Why Britain is stuck in a rut

"Remorselessly, unstoppably, Britain's bloated public sector just keeps on growing," said the Daily Mail. With another 95,000 workers added to the public payroll last year, one in five British employees - a total of more than 5.8 million - now works for Whitehall, the town hall, or the "myriad quangos spawned by New Labour".

Yet in the summer of 2004, Gordon Brown promised to cut spending on public-sector jobs. He pledged that 84,000 central Government posts would go, plus 20,000 in Scotland, Wales and Northern Ireland. Instead, 17,000 new administrators have joined the payroll in the year to July. Overall, growth in public sector employment is expanding at 1.7% a year - that's comfortably more than the private sector rate of 1%, and public sector wages are rising faster too. It means that some parts of the country - Scotland, northeast England, Wales and Northern Ireland - now get "more of their income from the taxpayer than from business or enterprise".

Brown protests that actual civil service jobs, the centrepiece of his initiative, are falling, said Patience Wheatcroft in The Times. But only 1,000 out of the 84,000 target have gone so far. You would expect, given Brown's need to slash costs to keep up other spending plans in a time of waning growth and uncertain tax revenues, that both the chancellor and his Treasury aides would make "absolutely sure that this cost-cutting reform was being driven through fast". Yet it hasn't happened. As most sceptics suspected, for every civil servant "politely ushered out through the front door, two more creep in at the back". The reason all this matters so much is that our "bloated public sector has become the ball and chain holding back the British economy", said The Business. Growth in Britain's GDP was a mere 1.5% in the year to the end of June - that's way behind America (3.6%) and scarcely more than the "tortoise of the world economy", the eurozone (1.1%). It is also the UK's slowest rate of annual growth since 1993 - a fact that even Gordon Brown's complacent and economically illiterate cheerleaders in the British media are starting to understand.

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What they should also understand is that a major reason for our lacklustre growth is that productivity is stuck in a rut, courtesy of declining competitiveness, weak capital spending and extraordinary waste in the public sector (where productivity has been falling for four years). So ignore Brown's "meaningless rhetoric" praising US-style enterprise. In truth, "Brown is fast turning Great Britain into a Scandinavian-style socialist society" destined for low growth and high taxes. This week's Tory conference will help voters decide if the main opposition party has the "brains, guts and leaders" to grab hold of the huge opportunity this presents them with. "We do not advise our readers to hold their breath."