Since 1979, successive governments have robustly committed themselves either to reduce public spending and ‘roll back the state’ (Conservative) or be ‘prudent’ with regard to the public finances (Labour).
In spite of this total government debt is now approximately £156 billion and the number of public sector employees is greater than ever. In Scotland, the size of the public sector is even higher with 613,000 employees (a quarter of the workforce) out of a population of five million.
This must give sobering thought for reflection as the Coalition government is about to unveil its first budget to cut back the massive public debt: Every government of the past 30 years has aspired to do the same and failed miserably (contrary to popular perception the Thatcher and Major governments actually increased spending on health and social care).
The necessity to save the UK financial system from meltdown (itself a product of lax regulation and a debt binge) is the immediate reason for such huge levels of public debt. But UK public expenditure has been consistently increasing for years prior to the 2008 recession.
This is all the more ironic as the landscape of the UK public sector economy has changed profoundly from 30 years ago. All of the former nationalised industries and state owned utilities have been sold to the private sector and entire swathes of government departments privatised. And yet, public spending goes on rising remorselessly. Why?
There are two main reasons: Firstly, there has been a huge expansion in the number of laws, regulations and directives, particularly in the areas of employment law, health and safety and equalities and diversities. These laws, regulations and directives require both an enforcement machinery and infrastructure to implement them. Altogether, some 3,600 new laws were put onto the statute book in the eleven year period from 1997 to 2008.
Secondly, privatisation and deregulation has led to the opposite of what was intended: Rather than greater freedom, dilution and decentralisation of government control it has produced an elaborate inspection and supervisory mechanism involving the creation of a whole series of agencies to oversee activities and operations that were formerly part of government ministries. Just take a cursory glance at the alphabet soup of agencies overseeing any area of activity in the UK from social policy to the railways, or education or housing to get a grasp of the magnitude of this. (The one ominous exception to this inflation of regulation and oversight has been in the area of finance.)
Cumulatively, this has led to a sustained and massive expansion in the scope of the state’s activities and intervention into daily social and personal life. Crucially though, whereas over the past 30 years the state has divested itself of direct control over the economy, it has significantly increased its capacity for regulation and compliance. This is where the bulk of the expansion in the public sector has gone in management and compliance/regulatory posts or interventions in lifestyles, attitudes and behaviours.
The new Coalition government will face serious constraints if it really wants to tackle public spending. This is because a great deal of it is buttressed by legislation and accompanying compliance. What has been sorely missing from politics in the UK, on both left and right, is a debate on the rise of this huge regulatory and legislative apparatus, including such cherished areas as employment laws, equalities and discrimination and health and safety. The real debate is not public spending per se but its focus: Is that to be on outputs or regulation and compliance?