We must shed the public sector of pointless managers

When I read a headline proclaiming an impending strike by civil servants I had no idea what it was all about. On reading the article I discovered it is all about redundancy pay. My chubby little heart was lifted by reading that five of the six trade unions representing civil servants had agreed to a change to the redundancy pay scale and only one was holding out against the plan. Under the new proposal civil servants will be entitled to far more than the statutory minimum, albeit less than their previous contractual entitlement. It looks like most of the unions have recognised the reality of an empty governmental purse.

It might be a different matter once the need to reduce government spending substantially becomes policy rather than a plan for some undefined time in the future. There are all sorts of ways one can look at the figures. I prefer a simple approach to match my lack of depth. Government spending, c£600billion; government income c£450billion; answer = reduce spending by c£150billion. There, nice and simple.

I doubt that anyone sees throwing people out of work as a good in itself save, perhaps, when the people concerned are politicians. Some of us are very keen to see every five-a-day advisor, carbon footprint assessor and street football consultants to be out of a job, but it has nothing to do with wanting to see the individuals on the dole. Instead it is all about the jobs they do. They are non-jobs, they suck money from the productive side of the economy and deliver nothing of value; they represent spending for the sake of spending. The need for redundancies is far from clear, however.

The public sector has a large turnover of staff each year. One way to reduce staffing costs without sacking anyone is to use staff currently in non-jobs to fill vacancies as they arise in the parts of the public sector which actually do something useful. This will take careful and sensitive management but there is no reason in principle why an administrative assistant in a five-a-day advisory department could not use their skills in a court office or a hospital office or a tax office when an existing member of staff leaves. Of course it is unlikely that a satisfactory position can be found for everyone working in the non-value-added areas of the government machine, but there is no reason to believe that vast numbers cannot be transferred happily from one department to another. After all, if someone leaves a court office to take a job in the private sector they are simply transferring their skills from one work place to another; there is no difference in principle between that happening and someone else moving from one government office to another.

The "natural wastage" that arises every year through retirement and resignation does not always require new people to be brought into the fold. Identifying the areas of the public sector that are mere political fripperies allows the people currently employed there to be available to fill other vacancies.

That is not to say there will not be an adverse consequence on overall levels of employment. By definition, abolishing one role and using the person who filled that role to fill a vacancy elsewhere that would otherwise have been filled by taking someone off the dole leads to one fewer person being employed overall. But given the need to save £150billion (on my simple figures) the overall number of state employees will have to fall considerably.

Transferability of state employees is almost certainly easiest where the job is not technical, particularly where it is purely administrative. The greatest risk of redundancy is probably not in the paper-pushing side of things but in wholly unnecessary management roles. The management of departments often requires knowledge and skills that are particular to that department and are not easily transferable. Where the department is a waste of space the manager cannot expect to find another position in the civil service as easily as his secretary and the army of people who deal with mundane paperwork. The time has come, however, when the pointlessness of their department must be acknowledged and they will go the way of countless people in the past who had skills and knowledge that was no longer of any use. If they can be used elsewhere, so be it. If they cannot then it must be "thank you and goodbye". I hate to think how many people are employed in these positions at salaries of £40,000 and above (plus pension, plus car plus this plus that). A huge saving is possible if only someone finds the guts to say "sorry, your job achieves nothing".

It is worth noting that almost all non-jobs have always been non-jobs. I am not talking about the modern day equivalent of the brick maker whose skills were made redundant by mechanisation of the brick-making process. I am talking about the man with the flag walking in front of early cars to warn people that a motor vehicle was approaching. That was a non-job, created out of an abundance of caution about a risk that never existed. So it is with every public sector job concerning so-called "climate change" or haranguing people about what they should or should not consume, and so it is also with the countless talking-shop Quangos including those with "Regional Development" in their title.

Such of their staff who have skills useful elsewhere should be redeployed. It will save money without causing them to lose a day's pay. A big saving will be made by disposing of the highly paid but utterly pointless managers.

I did a rough calculation earlier today. It concerned a local shop that is suffering badly despite being run extremely well. There are two owners who both work there, three other full-time staff and five part-timers. Assuming all the employees are on £7 an hour and the owners draw £30,000 each (if takings permit that much), the income tax and National Insurance produced by that business in a year is roughly £25,000. Five full-time and three part-time workers work all year to pay the cost of half a senior climate change manager.

If the unions oppose such redundancies they should be shot.

Boring is hard to sell

Perhaps it's just a reflection of my experience, but I simply don't think general life is very exciting. It has its moments, of course it does, there are spells of huge joy and deep misery. Most of it, however, is just getting on with getting on. I know I am luckier than most in that my field of work has provided variety and intellectual challenge of a type not many enjoy. When we look at the general scheme of life, though, it is not full of thrills.

