Why wait?
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TRYING to forecast the future is dangerous enough. Trying to forecast what future generations will think of our actions is even riskier.
2084 man will probably be almost totally dependent on nuclear power, and even so may not have solved the problem of safe disposal of nuclear waste. He will look back enviously at the North Sea oil boom and wonder what we did with all the revenue. And when he has found out he will probably conclude that we were mad.
The Government rightly refuses to use this money to support industries producing goods for which there are no customers. Future prosperity will flow from what the Prime Minister calls "real jobs".
But the Government also refuses to spend oil revenues on public goods and services for which there is an obvious — sometimes even a desperate — demand.
Anyone who doubts this should take a look at the state of the roads. Never mind the motorways — they are merely the most visible sign of increasing decrepitude. On every type of road there are potholes, sloppily-executed quick "repairs" leaving uneven surfaces, lights out of order or signs broken for weeks on end. All these reflect the scarcity of funds available for maintenance.
Or take a trip round London's so-called South Circular Road (the name is a piece of black humour) or any number of other traffic black spots up and down the country for whose solution there are not yet even any plans, still less any action.
Or make a tour of our bridges, from minor rural arches built in the days of the horse and cart, through important Victorian structures like London's Hammersmith Bridge, to major modern constructions like the Severn Bridge. Many thousands need drastic and expensive improvement to cope with modern traffic.
This is not just a traditional "roads lobby" plea. It is the same story underneath the roads themselves. Sewers built by the Victorians over a century ago are now collapsing on such a scale that the resulting holes are measured in "DD" units; the initials stand for the number of double-decker buses which would fit into them.The House of Lords recently said that the £205m spent annually on maintenance should be increased to at least £310m. But of course this has not happened.
A common thread runs through all these items. Expenditure on remedying the problems is not optional; it is inescapable. Only the timing is optional. A lot of money will have to be spent — sometime. Why not now?
In the sixties and seventies the main worry of Governments in the economic field was the balance of payments. Expansionist programmes might bring a run on the pound, and cause the exchange rate to collapse.
Today, it is not the pound but many sectors of manufacturing industry which have collapsed. Thanks to North Sea oil revenue our balance of payments is in generous surplus. As a result many experts consider that sterling is too high for the wellbeing of British industry.
Nor is the risk of a resultant increase in inflation a satisfactory reason for inaction. Ten years ago any wage settlement much below 30 per cent was regarded by trade union negotiators as a dismal failure. Today the fear of unemployment is clearly keeping wage demands within a zone of reasonableness.
It might seem pointless to expect this Government to embark on a major public spending exercise. It is determined to cut public expenditure, and thus be able to reduce taxation. It is an embarrassment to the Government that in its first term the total tax burden actually rose by 4.5 per cent. Unless that trend has been reversed by the time of the next general election, reduced inflation would be the Government's only economic success.
That is a valuable achievement, but it is probably outweighed in the public's mind by increasing concern at the huge total of the unemployed. Yet there is a way in which the Government could reduce unemployment without substantially raising public expenditure. That probably sounds like the alchemists of old who claimed to be able to turn base metal into gold.
But unemployment benefit is a form of public expenditure which has no end product. Switching some of it to productive ends would cost relatively little.
An Oxford economist, Andrew Glyn, recently demonstrated that the gross cost of each Government-funded additional adult worker would be £176 per week. This would consist of the average wage of £144 plus £32 employer's National Insurance and superannuation contributions.
But there would be many offsetting savings. While unemployed this worker, if married with two children, would have been receiving about £75 in various benefits. Stopping these reduces the cost of employing him to £101.
But there are also positive elements. While employed he would be paying £50 in income tax and National Insurance contribution, bringing the gap down to £51, or a third of the gross cost. Then come the indirect taxes from the worker's additional spending. These would amount to at least £5. So the net cost per worker goes down to £46. And Mr Glyn argues that by borrowing back pension contributions the Government could further reduce it to £22.
It would be an unusual situation in economics if there were no argument about the precise figures. But even an error of 100 per cent would mean that each additional worker could be hired for a net cost of £44 per week.
The employment benefits of proper maintenance and minor improvement of roads and sewers spread well beyond those carrying them out. Tipper operators are obvious, but not sole, beneficiaries. New equipment — lighting columns, sign gantries, pipes, valves, junction boxes, cables and much else — has to be bought. Most of this still comes from British firms in the badly hit "metalbashing" sector, so prices are very keen.
Even allowing for the offsets, a programme on the scale needed would undoubtedly involve some increase in public expenditure. But awaiting the long-promised upturn in the economy would lower the decrepid state of roads, bridges and sewers to those of a third world country. And by then labour and materials will be scarcer, prices will be firmer, and North Sea revenue will be declining.
On the other hand action now, making road transport more efficient, would bring recovery nearer.
Bargains are there for the taking. Why does the Government wait?