Ten thoughts from 10 years in the Public Sector; #6 The Tax Toilet…

…the journey of our pounds and how they stick to the sides

“Waste of money cures itself, for soon there is no more to waste.”  M.W. Harrison Toliet

Here’s an imagined description of a week in the life of a pound that was taken from you in tax. For the purpose of our illustration we’ll imagine this particular pound is destined to go towards helping people start-up a new business and reinvigorate the economy, “what could be more worthwhile” I hear you say.

Day 1; its pay-day and your employer has calculated your wages and gives you what is left of your salary after tax and national insurance.

Day 2; your shiny pound, along with many others has arrived at Her Majesty’s Revenue and Customs to be distributed to another deserving government department…of course Her Majesty’s Revenue and Customs need to take a small slice out of it to cover their management administration costs and their overheads.

Day 3; a slimmer and slightly less shiny pound has now made its way to the Department for Business Innovation and Skills from where you can be sure that it will now make its way to help a deserving entrepreneur somewhere in the UK…after the Department for Business Innovation and Skills has taken a small amount to cover their management administration costs and their overheads.

Day 4, your pound, which is now looking ever so slightly anorexic, perhaps even a touch emaciated, is making its way to an organisation that has been hired by the Department for Business Innovation and Skills to manage the delivery of a well meaning programme of support for budding new businesses across the UK. Of course this organisation does not actually provide the support to new businesses themselves, they contract this out to other agencies and to help them achieve this in an efficient way they need a smart set of offices with a modern computer system and a team of well-paid staff. And of course, they need to use some of your pound to cover their management administration costs and their overheads. At this stage it’s fair to say that your pound is undergoing a transformation, it is starting to turn silver and looks a lot more like a 50p coin.

Day 5; now what’s left of your pound has made its way from the organisation that was hired by the Department for Business Innovation and Skills to another agency. They are of course just about to finally pass it onto a local agency, but before they do they will need to take a little something out to cover their management administration costs and their overheads.

Day 6; the shadow of the coin that was formerly your pound is now limping, no crawling, towards a local agency so that they can actually use it to help deserving local people in your area to start new businesses…of course they can’t be expected to do this for nothing and so they need to take some of what’s left of your pound to cover their management administration costs and their overheads.

Day 7; in the interests of efficiency the local agency has sub-contracted the provision of support to start new businesses to self-employed consultants and what little was left of your money has been used to cover their management administration costs and their overheads.

The journey may be fictional but that is where your pound went and where billions of others just like it go. This picture of bureaucratic and administrative expense is one of the reasons that a great deal of confusion arises between what politicians think they are providing and what people and businesses in the real world are actually receiving. Governments can and do legitimately say that they are making large amounts of funds available to help people in various parts of society, but by the time the money gets through all the different organisations that are involved and eventually reaches the coal-face there is next to nothing left of the money for people to see because so much of it has stuck to the sides.

I wonder if we would give any money to charities that were found to contain these levels of bureaucracy and used as much to cover their management administration costs and overheads?

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