If you are a politician faced with an electorate plodding through their everyday lives it's fairly obvious that promising them rewards they do not have to work for is more likely to gain their vote than telling them they shouldn't expect riches if they vote for you. This is one of the reasons socialists will always garner votes. They claim there is wealth for all if only they could be in charge and arrange things suitably. Every time they are elected they fail to deliver on that promise, and every time the next election comes around they promise the same thing while the alternative candidate does not. The promise itself is as enticing, yet as tantalising, as the rack of scratch cards on a shop counter. Faced with a choice between the idealist claiming he can make you rich and the realist saying he won't, it is hardly surprising that people vote for the former.

That they have been let down and made worse-off by the idealist every time he has gained power is neither here nor there. At least he claims to offer the chance of a lottery win. Offering bad news or "sorry chaps, it's going to be more of the same" might be factually accurate and unimpeachably honest but it is not enticing to those who see no way out of their current rut other than a fairy godmother.

The current state of the UK economy is a matter of fact. No fairy godmother will come along to change things. The recession has reduced GDP by around 6.2%. A degree of reduction was inevitable regardless of international recessionary pressures because some business was dependent on continued additional borrowing by individuals and that cannot go on for ever. Some of that borrowing was for things that were consumed immediately and had no tangible long term benefit, such as holidays. Some was for the purchase of goods to replace worn out items, perhaps furniture or a washing machine that pumped more water on the floor than through the drainpipe. Some was for the purchase of goods previously not enjoyed by the buyers, perhaps a dishwasher or a garden shredder. Some was for up-grading of items where what was already owned was perfectly serviceable but not the latest thing, such as flat tellies and fridges with two doors.

Two factors apply to limit the continuation of that trend. First, incomes dictate how much can be borrowed and once you have borrowed you have to pay interest, thereby reducing your disposable income and limiting your capacity for further borrowing. Secondly, once you have acquired a new thing, whether as a replacement, a new product or an upgrade, it will be some time before you have to spend on the same type of item again. Even in a country of 25 million households the time will come when the numbers up-grading their tellies starts to fall. Changing from a fat telly to a flat telly is a different kettle of ball park than changing from one flat telly to another.

There is probably a clever person somewhere who has calculated the overall level of person debt at which further borrowing will not be feasible, but their work has evaded my attention. The precise figure (if there is one) really doesn't matter. All that matters is that funding a certain percentage of national business on credit must have a limit. There is a limit for individuals, which is why Mr & Mrs Ordinary borrow £1,000 on a credit card to buy a flat telly plus surround-sound home cinema system and then don't borrow again until they have paid back that sum. A sudden rush of increased borrowing will boost the business of the vendors and manufacturers, but only for so long as people can afford to borrow more. One day it will slow down but the shops and distributors and manufacturers will have staffing levels to cope with the previous massive demand. A reduction in demand will mean job losses.

We now know that people borrowed more than they should because their actions tell us. They are paying-off personal debt faster than at any time in history. The reduction in demand for unnecessary replacements and up-grades is an inevitable consequence of the previous demand being a temporary and unsustainable bubble. That aspect of reduced GDP would have happened at some time regardless of other factors. Careful governments regulate the amount of consumer credit because they know that only a certain level can be sustained. But you can't easily win votes by saying "we are going to make it more difficult for you to borrow the money to buy a fridge with two doors in place of your boring old one". Perhaps it would not be a vote loser if the politicians had the courage to explain that the bursting of demand bubbles does far more damage than the benefits those bubbles delivered during their short life.

What I find utterly baffling is the apparent inability of people to equate their own financial situation with that of the government. (I infer this apparent inability from the indication from opinion polls that some people are still prepared to vote Labour) All around the country there are homes with Ma and/or Pa saying "sorry offspring, it's Margate not Marbella this year" and "no we can't get new car, we don't have the money because we are still paying for the telly and the duck-egg blue leather sofa". When money was, or appeared to be, available it was spent. Now that it is not available it is not being spent and it's beans on toast at home rather than chicken-in-a-basket at the Dog and Duck. Government spending includes countless sums on fripperies that appeared affordable during the bubble years. They weren't affordable before, so why are they still seen to be affordable now that the money has run out? It's sheer madness. But there are no votes in saying "we are going to get rid of half a million unnecessary people from the public sector payroll". Perhaps it would be a vote-winner if politicians had the guts to say that continuing to employ the pointless half million drains money that could otherwise be used to pay-down personal debt sooner or to allow a business burdened with taxes and the red tape of excessive regulation to stay afloat.

The truth is that there is only so much money and there is only so much wealth. Creating more money but no new wealth benefits no one. Only creating wealth allows an economy to expand and people to enjoy sustainable higher levels of material comfort. Creating wealth is a slow process once a certain level of wealth has been achieved. China, India, Brazil and others are creating new wealth at a fast rate because they are still far below the level we currently enjoy, indeed below the level we enjoyed twenty and more years ago. Once a particular level is reached it becomes difficult to create more. Perhaps two percent a year can be achieved, maybe even three, but two percent of a lot is a lot whereas ten percent of little is less and far more easy to achieve.

