Wednesday, 11 June 2014

JOINED UP GOVERNMENT?

When is work productive and useful, and when is it just a drag on the productive and useful things that people want to do? The importance of this macro-economic question is best illustrated by specific cases, which is why the story of the former magistrates court in Totnes, in south Devon, has such resonance. 

The 1970s court building, which was closed in 2011, is next to KEVICC, the town's secondary school, which wants the additional space for its cramped sixth form. The drive leading up to the main sixth form building runs right right past it, and has a direct access.

Unfortunately for H.M. Courts Service, who own the building, that is pretty much the only access, at present. It was formerly approached across land owned by Devon and Cornwall Police, who presumably had an interest in allowing the people they had arrested to have access to their day in court. Now that the building is for sale, however, the rights of access appear not so straightforward.

 What does seem straightforward is the solution to the matter. KEVICC, a public body, wants and needs the space, and is even willing to pay a respectable sum for it. H.M. Courts Service, another public body, wants to get rid of it. Common sense and the interests of the public purse would suggest that the simplest and swiftest means of transferring ownership from one branch of the state to the other would also be the best one, particularly since the complications of access do not arise.

Not at all! A better solution, apparently, and the one adopted, is for the police, the courts service and Devon County Council, which also owns some neighbouring land, to employ lawyers to thrash out the details of an alternative access to the premises, which might lead to a higher price than the KEVICC offer. According to an article in the local Totnes Times, they have been at it for year and have still not resolved it. The issue, presumably, is that the owner of the access to a site considered landlocked can expect to garner 50% of its value. In the Balkanised state that is modern Britain, four different branches of government are now fighting over the value of a building that only one of them wants.

No prize for guessing the winners in all of this, although whether the lawyers or the estate agents will do better only time (and a freedom of information request) will tell. Meanwhile, however, the value of this deteriorating public asset is diminishing as the professional fees rack up. If KEVICC ends up paying more for the building, the police and the courts service may gain, along with the lawyers and agents, but there will be a net loss to the public purse, since the school will have fewer resources with which to educate its children. And if it cannot buy the building at all, the public purse will still bear a loss since the cost of expanding in other ways is sure to be greater than the price achieved for the courthouse on the open market.

By allowing the arrangements between different branches of the public estate to be commercialised in this way, the government has caught a serious infection from the private sector, which is the cost of doing business in an increasingly transactional economy. More and more people now make their living shifting money round the economy, taking a handsome slice of it along the way but not actually producing anything new that people want or need.

In the past 25 years the number of practising solicitors has increased by 154%, according to figures collected by the Law Society, while the number of people working in real estate has increased by 134%. The latter is an ONS industry category that includes a lot of people who are not estate agents as such, but it gives an indication. Over the same period the population increased by a mere 12%: whereas one solicitor per thousand people in England and Wales was sufficient in 1988, two and a quarter are now required, which suggests not that life has got better, but more complicated, and people are having to buy a lot more legal services than they did. Nor can this increase be accounted for by the fact that people are doing more business: GDP increased by 62% in the same period, so GDP per solicitor is now two thirds of what it was 25 years ago.

When it comes to the things that people want and need, the economy divides approximately into the actual production of those things, which is a clear gain for society, and the  administering, managing and regulating of that production, which is a cost upon society that has to be paid for out of productive capacity. The test is relatively simple: would you rather have more of it or less of it. In general a society would rather have more of the things that people want and need (including the ones that are “free” such as a good night's sleep or a walk in the countryside) and less of the administrative burden.

Of nineteen industry categories collated by ONS, six employ fewer people now than in 1988, and most of these are the “doing and making” activities that produce the things that people want and need. Mining, manufacturing, energy production, farming and fishing all get by with fewer people; the number engaged in construction has changed little over the period, and numbers are up in water supply, hotels and restaurants, education, the arts, communications and health. These doing and making activities as a whole engage about 850,000 more people than 25 years ago  – about a fifth of the four million new jobs that have been created over the period.

Much bigger gainers, meanwhile, have been administrative and support services, and professional, scientific and technical activities, which together have nearly doubled in size, putting on 2.3m new jobs over the period. This latter group is where the lawyers, accountants, advertisers, etc., are to be found. Other transactional activities that have increased their numbers are wholesale and retail (up 10%), and transport (up13%). Finance and insurance are down slightly, because the huge growth of the City over the period has been offset by the loss of many clerical posts and the closure of local bank branches.

Each ONS category contains a range of work activities, and it does not follow that all the work in the professional, administrative and financial categories is of a sort that society would ideally do less of, or that all the work in the other categories is providing real human value. But the categories do paint a picture. Just as those government departments are paying professionals to share out among them the value of a dilapidated building in Totnes, so society at large is spending more and more of its time and energy administering, managing and regulating itself, and less and less of it producing the things of real value that people want and need.

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