The financial market’s response to the increase in budget spending announced by our new Chancellor presents a sobering indication of the problems that record levels of national debt will bring to the economy, in a land where food and fuel poverty exacerbate deprivation in our communities and local authorities struggle to stay afloat, never mind meet their obligations for social care. Unfortunately, this budget only exacerbates the existing problem, ignoring treatment of the underlying cause of our economic malaise.
The market and 'Gross Value Added' (GVA)
Instead of addressing legislation to improve its efficiency, governments look to micromanaging and misappropriating funds to achieve their political aspirations. As the market is the only means of holding Government accountable for the extent of our national debt, the taypayer finances inefficient processes in perpetuity.
As the UK government constitutes a large share of the Gross Value Added of the nation, the inefficiencies of government are an important, unmentioned cause of this malaise.
The UK Government is the largest contributor to the nation’s Gross Value Added, the measure of an economy’s value, which is not a good sign for its overall health. A healthy economy would have a strong industrial base, producing goods and services for export and consumption by its own people. It would have intellectual property and a robust contribution from trading. Inefficiency propagated by bureaucracy institutionalised in the announcement from the latest budget round are being starkly interpreted by financial markets.
It’s unfortunate that this government cannot see the wood through the trees.
Government as a barrier to community energy
The biggest barrier to developing “home grown” community energy is that central government directs everything involving decarbonisation through local authorities. Naturally, because it’s easier for them to allocate huge budgets to smaller legislators than it is to ensure that the taxpayer receives value for money for these allocations.
BHESCo have spent years pleading with the revolving door of government officials at the changing names of departments, first DTI, then BERR, DECC, BEIS and now DESNZ. These types of portfolio changes and responsibility shifts have contributed to government inefficiency, ultimately increasing the amount of interest taxpayers’ pay to service our national debt.
GB Energy and the folly of 'Carbon Capture'
While GB Energy was supposed to receive £8 billion to invest in infrastructural projects, it is not transparent how the paltry £125million will be spent over the next two years to establish its redundant bureaucratic infrastructure. The private sector and community energy (social enterprises trading for many years) combined could do what is aspired by GB Energy if proper funding were made available.
Instead, this government aims to waste taxpayer money to recreate the wheel instead of properly incentivising existing initiatives. Now it aims to invest 27x the amount intended for renewables in Carbon Capture and Storage, unproven technologies that don’t add any value to the economy, besides allowing the business of burning fossil fuels to continue at higher cost.
The grim state of UK productivity & economic impact
Why isn’t government addressing its own structural and managerial crisis? Considering how much most people work on average, they may find it hard to believe that the UK ranks 20th on the international productivity scale . However, it’s been this way for quite some time. According to the Office for National Statistics, the UK is almost 20% less productive than Germany and France and 40% less productive than the United States.
There are many reasons for this. Absenteeism in government is increasing with the Ministry of Justice and HM Treasury being the highest perpetrators with 11 days and 10 days per year in 2023, almost 3x the average of small businesses of 4 days per year. Civil servant sick days are primarily due to stress and mental health, a sad reflection of how government treats its employees.
This wouldn’t be so impactful if government services weren’t the highest contributor to national Gross Value Added. This is a real problem, as the economic strength of a nation is determined by its capacity to produce goods and services. Redundant investments by government in efforts like Great British Energy, that shift existing resources, are a distraction from the vital investment in building industry and skills that are needed to drive forward a thriving economy.
Bureaucracy is hampering the pace of climate action
My effort for the past 12 years to develop clean energy infrastructure and energy efficient retrofit, liaising with government, has informed the conclusion that the protocol directing operations of central government are broken, creating massive inefficiency. Poor management, the confrontation and conflict that takes place between politics and civil servants creates inertia.
In developing clean energy projects, we are stonewalled by bureaucratic processes that consume excessive amount of time, like the broken procurement system, micromanaged regulation and an archaic planning system, all feeding a collective time dump that introduces fiery hoops to jump through for any enterprise working to decarbonise the country’s energy provision in innovative ways.
These bureaucratic processes divert resources that could provide the energy security that real “home grown” energy supplies, ensuring value for money for taxpayers and nurturing and growing our skills in trades. Instead of micromanaging, government needs to legislate, set the goal posts for industry, make policy, setting budgets to spend the money, ensure it is spent efficiently and let the industry employ its expertise to make it happen.
The Autumn Budget is not going to save us
Government must finally do something to tackle the tremendous history of inefficiency in this country. The nation’s track record will not change unless we see a paradigm shift in its governance.
The problems that we are facing today are rampant unaffordability across housing and basic staples, like food, clothing and energy. Landlords who are pricing young people out of the housing market, exacerbating homelessness and homes that are not affordable to heat.
This budget is not going to cure the problems that we face, nor will it improve our national wellbeing. It just continues to kick the can down the road.
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