It's terribly dull to say "we are actually pretty comfortable in this country, so don't expect a lot more comfort any time soon". Yet that message is essential if there is to be any hope of realism entering governmental economic management. Our current government is clinging like a barnacle to the bubble of apparent but unsustainable wealth created by them allowing personal credit to get out of hand. Much of current government spending was only undertaken in the first place because of the tax revenues arising from the credit bubble. That revenue is no longer there, yet they insist on maintaining their spending as though it were. They don't have the courage to say "sorry chaps, I know it's rather dreary, but we can't afford it any more".

I long for dreary. I long for a government that sets its spending according to its income rather than vice versa. I long for a government with the guts to say "don't expect a lottery win, it ain't going to happen". It's not an easy sell, the desperate and irrational will never buy it, but I think most of the rest would if only someone grew some balls and tried it.

If it ain't working, fix it

In the real world, if something doesn't work it is abandoned. It might have seemed a good idea at the time and its intended outcome might have been a great boon to mankind and to fluffy bunnies, but if it doesn't work it doesn't work so we say "nice try, bad luck" and we move on. Abandoning an unsuccessful experiment can be very expensive for those engaged in the project. History is littered with many thousands if not millions of "greatest inventions since sliced bread" that never got anywhere near the toaster let alone were buttered and consumed. Countless inventors and investors have lost every penny pursuing an idea which either failed to meet its potential or failed to find a market. Because that's what real life is like - someone has an idea, it seems like a good idea so it is tried. If it seems like a really good idea initial failure might justify further attempts. Always, sustained failure results in abandonment. The money required to continue the experiment can no longer be justified so the tap is turned off.

This illustrates one of the many fine qualities of money. Money allows us to measure success or failure of every commercial project. We can tell from a profit-and-loss account whether it has been a financial success to date, if it hasn't yet made a profit we can tell by the level of loss incurred whether it has a decent prospect of becoming profitable within a reasonable time. Money not only allows us to measure how successful a commercial enterprise is, it also provides a means by which we can assess whether a commercially unsuccessful venture should be continued (through private or public subsidy) because it provides a benefit that is perceived to be affordable. For example, a local council might operate a swimming pool and choose to spend up to £100,000 of taxpayers' money subsidising it each year; once running costs exceed entry fees by more than £100,000 questions will be asked about whether it should stay open. The mere fact that the swimming pool has been built and provides a benefit can never justify limitless spending on it. Some would say no such subsidies should ever be given, others might argue that £200,000 is the correct maximum figure, but whether a subsidy is given and if so how much it should be are decisions taken with an eye to money - the universal means of measurement.

Some areas of government expenditure cannot easily be assessed in monetary terms. The armed forces, the police, prisons and the fire service can only be effective if they have a certain number of front-line personnel and the equipment necessary for them to do their work. The level of necessary service determines how much must be spent, it is not possible to say "we can afford half a billion for the police and that's that". Of course countless arguments can be had over what level of service is appropriate, how it should be organised to get best value for money and whether there is a sensible role for the private sector, but at heart these services must be funded according to need (however you wish to define that) and cannot or should not be limited by purely financial considerations. The central point about these services is that they are protective services, they exist to prevent trouble and to protect us when trouble brews.

Other so-called public services are not protective in nature, they are intended to provide a positive benefit rather than to protect us from a threat. Health, education, refuse collection, laying and maintaining roads, providing street lighting and many other things are essentially commercial activities being carried out by one arm of the State or another. Some of them are usually provided by private sector businesses but paid for from taxation, road maintenance and refuse collection being perhaps the most widespread examples of this.

Not so long ago refuse collection was manged by local authorities and performed by people employed directly by them. In many areas the task has now been contracted-out to private businesses who are paid less than it cost the local council to run it's own service and are subject to a contract requiring them to provide a service at least as good as the one they replaced. As far as I am aware, no council has chosen to revert to the old system once a contract with a private provider has expired. No doubt one reason for this is that a council would incur a substantial cost in buying or hiring the necessary lorries and installing managers on its payroll but the more compelling reason is that the work is a service which is best left to the private sector because only that sector is subject to market pressures to keep its costs as low as possible, not least because they do not have to battle against the monopoly public-sector unions. The provision of refuse services is a normal commercial exercise. Local authorities specify the service they require, price is a matter for negotiation and the result is a binding contract. There is an important public health element to the work but so there is in the supply of all sorts of goods and services, appropriate contractual terms and general legal obligations on suppliers ensure (insofar as you ever can) that health is not adversely affected by the identity of the supplier.

