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Public spending: Spending the public's money

In all the rage, argument, and counter-argument that has gone on this week, there has been one thing missing: who pays?

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For hard working people, or from?
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Simon Miller
On 5 April 2013 17:51

Explosions happen all over the place in politics. An old and ill-advised comment about London nightclubs can tarnish a rising star in the Labour party while what appears to be a considered response to a question asked can see the Chancellor castigated for bringing politics into the terrible case of the Philpotts.

Well, he was asked and he answered. He’s a politician; of course it’s political. It cannot be anything else. Still, it’s nice to see that some on the left are now finally realising the concept of individual, personal responsibility. It’s taken them long enough.

Anyway, despite the glee that Osborne’s comments have been seized on in a shamefully political manner by his opposite number, there are questions to be heard that are being drowned out by the shouting: What is the purpose of the welfare state and how do we afford it? Who pays?

You see, the welfare state has good intentions. It is meant to show that as a civilised society we will protect the vulnerable until they find employment. That’s the key. It is based on a type of insurance via friendly and mutual societies.

Where the disconnect has occurred is in a change of attitude: for some, there is no longer any impetus to try and find work. The faceless taxpayer is no substitute for the friendly society in your village or town.

This country is in a perilous state already over its debt. Public sector debt as a share of GDP is set to peak at 85.6 percent in 2016-2017. Total public spending is already at around £700bn. And, with the continued dead cat bounce, there is a huge risk that receipts are going to go down.

But where does all that money go?

Predicted spending for 2014 will see pensions as the highest expenditure at 20 percent, followed by health care (18 percent) and welfare at 16 percent. What about the bane of shrill left-wingers, that area that always comes under fire when their precious little domains come under scrutiny? Well, defence comes in at 6 percent of total spending.

The key areas are pensions and welfare. The pensions bill has gone from £45.4bn in 1996 to a whopping £127.18bn in 2012. This bill is estimated to rise to £144.57bn in 2014.

Meanwhile, welfare as exploded from £65.39bn in 2003 to nearly double that at £115.12bn in total in 2012 – with a projected cut of less than half a billion by 2014 to £114.65bn. Granted, this year’s bill is expected to top at around £117bn, but even so, the cut really is a piddling amount.

Some might ask, if it is a piddling amount, why are they cutting? And that’s the point. I have consistently argued that if the government really did cut then you’d really know what austerity was. This minor chipping at the edges does no favours for country or citizen. And when it comes to paying for this, your wallet gets lighter every year.

The bill for the taxpayer directly comes in at £155bn in income tax and £107bn in national insurance.  So that’s welfare and pensions sorted with a bit left over to perhaps pay for a missile or two for the defence chiefs. Indeed, total net taxes and NI comes in at £550.6bn, that’s 35.6 percent of GDP – over a third.

Oh, and before anyone starts, national insurance is at best an assurance scheme where the money paid in goes out immediately to beneficiaries and at worst could be described as a Ponzi scheme. So anyone claiming that they’ve paid their stamp, the answer is yes, but for today’s pensioners and patients.

In all the rage, argument, and counter-argument that has gone on this week, there has been one thing missing: who pays?

Have you noticed that in all this political footballing, all we hear about is government money? But it is not. It is ours. It always has been.

Whatever your views are over the terrible case of the Philpotts, whatever your beliefs are about the welfare state and social spending, fundamentally you are talking about what politicians should be doing with our money.

And it really is about time we reminded them of that fact. 

Read more on: Who pays for welfare?, Simon Miller, British welfare, British welfare state, and public spending
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