Oh heck … Bloated public sector is damaging economy, warns Andrew Bailey.

I read that Bailey said the public sector productivity was nor improving, rather than that it wasn't contributing to over all productivity.

Public sector productivity is calculated quite differently from private sector productivity. Private sector is in the nature of a financial calculation of the contribution workers make to profits.

Public sector, obviously, can't do that because the public sector doesn't make any money directly, even though it has a very significant contribution to make to economic activity in the domestic economy by means of purchasing goods and services and the payment of wages.

So, their productivity is, apparently, calculated on the financial inputs, such as purchase of goods and services, capital spending and wages. Inputs are compared with 'outputs' to see if increased inputs engender increased outputs.

I'm not sure how 'outputs' are calculated, though. I can understand if it were just straight targets, such as shorter waiting times for surgery, more GP appointments, more criminals caught and prosecuted. But what about the non tangibles?

What about increased expenditure on maintenance and repairs of the public estate? Or increased expenditure on teacher training leading to better outputs for pupils?

In the instance of repairs and maintenance how could the output even be determined, let alone monitored? Or in the case of increased spend on training, if, as is inevitable, there is a time lag between the spend and its results is that accounted for?

Trying to find answers to questions like this I got the impression that calculating public sector productivity is something of an art rather than a science. So maybe not an absolute measure to trust implicitly?

Grantanow

The Governor's point wasn't that the public sector is 'bloated' but that an increased public sector does not contribute to productivity. I think that is arguable: using the NHS to return people to active work in the private sector would help. Of course, productivity depends on multiplying human efforts by investing in training and equipment which the Tories failed to do.

I think it's arguable too. If people aren't educated or fit and healthy, they're not going to be very productive.

Does Mr Bailey think if public services were to be privatised they'd suddenly contribute to productivity?

The Governor's point wasn't that the public sector is 'bloated' but that an increased public sector does not contribute to productivity. I think that is arguable: using the NHS to return people to active work in the private sector would help. Of course, productivity depends on multiplying human efforts by investing in training and equipment which the Tories failed to do.

fancythat

Common economic sense.

But is it?

It depends what the costs are if the public sector doesn't provide a service.

My daughter is an HR manager in the civil service. They have recently been given more work to do (involving child porn and tracking people smuggling gangs) but are facing budgetary cuts, which will inevitably lead to redundancies. There might be short term gains and balance sheet targets might be met in the short term, but what about the long term costs?

It's a nightmare!

fancythat, I repeat my earlier post - the word " bloated" was added by the journalist. It is not a quote from the source.

Others can explain it better than I can.

This all assumes you dont know that answer already.
Which I am pretty sure you definitely do.

Common economic sense.

fancythat

If the Public sector really is bloated, then yes, it would damage the economy.

And your evidence for that statement is... what?

If the Public sector really is bloated, then yes, it would damage the economy.

Trickledown is not thought to be as big a thing as it used to be.

MaizieD

^Tax lower wages less means higher rates need to be disproportionately higher.^

Absolutely as it should be!

Having already noted that, to be of any use to society, money should be circulating in the economy and that the wealthy have a marginal propensity to spend, taxation on an ‘if you don’t use it you lose it’ basis seems like a really good idea to me..😆

Yes money should be circulating in the economy but in many cases it isn’t, it’s tied up in property or investments, then by various means passed to the next generation untaxed.
Taxation of income is high enough, if inheritance and gifting rules were less generous, more would be spent in economy, and “trickledown” would have a chance to work.

Tax lower wages less means higher rates need to be disproportionately higher.

Absolutely as it should be!

Having already noted that, to be of any use to society, money should be circulating in the economy and that the wealthy have a marginal propensity to spend, taxation on an ‘if you don’t use it you lose it’ basis seems like a really good idea to me..😆

David49

FriedGreenTomatoes2

Totally and utterly agree with this, one of Reform UKs stated aims MaizieD (and *Terribull?). Regarding the stagnation in wages, I wonder whether a higher threshold before those on lower incomes become liable for tax would make any economic sense

This was suggested by Reform in their 'manifesto' last year. It is the only thing they proposed that I would be in agreement with. Based on the premise that business needs consumers to buy their products, so keeping the critical mass of consumers short of money makes no sense whatsoever when it comes to looking for growth.

It was one of the reasons I voted for them. It makes so much sense any way you look at it.

