Why does government spending increase ...

.... no matter who's in office?

Using perhaps the coolest website invented for policy wonks, I produced this graph.  It shows how the amount of money spent by government has increased relentlessly since 1950 (at constant 2003 prices).

It's quite extraordinary.  Sometimes a dip or pause, but the upward trend is clear.  Why?

Between 1950 and today, we've had governments of all sorts; from socialist to Hayekian free market, to the mushy managerialists in between.  

Maybe it’s not just about which political party has the majority in Parliament.  Perhaps the graph also charts Parliament's decline as an institution capable of reining in government spending? 

Unlike in 1950, today Parliament approves government expenditure more in theory than practice. During the budget day charade, MPs vote - but as the 10p income tax fiasco shows, without always knowing the details they are deciding.

Unlike the 1950s, real spending decisions come from executive fiat and Treasury officials.  Quango chiefs spend billions without reference to Parliament at all.   

Without the elected legislature acting as a brake on government largess, there’s been less to constrain how much money the government spends. The result is a 600% plus increase in real terms - and some grotesque waste.

Perhaps if we seek less expensive, wasteful government, we don't only need to change who holds office.  We need to strengthen the ability of the legislature to say "no" to government.  Why not require Commons select committees to vote to approve each department’s annual budget?  Or insist every quango had its expenditure annually approved?  

Reducing government waste means making government more accountable to Parliament for how our money is spent.  

Posted on 28 January 2009 by Douglas Carswell

Comments

Douglas, The striking thing is that whilst government expenditure has increased and the rate of increase up to 1995 rises, then evens out when Ken Clarke applied the 'brakes', since 2000 when Labour stopped following Tory expenditure plans, the graph goes almost vertical! Lesson somewhere? Heartily agree with you suggestion though re Select Committees having oversight - also believe quangos should go - period! If per The Plan local authorities were self-financing (local sales tax etc) the need for quangos would be virtually non-existent - agreed?

Posted on 27 January 2009 22:44 by WitteringsFromWitney

Douglas,

Unless the graph adjusts for annual inflation then it will always trend upward. You need to diminish each year's spending by the inflation rate for that year.

This is why there is a huge hump in the late 70s when Labour pushed inflation up to 26%

Posted on 28 January 2009 16:11 by Hawkeye

Perhaps somebody should be sidling up to Lord Digby Jones, given his views on the civil service gained as a minister in Brown's govt ?

Posted on 28 January 2009 16:21 by Man in a Shed

Hawkeye, Like I said, the graph is in constant 2003 prices. It factors in the effect of inflation.

Posted on 28 January 2009 16:26 by Douglas Carswell

There is no reason why public sector costs cannot be reduced by 5% PA, in real terms, for each of the next 5 years and at the same time improve the quality of output. In the private sector such productivity gains are common place.

Posted on 28 January 2009 16:26 by Roger

Sorry Douglas, I missed that.

You have to give Labour their due, even with that they still managed a spike in the late 70s.

I guess the lesson is that when it comes to spending Labour is hard to beat.

Posted on 28 January 2009 16:43 by Hawkeye

It's another bubble! And we know what happens to them. The question is when will it pop? My guess is this year, government will soon be the economy.

Posted on 28 January 2009 19:58 by Jim

Your graph has the wrong title, for it is clearly a graph of MPs expenses.

Posted on 29 January 2009 00:08 by Mick

Douglas, MPs like you must try to convince DC that we could slash and burn Govt expenditure without affecting front-line services. Talk about reducing expenditure by £5 billion is peanuts.

Posted on 29 January 2009 07:53 by sjm

I beleive a good part of this is because the state has constantly worked to 'softened up' the public and induce dependance and a 'the government must...' attitude.

Maggie worked at restructuring the country so this could be reversed - but the opportunity is still being squandered, and the pain we bore being wasted.

As long as the government use tax to modify behaviour (rather than to raise the revenue it needs to do its job), it is a one way ratchet - once imposed, the tax is never taken off or reduced because it would 'send out the wrong message'. And all the time there are people so stupid as to continue to support and call for more of this type of taxation...

It is interesting to note that the government have so much un-needed money sloshing around that some people think they should just give some of it away to the families of terrorists - whereas they should not have taken it from the tax-payer in the first place.

Posted on 29 January 2009 08:38 by pp

UKPublic spending looks like a very interesting site - but I found that pension spending only goes back to 1995 - adding 50bn growing to 100bn since then...

If pensions spending was really 0 before then (or in one of the other categories), then that is fine, but if it 'missing' the figures will be skewed down in years before that...

I have emailed the site owner asking...

Posted on 29 January 2009 08:57 by pp

Douglas,

This is a pretty misleading graph. Re-basing for inflation does not take into account that Britain as a country is much more wealthy than in 1950. We can therefore afford to spend more. The most important figure is % of government spending against GDP, which has remained quite constant over the last 50 years.

Using the site it is clear that historic spending as a % of GDP has been higher in the past, but only at the time of major wars; The Napoleonic, WW1 and WW2. However, overall, pre-1950 the state spent about 20% of Britain's wealth, much of it on foreign commitments. Post 1950 the proportion has been 40% almost all internally focused.

The result; we have far better public services, but have lost our place as a pre-dominant world power. To regain that sort of position we would need to permanently half public spending.

Posted on 29 January 2009 11:07 by J S

It seems that pensions were included under social protection pre-1995, so the totals are correct!

Another interesting graph is

http://www.ukpublicspending.co.uk/downchart_ukgs.php?year=1970_2011&view=1&expand=&units=p&fy=2008&chart=G0-total&stack=1&size=m&title=

Government debt as a proportion of GDP...

Of couse if the government spends less of our money on 'one size fits all' approximations of what it thinks we should have, we can spend it ourselves on precisely what we really want/need.

Posted on 29 January 2009 15:43 by pp

Why did I quit Britain? Tax played a big part in the decision. Pre-1997 I could receive bonuses from the compay I built from nothing in 1976 taxed at 40%. Brown added NI and uncapped it, and I would pay over 60% today. As it is I pay zero as I'm a tax exile. But why does Brown think I would be stupid enough tp pay 60+% on my income? Two million of us left between 1997 and 2007. No recent figures but the numbers are growing.

Posted on 30 January 2009 05:10 by Tapestry

Does the graph factor in population increase? It stands to reason that with population growth comes more tax revenues and the requirement to spend more servicing the needs ot said extra people.

Normalise the spend per capita and your graph will change significantly.

Posted on 30 January 2009 10:10 by Anand

I would be interested to know how spending was adjusted to 2003 levels. If it was by adjusting for changes in the RPI or CPI the figures are flawed because neither RPI nor CPI accurately measures real inflation. Official inflation figures take a basket of goods but do not weight them according to consumers spend. Therefore adjusting 2008 prices to 2003 figures and then comparing them to 1997 prices also adjusted to 2003 levels is like comparing apples and oranges.

Posted on 30 January 2009 12:30 by Damon Shinnie

Weeds have to be uprooted and not just cut back else they'll regrow.

Also, sociology based non-degrees create the demand for quango non-jobs.

Posted on 31 January 2009 15:27 by MrJones

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