The effectiveness of private-sector delivery of services such as refuse collection can be measured by money. Once the standard of required service is defined it is a matter for competitive tender who can give the purchaser (the council) the best price. That these tenders will be pitched at a level that allows the supplier a profit does not mean that the state sector could provide the same service at a lower cost in particular because working practices in the state sector are not subject to the same constant pressure to be efficient as the private sector because the provider is also in charge of paying the bills.

When it comes to health and education is there any reason to believe the private sector will provide an inferior service? After all, non-state schools and hospitals have to provide what their customers want or they lose business. MRSA infections don't happen in private hospitals because a single occurrence could cost the business millions in lost custom. Indiscipline and a failure to teach to a high standard can have the same effect in private schools, so it just doesn't happen. It doesn't happen because the system is designed to deliver a service not to deliver a political agenda.

The NHS doesn't work. It doesn't do what it was set up to do. Part of the problem is that it is not operated as it was intended by its founders to be operated. The original idea was for it to be a universal health service funded by insurance but operated as the best private hospitals and general practices were operated. Instead it has become a perpetual opinion poll, fiddled with by government after government with at least as much of an eye to political advantage as providing a service. There is now about twice as much money in real terms being pumped into the top of the NHS as twelve years ago. It hasn't resulted in twice as good a service at the bottom, despite the efforts of the vast majority of doctors and nurses to do their very best by every patient. The NHS is the largest single employer in the western world and it has the highest rates of hospital acquired infections of any developed country. It simply isn't working.

State schools don't work. They don't do what they were set up to do. Levels of general numeracy and literacy at age sixteen are pitiful. Far too many bright children are not stretched as they should be to develop their analytical powers. Universities have to hold remedial classes for those who have splendid examination results on paper but struggle in real life to construct a sentence. It simply isn't working.

Why have these failed institutions not been farmed-out to the private sector which has a long record of providing a better service for a lower cost? No doubt part of the reason is the desire of politicians to use health and education as measures of the success of their time in government. If they had any sense they would realise they are onto a hiding for nothing in the long term. A system that cannot deliver, cannot deliver. You can fiddle with it to your heart's content but it still won't deliver. You can boast of so many more billions being spent on the NHS or school and, as we have seen, you can win elections, but a system that cannot deliver, cannot deliver.

The central problem is that additional money is pumped in at the top rather than the bottom. Pumping in extra money at the top means, in the mind of government, that there must be additional oversight of how the bit that gets down to the coal face is spent. Ah, but there's more, you can't just pump money in and distribute it to everyone, you have to choose where it goes. That requires committees. Extra committees to deal with the extra money. And if more is getting down to a region the region will need an extra manager or ten to supervise it, and every hospital will need an extra manager or five to report back on how it is being spent. The whole system doesn't work. It's almost as far as it could be from Beveridge's idea of a private system funded by public insurance.

In the real world a system that doesn't work must be replaced, root and branch if necessary. We are seeing at the moment how the public have a taste for radical change where systemic inefficiency, waste and corruption are to be avoided. Today it is MPs' expenses and allowances, this is the perfect time to widen the debate and expose systemic inefficiency in the state delivery of services. Strike while the iron is hot and tomorrow we can spend less and receive more.

Self-employment, a way to recovery

Predictions of likely job losses in the UK during the present year paint a pretty nasty picture. None of them is more than educated guesswork and various figures have been bandied about recently. The number counted as unemployed by the government's own fiddled figures reached 1.86 million as at last October and some are predicting as much as a doubling of that figure by the end of 2009.

At the same time as unemployment is rising fast so is the anticipated downfall in economic activity during the current recession. Most estimates are that the economy will shrink by more than 2% in 2009 and even more in 2010 before there is any hope of a levelling-out let alone a recovery. Obviously the depth and length of the recession will be a major factor in how many jobs are lost. There is also a hidden aspect to the contraction in the numbers unemployed as migrant workers return to their home countries because most of them simply drop out of the picture rather than being transferred from the "numbers in work" column to the "unemployed" column. The total number of jobs lost will be greater than the increase in the numbers recorded as unemployed. Could it really be that 2 million or more jobs will be lost from the UK economy in 2009 alone? Time will tell, but as businesses fail and others have to cut costs to stand any chance of survival it is inevitable that a huge number will find themselves without gainful employ.

A question that has troubled me for some time is where new jobs might come from as and when things start to pick up. One obvious answer is that an increase in retail demand will increase employment in shops and distribution companies, but it will not involve replacing like-with-like. An experienced and knowledgeable former employee of a specialist furniture shop might well find a position as a new furniture store opens for business but the £30,000 salary he commanded before is unlikely to be offered, he might have to start on half that and trust his experience, knowledge and hard work to gain him promotion. In addition a lot of people who had earned increases above the minimum wage by loyal service will be back at the starting rate again when they find a new equivalent job.