The problem is that the wage profile is a pyramid, many on low or no wages, less on moderate wages, few on high wages.
Tax lower wages less means higher rates need to be disproportionately higher.

At £50k the rate already doubles to 40% in addition NI and Pension has to be paid.

NI is only paid at 2% for earnings over £50,268. Moreover, anybody with a private pension and paying 40% tax receives a much higher subsidy towards their pension than basic rate tax payers. They don't do too badly!

FriedGreenTomatoes2

Totally and utterly agree with this, one of Reform UKs stated aims MaizieD (and *Terribull?). Regarding the stagnation in wages, I wonder whether a higher threshold before those on lower incomes become liable for tax would make any economic sense

This was suggested by Reform in their 'manifesto' last year. It is the only thing they proposed that I would be in agreement with. Based on the premise that business needs consumers to buy their products, so keeping the critical mass of consumers short of money makes no sense whatsoever when it comes to looking for growth.

It was one of the reasons I voted for them. It makes so much sense any way you look at it.

The problem is that the wage profile is a pyramid, many on low or no wages, less on moderate wages, few on high wages.
Tax lower wages less means higher rates need to be disproportionately higher.

At £50k the rate already doubles to 40% in addition NI and Pension has to be paid.

No new roads or maintenance of existing roads.

Hmm ... this isn't sounding too good!

Is anybody actually in favour of anarchy?

No armed forces
No diplomatic service
No GCHQ
No Inland Revenue
No Bank of England
No Governor of the Bank of England i.e. Andrew Bailey

Churchview

No MPs

Nobody to administer the state pension.

Totally and utterly agree with this, one of Reform UKs stated aims MaizieD (and *Terribull?). Regarding the stagnation in wages, I wonder whether a higher threshold before those on lower incomes become liable for tax would make any economic sense

This was suggested by Reform in their 'manifesto' last year. It is the only thing they proposed that I would be in agreement with. Based on the premise that business needs consumers to buy their products, so keeping the critical mass of consumers short of money makes no sense whatsoever when it comes to looking for growth.

It was one of the reasons I voted for them. It makes so much sense any way you look at it.

No MPs

Churchview

fancythat

Jane43

Ilovecheese

Yup, let's sack a load of public servants and give them Universal Credit instead, that will really help the economy!!!

There would be a hefty bill for redundancy payments as well.

But imagine everyone working in the Public service.

There would be no money made by the Country at all?

Imagine nobody working in Public service.

No bins emptied
No libraries
No schools
No police
No NHS
No Environmental Agency
No courts
No prisons

No defence or border control ....

I feel very sorry for public service workers who have spent the last 14 years being squeezed until their pips squeak. Those people who put their lives at risk through the pandemic, who are working with less and less every year for a more demanding public. A group of people who are almost all paid less in real terms than they were 15 years ago.

fancythat

Jane43

Ilovecheese

Yup, let's sack a load of public servants and give them Universal Credit instead, that will really help the economy!!!

There would be a hefty bill for redundancy payments as well.

But imagine everyone working in the Public service.

There would be no money made by the Country at all?

Imagine nobody working in Public service.

No bins emptied
No libraries
No schools
No police
No NHS
No Environmental Agency
No courts
No prisons

fancythat

MaizieD

But imagine everyone working in the Public service.
There would be no money made by the Country at all?

The country isn't a business. It doesn't have to 'make money' to continue to exist.

We'll never have everyone working in the public sector because the public sector depends on the private sector to supply it with goods and services. What is more, the employees in the public sector spend their wages in the private sector. Which would encourage the private sector to expand.

But you can see where I am coming from?

My original point still stands.

Oh yes, if everyone worked in the public sector, it would exist. In absolute poverty, Or famine. Or death ultimately I would have thought. It wouldnt take long.

Well, it isn't ever going to happen, so stop fantasising!

Sounds like a message via Trump. All we need now is a “Musk” and we will be well away.

MaizieD

^But imagine everyone working in the Public service.^
There would be no money made by the Country at all?

The country isn't a business. It doesn't have to 'make money' to continue to exist.

We'll never have everyone working in the public sector because the public sector depends on the private sector to supply it with goods and services. What is more, the employees in the public sector spend their wages in the private sector. Which would encourage the private sector to expand.

But you can see where I am coming from?

My original point still stands.

Oh yes, if everyone worked in the public sector, it would exist. In absolute poverty, Or famine. Or death ultimately I would have thought. It wouldnt take long.