A wry look look at the state we’re in
The latest film from serial offender of liberals Martin Durkin, on the perilous state of the UK’s finances, was witty but one-sided.
One of the more annoying things I’ve come across in recent weeks is a song called ‘I’m Proud of the BBC’, by singer-comedian Mitch Benn. Basically, it extols the virtues of our state-owned broadcasting corporation with the implication that you couldn’t possibly get such a diverse range of programming on anything as filthily money-grubbing as a commercial broadcaster. It’s not just the BBC, you see, as Benn points out: ‘It’s as British as midsummer showers – and it’s ours.’
Now, I do think the BBC produces some very good programmes (and considerably more rubbish). But given the billions at its disposal – thanks to the kind of flat-rate tax that would normally have left-wingers torching Trafalgar Square – it bloody well ought to manage to produce good TV and radio. Strangely, while it may be touted as our BBC, nobody has ever popped round to ask me what I think about it. This combination of spending the proceeds of legally enforced taxation with relatively little accountability is the story of the modern British state in microcosm.
I’ll bet Martin Durkin has much stronger views than me about Auntie Beeb, judging by his latest shock-doc, Britain’s Trillion Pound Horror Story, shown on Channel 4 last night. Durkin is the man who did his level best to piss off every green in the world with his two previous high-profile programmes, Against Nature and The Great Global Warming Swindle. His latest film is in the same vein: polemical, witty, occasionally inaccurate or exaggerated, but always thought-provoking and taking great pleasure in irritating people – most particularly anyone who reads the Guardian.
Durkin argues that the debate about spending cuts we’ve had so far completely misses the scale of the UK’s fiscal troubles. ‘Today in Britain’, he says, ‘the government spends more than all private individuals and companies put together’. The coalition government claims its spending and taxation plans will ‘save Britain’, but Durkin notes that UK government spending is still planned to rise from £697 billion to £757 billion by 2015 (though in real terms, the increase will be small). While New Labour is normally presented as the tax-and-spend party, there is clearly a cross-party consensus that the state needs to remain large.
The current annual budget deficit – £155 billion pounds – is dwarfed by the accumulated government debt, plus the state’s pension liabilities and other costs: £4.8 trillion. That’s £77,000 for every man, woman and child in the UK. And what’s rather disturbing is that many MPs don’t seem to understand the distinction between getting the deficit down and reducing the government’s total liabilities. It will be years before the UK actually starts to pay off those trillions of pounds of debt.
That said, Durkin does overegg his case somewhat by suggesting that the state might eventually become bankrupt (it won’t) or that social chaos will necessarily ensue if spending cuts have to be forced through. There have been drastic cuts in Ireland, but the result has largely been passive acceptance rather than mutiny. Even in Greece, the reaction to cuts has been comparatively muted by the lively standards of Greek politics. We don’t need scare stories about potential anarchy in order to think we need to do something about the economy.
To deal with it’s empty coffers, the state has been engaging in a variety of activities that put off, rather than deal with, the problem. In particular, that means borrowing – which in turn amounts to sorting out the government debt later, from future taxes. Durkin poses this as present governments stealing from future generations – illustrated here by his very own band of protesting children – who will have no say in the debt that has been incurred.
But that’s not really the problem. If taxes are spent on vital infrastructure, research or education that enable the UK to become wealthier, those future generations will benefit greatly. Indeed, it’s surprising to find someone normally so sceptical as Durkin asking ‘What about the kids?’ like almost everyone else seems to be these days. The real problem is that state spending is often wasted – as Durkin amusingly notes with a spoof of What’s My Line? – and a diversion from more urgent priorities.
For Durkin, the state is a burden on the wealth-producing section of the economy: the private sector. Actually, things are more complicated than that. The British state provides many things that are crucial to private-sector wealth creation: the enforcement of contracts; roads; healthcare; education, and so on. If the government didn’t do it, the private sector would have to, so there would still be a cost no matter how efficiently it was done. And especially when it comes to big infrastructure projects – like the Channel Tunnel or the provision of cable broadband and television – private shareholders have been all but wiped out.
In fact, given how awful it is, you do wonder how the state ever expanded in the first place. The answer lies, at least in part, in trying to clean up the mess left by the failings of the market. The postwar nationalisations of coal, steel, railways etc, for example, were as much a case of big, privately run pieces of infrastructure falling into state hands because the companies concerned were skint. The problem of profitability was not, and is still not, simply a problem of excessive taxation.
Durkin notes that state spending can directly and indirectly benefit private firms, but he sees this as merely recycling company profits through the exchequer with no ultimate benefit to those private companies. But given that the state is spending money obtained by borrowing against future tax revenues, the effect is to prop up many private companies in the here and now. If they were really so healthy, would they need the crutch?
In other words, the notion of a potentially thriving private sector – if only it were liberated from the burden of the state – requires just as much scepticism as the equally long-standing idea that there is something ‘socialist’ or progressive about the state. Here, Durkin is on stronger ground. While the National Health Service (NHS) has become something of an untouchable political totem in the UK (it’s our NHS), Durkin shows that other countries provide healthcare for the poor without the need for a state monopoly of care. As a result, he argues, many other countries get much better standards of care than we do here in Britain.
Durkin rightly notes that the state has had a disabling effect on millions of people who are fit enough to work but who are stuck in a poverty trap where working makes little financial sense for them. What other country, he asks, would simply carry on with the destructive and wasteful policy of paying benefits for years to people who are allowed to rot in permanent poverty? Wouldn’t it be better to make employing people cheaper by cutting taxes instead and ending this dependency?
Durkin’s solution is to look east, to Hong Kong, where taxes were slashed 50 years ago. The British civil servants that ran the then-colony took the view that the state should tax and spend as little as possible. Hong Kong’s per-capita income was then one third of Britain’s; now it is one third more than Britain’s. Durkin suggests that Britain should follow suit and scrap many taxes while reducing income tax to 20 per cent for the better-off – and zero for poorer people.
Whether such shock therapy would work is open to question. There are many differences between the UK and Hong Kong then and now that cannot simply be reduced to the levels of taxation. But Durkin’s film does pose two questions starkly: where will the UK’s wealth come from in the future and what is the proper role of the state? Hopefully, Britain’s Trillion Pound Horror Story will be provocative in the best possible sense: encouraging a serious, no-holds-barred debate about the future.
Rob Lyons is deputy editor of spiked.
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