Perhaps more worrying is the loss of skilled jobs from manufacturing industries. While draftsmen and toolmakers are being made redundant in the UK competitor industries in many countries overseas will be able to stay in business because they are not saddled with the massive expense caused by British labour laws and health and safety bureaucracy. To re-start such a business here is a vastly expensive exercise and can only happen against a background of lost world market share as developing nations undercut on price and establish their reputation. Some new skilled jobs will be created but it is hard to see that it will be as many as the number lost.

Something that happened during and after the last two recessions might give a clue about where jobs can be created without the need for massive capital investment. What was seen was an increase in self-employment. The plumber laid-off by a building firm got a small van and put an advert in the local paper. The assistant no longer required at the garden centre set himself up as a freelance gardener cutting hedges and tending lawns, perhaps occasionally getting a commission for a complete garden make-over. Over the last twenty years we have seen a massive increase in the number of self-employed single person businesses offering their skills in all areas of building work as well as pet care, hairdressing, ironing and a thousand other activities people are prepared to pay for because they either lack the skills or the interest to do them themselves. Naturally, some of these businesses don't remain single-person enterprises for long and grow to something quite substantial. More power to their collective elbows say I.

Being self-employed is not a bed of roses. You are not guaranteed an income, no one makes a contribution to your pension or National Insurance, you have to keep accounts (a wonderful two-edged sword for those paid in cash as they try to keep their declared income down for the tax man and up for the bank manager), there is no sick pay unless you take out insurance, you have overheads you would not have as an employee and so on and so forth. Having said that, a lot of people have found it a far more rewarding way to earn a living than selling their skills for a fixed price to an employer. It doesn't suit everyone but it does suit an awful lot who never thought it would.

The days when little Johnny would leave school and be guaranteed a job in the factory his father and grandfather worked in have long gone. Employed job for life are a dying breed in the private sector. More people than ever are changing jobs and changing employees. I wonder how long it will be before the norm is for everyone to be self-employed and hire-out their services either for individual jobs or for fixed periods. I am heavily biased on this subject because I was self-employed all my working life and relished the freedom it gave me to take a break when I needed it rather than when it was convenient for a boss. Being utterly hopeless at administration I paid countless penalties to the tax man for not filling in pieces of paper or sending a cheque a day or two late, but that was a small price to pay for not being (as I perceived it) at someone else's beck and call.

I hope the current recession will cause many of those losing their jobs to set up on their own account, selling their skills directly. One thing of which I can be fairly sure is that a great many will be waiting a long time for a new job if they do not take their fate into their own hands.

To create or not to create, that is the question

So, poor Gordon is going to create 100,000 new jobs, or so says the BBC. What caught my eye was the way the headline to the BBC's article is written, it says poor Gordon is `to create 100,000 new jobs', so I then looked through the article to find where that quote came from. Gordon is actually quoted as saying "I want to show how we are able ... to create probably 100,000 additional jobs over the next period of time ..." So, he did not say he will create any new jobs, he did not commit himself to the figure of 100,000 and everything he did say is hedged by the meaningless evasion "over the next period of time". Well done BBC, an utterly hopeless piece of hack journalism.

Leaving aside the incompetence of the editor who allowed the article to appear in that form, I want to look at what poor Gordon actually said. If I understand it correctly, his plan is to pump money into public works projects to provide continued employment for builders who might otherwise lose their jobs. In other words, he is not creating vast numbers of new jobs he is merely preserving jobs which currently exist. No doubt some additional people will be taken on but the clear thrust of the plan is to retain jobs not create new ones. In his usual confused and misleading way poor Gordon uses the term "additional jobs" without saying what they are additional to, the only explanation that makes any sense is that they are additional in that those employed to refurbish schools and hospitals would otherwise be on the dole yet that is hardly the meaning he hoped to convey.

The other aspect to the plan is to "invest" in various eco-wibble projects, such as research into electric cars and wind and wave power. It's hard to see any significant number of jobs being created in these fields because research is not very labour intensive. How, I wonder, will this "investment" take place?

Car manufacturers are already putting a lot of time and money into researching electric cars and they do so as people who know a bit about making cars. What can the government do to expand or speed that research? Very little, I would think. They do not have the wherewithal to set up their own research facilities so their involvement can only be by way of funding research which is currently paid for by the existing manufacturers. If I were in charge of Jaguar's current account I would be delighted to hear that government wants to pay my company to do what it is currently doing at its own expense. I would be faced with an overwhelming temptation to announce that research has to be pared-back due to the recession in the expectation that the UK taxpayer will then hand over vast slabs of cash to allow it to continue. How many jobs will be created by this sort of exercise? Probably very few, if any at all.

If it really is to be an investment rather than yet another example of pouring money down the drain, the government will look for a return, perhaps by way of interest or by having a defined right to share in the proceeds of future exploitation of the new technology. The task for the motor manufacturers will be to assess the cost of getting the government involved. If government wants to big a return, the companies only have to make clear they are not willing to play and the whole scheme collapses - unless the government then capitulates and gets such a feeble return that the money is, in effect, a gift. Poor Gordon's problem is that he has absolutely no bargaining strength. Couple that with his solid track record for throwing good money after bad and we get a pretty good idea of what will come of this "investment".

