history has it been more imperative to halt and reverse this grotesque growth. Without a real swingeing cut in the size of government we will all be well and truly stuffed, the private sector will be choked to death and Britain will drown in the Brown created debts.

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