Monyy Property Finance Blog

Our politicos are all now scrabbling around looking for the elixir of growth as recession bites and confidence continues to fall. Latest jobless figures showed a further 169,000 people are now out of work.

The government wants to bring forward planned capital projects to keep work flowing and people in jobs. I agree with this. The Tories want to give SME 1% off NI for 6 months, and a VAT boost to cash flow by allowing firms to pay 6 months late. I don’t agree with this – it’s mere tinkering. We don’t yet know what the Liberals propose, so ‘no comment’.

The really ‘big idea’ that no one dares to mention, but is absolutely necessary, is the public sector needs to be cut back dramatically. How many of the 169,000 new jobless came from the public sector I wonder? I’m willing to bet a large sum it was less than 100 people; let me be generous and say less than 1000. The public sector remains largely immune from recession. It continues to consume masses of cash and resources we no longer have. Where are the bold political moves we need to cut the public sector back to affordable and sustainable levels?

This country needs a new contract between the wealth creating sector of the economy and the wealth consuming sector of the economy. And that new contract needs to include a ceiling, a level of GNP beyond which it is agreed that the balance between wealth creation and consumption should not go. I’m going to suggest a range of 30% - 35% of GNP as the target size of the public sector. In much the same way as the Bank of England targets an inflation range, the National Audit Office should be the regulator of government growth and spending up to this ceiling and no higher.

Curbing the public sector and cutting it back to these suggested levels would cause initial contortions, job losses, distress and howls of complaint from those affected and from those with vested interests in the sector. But in the same way the private sector is forced to cope with the same contortions, the public sector must now be forced to do likewise. No excuses.

With this new contract in place, a few short years from now would see a new Britain; completely re-engineered for more competitive times. And boy, do we need that, and fast. The dynamic economies of the East are just the start of a new age; twenty years from now Africa will be next. Britain is like an ageing heavyweight boxer grown fat on past success, but who, with some rigourous gym work could regain his crown again.

So, this is the direction of travel that the country now needs in thse recessionary times. A leader made of spirit, guts and steel backbone needs to emerge to reset the country within the paradigm we all now battle under. Where is he, or she? Certainly no-one known to us fits the bill. No-one inside any one of the three main parties that’s for sure. Reform of the scale I’m suggesting can only come from the outside and must be imposed on the established political class against its collective will. This needs a new political force, one unclouded and untarnished by any past or present political allegiances. And yes, such a force will need deep pockets to run for office, £30m perhaps, but that’s mere bagatelle when you consider Britain’s long term prosperity is now absolutely at stake. There are rich individuals in Britain to whom such a sum is easily affordable.

Let’s then all of us look forlornly to the horizon; enter the dragon?