Then he wants to play with windmills and waves. Again, a great deal of research is already taking place into wind and wave power, most of it paid for by the taxpayer. What exactly does he have in mind? More people employed to do the same work as now? That's the thing about research, it can only move as fast as it can move. Ideas must be tested on paper, then on models then in real life and at every stage the results must be analysed and adjustments made to try to improve the outcome. You can't just say "here's an extra £1million, now you can produce an efficient windmill" because it is not a lack of money that causes current wind and wave power technology to be expensive and only modestly efficient. What is needed is time and an awful lot of trial-and-error. Of course extra money can allow additional experiments which might speed the path to a final product, but the difference it can make is only marginal.

Perhaps the most interesting thing about the plan is the money involved. It is said to be a bringing-forward of £10billion of expenditure. In other words, it's in the government's budget for future years but will be spent now rather than in 2010, 2011 or whenever. It seems to follow that the budget will be reduced in those future years. If this is so, spending it to preserve jobs in 2009 will simply result in jobs being shed later. That's a curious definition of "additional jobs".

£10billion looks like an awful lot of cash, probably because it is an awful lot of cash. But how much does it really buy? Say a school is to be refurbished to current Building Regulation standards. Perhaps it will need new windows and doors, new insulation, rewiring, new plumbing and all the rest of it, including upgrades to old language and science labs. Just the materials will cost a lot of money. New windows and doors for a single large classroom might easily cost £5,000, the materials for an average sized secondary school could top £1million in the blink of an eye. New roads cost millions per mile just in materials and plant hire, resurfacing is cheaper but still very expensive. Are the preserved jobs of the suppliers of materials to be included in the count? If so, how is anyone ever going to be able to tell whether those jobs would have remained safe even without this new business. No doubt the government will claim credit for keeping all sorts of people employed when their jobs were never under threat.

If £10billion is to sustain 100,000 jobs that is just £100,000 per job, yet that figure includes not just wages but materials too. It really is hard to see how 100,000 jobs can be either created or preserved for any significant period when the budget only allows £100,000 for the combination of each job and the materials that job requires. In any event, once a renovation is finished or a road resurfaced the jobs involved in that project necessarily cease. So what is "the next period of time"? Of course it is anything you want it to be. Logically it should relate to the bringing-forward of the money. So, if 2011's budget is spent in 2009-10, the relevant period is two years; if 2011's budget is to be spent in 2009, it is one year. But it won't be looked at in that way because then he would have to admit that he is planning lay-offs in 2011. And what if Joe the plumber is retained through the whole of 2009 and 2010, does that count as two jobs, one for each year? Will he have to be formally laid-off between projects so that he can be counted twice? In the world of statistical jiggery-pokery all sorts of tricks can be played to make it look as though the impact on employment is greater than it really is.

It's such a lovely catchy headline. Good old Gordon, not only saving the world but now creating enough jobs to keep the adult population of Reading employed for a year. His own explanation shows that he is planning nothing of the sort. He is hoping to cushion the effect of recession by keeping people employed now in the hope that by the time these works have been completed the economy will have picked up and their jobs will be safe again. I have no huge objection to that (although cushioning recession inevitably involves a cost for future years), but I do wish both the government and the BBC would tell the truth. This is nothing to do with creating jobs and it is nothing to do with additional jobs (in any syntactically accurate sense of that term). For poor Gordon I suspect it is really about trying to hide the true damage his decade in the Treasury has done.

The cruelty of non-jobs

Over recent months much has been written about "non-jobs". Positions like Street Football Coordinator (paid by the taxpayer to organise impromptu kick-abouts into a more formal structure), Five-a-Day Adviser (paid by the taxpayer to guess how much fruit and veg people eat and suggest ways to force them to eat more), Climate Change Response Manager (paid by the taxpayer to suppress rational debate) and thousands more. Many are in the employ of local authorities who have felt compelled to engage them to meet some central government target or another.

Non-jobs are a fine way to reduce the unemployment figures and the tasks they carry out are, no doubt, thought to be of value by some people (usually a lobbying group paid by central government or the EU). I could bleat on about the cost. Just a thousand such jobs (a tiny fraction of the number in existence) at an average total remuneration of £20,000 each costs a massive £20million a year. Every year. I'm not going to go into the total cost, I don't know enough about it to do so and the figures are available from such luminaries as Mr Tyler.

When poor Gordon convinced himself and others that he had invented the money tree it wasn't a problem. He reached up to the ripe fruit, each one bearing the slogan "a billion quid", picked a few, peeled them and said "yummy". Now that the country is teetering on the brink of bankruptcy it is a rather different matter. Sensible budgeting demands that these unnecessary fripperies are abandoned as we enter a decade of thin gruel. Tens, if not hundreds, of thousands of these positions must be abolished if there is to be any hope at all of balancing the books by the end of 2018. And that gives rise to the point I want to make.

It really is very cruel and shortsighted to entice people into work when the cost of employing them is so much greater than the value of any benefit they could bring. Say you are a Street Football Coordinator employed by Bogshire County Council at a salary of £17,500 plus pension. Previously you were working as an assistant at the municipal sports centre on £14,000 but you have ambition and are keen to get more children playing football and enjoying competition so you put yourself forward. Your old job is then given to someone else and your new career starts. You are told your work is important and that you are a pioneer, you are told the future holds bright things with the possibility of promotion, higher remuneration and an even larger pension. But it is all guff. It's not your fault, in all good faith you took an opportunity to further yourself. After a couple of years in the post and with help from your parents you buy your first small flat. The future looks rosy but you have been misled. You read in the newspapers that others doing your work are being laid-off. How can that be? You were told it was vital work for the future and you planned your future around the rock solid security of working for a local authority. You find yourself made redundant with a small cheque to pay into the bank, a large mortgage and a flat falling in value. Funding for the sports centre is being squeezed so there are no openings there and you are now overqualified to go back to your old job anyway. And all because someone with more money in his budget than sense in his head decided Bogshire needed a Street Football Coordinator.

Of course neither central nor local government is yet making overt noises about such positions being dispensed with, they are saving that until after the next election. But dispensed with they will have to be because, frankly, they are a waste of money and now there is no money to waste. The position of people employed in these jobs is similar to that of those taken on by nationalised industries in the 1960s and 1970s. Those industries were loss making machines and the time would inevitably come when they had to be slimmed down or closed completely, yet people were given work in the hope and expectation that affording the unaffordable would go on forever.

Non-jobs create false hope in real people. Real people undertake financial commitments and plan their lives on the assumption their jobs will be safe. Many, like the sporty fellow in my example, leave other stable jobs to take the new positions. They do not do so out of greed or because they are trying to use the system for their own benefit. They do so because they believe the guff they are told.

Every sensible small businessman and woman knows what a very big thing it is to employ someone. They know that they must choose he right person for the job in order to get the maximum benefit for their business and they know that the person they choose will become reliant on them and will plan their future according to what that business can offer them. No doubt there are some hire 'em and fire 'em employers who simply don't care, although I have to say I've never met one. I have met plenty of businesspeople who hate having to let a loyal employee go and go to great lengths to avoid doing so, often at significant personal expense to themselves. No one is taken on at a substantial salary unless the job they are engaged to undertake is real and has real value. Still less is anyone taken on to massage the unemployment statistics. Yet that is exactly what has been happening over and over again in the public sector for the last nine years or more.

It is bad enough that it wastes taxpayers' money, it is simply cruel that it gives false hope to people acting in good faith.

The numbers are too big

The government tells us it will borrow £78billion in the current financial year although the actual figure is nearer £150billion because they have omitted the vast sums already advanced to banks and those earmarked to give further support to banks in the coming months. It seems to me we have reached the stage where the amount the government hopes to borrow is so enormous that it makes little practical difference for that figure to overshoot. Today we saw a sign that the Chancellor of the Exchequer might have abandoned any notion of keeping debt under control. When it was announced that a small bank, London Scottish, had folded Mr Darling said that all depositors' funds would be guaranteed by the government. It was only a few weeks ago that the formal guarantee for deposits was increased to £50,000, today that limit was cast aside and an unlimited guarantee was given.

It is easy to see why Mr Darling saw fit to do this. London Scottish is a small bank with total deposits of only £273million and the dent in the public purse is bound to be limited. In fact it would be a modest sum even in good times. But it is hard to see that an unlimited guarantee would have been given just two or three months ago, at that time the increase of the guarantee to £50,000 was seen as an exceptional measure. The only thing that has changed is that the government is now in hock to such a massive extent that adding a few extra millions makes absolutely no difference.

This change of approach comes shortly after it was disclosed that the government is drawing up a list of businesses who will be offered financial support if they go bust. That list is in the sleazy hands of Lord Mandelson and we can have no doubt that a major consideration for inclusion is that the business is in a Labour held seat or a marginal constituency. Bailing out the bankrupt was an old favourite of the Labour Party in years gone by. Their paymasters in the big unions required them to do it and everyone over the age of about 45 will remember how it ended. Vast companies produced goods no one wanted and buckets of taxpayers' finest were thrown at them to keep the workers voting Labour. The cost was so vast that the government ran out of money in 1976 and had to borrow from the International Monetary Fund. Yes, the very same IMF poor Gordon has been keeping sweet with calls for it to receive greater funding from the developed world. A major consequence of the 1976 IMF loan was that it came with conditions, including the need for government to cut its spending. That, in turn, caused the unions to get even more shirty and call strike after strike to "protect" publicly funded jobs. By the winter of 1978-1979 the position was simply bizarre with a Labour government being brought to its knees by its own paymasters. The Conservatives came into office in the 1979 general election and started to undo the state industries.

Now it appears that the natural instincts of Labour politicians are resurfacing. For the last nine years we have seen one aspect of this in a steadily increasing public sector crammed to the gills with non-jobs. But until now even this government did not feel it had a free hand to return to the days of state support for manufacturing and trading companies which could not make a profit. Lord Mandelson, with the keen support of poor Gordon and the hapless Mr Darling, knows he can nationalise vast swathes of business because the huge cost will be just a fraction of existing government debt. If the books were balanced and he announced a plan to spend, say, £30billion in bailing out bankrupt car manufacturers he would face a hostile public and press. As it is £30billion looks like the catering budget and will not cause significant public concern. After all, the government lost £2billion on the day it took shares in the Royal Bank of Scotland just last week and that hardly merited a mention in the press. We seem to have reached the stage where the debt figures are so big and so unimaginable to us little people that the government can add to them without fear of losing any more votes.

I believe there has also been a change in public mood over the last few weeks. When the government started pumping money into the banks to provide them with more capital in an attempt to restore confidence between the banks themselves, most people did not know why it was being done. What they saw, however, was the government using their taxes to help an industry noted for paying large salaries and even larger bonuses. It is hardly surprising that Mr and Mrs Ordinary will say "if they can do it for them, they can do it for us" and "if they can find all that money for the banks they can surely find it for schools and hospitals". These are perfectly sensible and fair observations, after all it is Mr and Mrs Ordinary who will have to pick up the tab and they want that tab to pay for things they value. It is unrealistic to expect Mr and Mrs Ordinary to walk happily from their jobs to the dole queue when a tiny fraction of what was paid to the banks could keep them in employment.

Lord Mandelson knows his party's only hope of reelection lies in getting Mr and Mrs Ordinary back on side. For a couple of years Labour has taken a pummelling in opinion polls and even now they are a fair way behind the Conservatives on most polls but the gap has been closing in recent weeks. They need a lot of Mr and Mrs Ordinarys to vote for them again and one way to do it is to claim credit for saving their jobs. Old-style nationalisation was driven as much by political ideology as vote gathering, many of those in the post-war Labour Governments led by Clement Attlee, Harold Wilson and Jim Callaghan genuinely believed that state owned industries would be more efficient and stable than those in the private sector. I doubt that even a youthful Trotskyite like Mr Darling still believes that because the evidence is utterly overwhelming that state run industry is a black hole for taxpayers' money. Today their primary motivation is the buying of votes.

What an irony it would be if the appalling mess caused by poor Gordon's devastating incompetence during ten years at the Treasury and two as Prime Minister will give him the smokescreen he needs to secure reelection. Horrible though it is even to think it, it could happen because the numbers are now so huge that he can buy votes without the public blinking at the cost.

What new jobs?

We have all become accustomed to poor Gordon's tractor production statistics, so much so that few listen any more. Often the only time one of the standard forms of words he uses registers in our minds is when someone else uses it. This week I have heard two senior ministers say that we have record numbers in work and that a million jobs have been created since Labour came into power in 1997. Something in the dim recesses of what I laughably call my mind suggested that Gordon has said the same thing and indeed he has, over and over again.

Then I asked myself what it means because the convention during my lifetime has been to measure the health of employment by asking what percentage are unemployed not what number are employed. So I did a little rooting-around at the Office for National Statistics and found an interesting document, the latest Economic and Labour Market Review. This is the one which noted an increase in unemployment of 120,000 over the quarter to July 2008. Section 13C summarises employment and unemployment figures over the last two years, the latest month included is July 2008.

As we know, the unemployment figures are massaged downwards by a plethora of ruses. For example, receipt of any one of a wide variety of welfare payments leads to exclusion from the unemployment statistics, losing entitlement to certain benefits by not taking an offer of work transfers you from "unemployed" to "economically inactive", early retirement is not unemployment and part-time work counts as one job not half a job. What I find quite compelling is the overall picture. Trotting out numbers for those in employment tells us only one side of the story and we cannot draw any conclusions about the overall state of employment in the country unless the whole story appears. For so long as population is increasing the number of people employed must increase if we are to stand still. New jobs are only a net gain if they lead to a reduction in the percentage of those who want to work but cannot get a job.

Interestingly, the figures produced by the ONS show an increase of 500,000 jobs since July 2006 but no change to the percentage of the population in work, it was 60.2% in July 2006 and 60.2% in July 2008. Half a million new jobs over just two years have made no change whatsoever to the relative numbers in work.

This will not stop the Harmans and Hoons of this world parroting poor Gordon's meaningless statistics, but now I know that they are talking nonsense when previously it was just a presumption.