Evening Post WEDNESDAY, OCTOBER 18, 1939. THE STATE OCTOPUS

Evening Post, Volume CXXVIII, Issue 94, 18 October 1939, Page 8

Evening Post WEDNESDAY, OCTOBER 18, 1939. THE STATE OCTOPUS

A prediction was made by the Minister of Finance, in addressing the Public Service Association yesterday^ that the Public Service was likely to grow to a greater degree and at a greater pace during the coming years. The Minister held that this was to the good, provided that the term "service" was followed. He also spoke of "public service in the best sense that that term was used." But with these qualifications, whatever they may imply, the meaning of the Minister's statement is that he admits there has been a great expansion of the work directly undertaken by the Government and Government agencies, and he expects there will be a greater expansion in the future. Also he considers this beneficial. The expansion of the past, especially under the Labour Government, is undeniable. Exact figures showing the growth are- not available, but the report of the Public Service Commissioner this year showed that employees in the Public Service had increased from 9850 in 1930 to 17,246 on April I, 1939. In the same period the Railway Department staff increased from 15,410 to 25,297. To the Public Service and Railway Department must be added Post and Telegraph employees, about 12,000, teachers, about 7000," workmen employed on public works not included in the departmental staff—any number up to 20,000—military personnel of the Defence Department, and many other groups. A statement compiled by the Associated Chambers of Commerce last year showed that for 1938-39 the Government had obtained financial authority from Parliament for increases aggregating 25,631 in the number of State employees as compared with 1935-36. The employees had been engaged at the rate of 10,000 in 1936-37, 7000 in 1937-38, and 8000 in 1938-39. The expansion is still proceeding and the Minister of Finance thinks it will continue "to a greater degree and at a greater pace during the coming years." This he welcomes. The taxpaying public, who have to find the money for this expansion, are pot of the same mind. They see the State octopus reaching out more and more to grasp their means of livelihood, and the scope for private enterprise and occupation being steadily restricted. All the while the demand for the financial means for this expanded activity grows greater and greater, and the sources from: which they may be supplied become less. The very demand for heavier taxation hinders the extension of private enterprise. The Minister attempted to justify his anticipation of expansion by saying that it would be maintained to the extent that the Public Service "did the job better. If it did not do the work better, then inevitably the old way would continue to be followed." But this test has not been, and is not being, applied fully and fairly. In many directions the State activity is given statutory protection against competition. It has a virtual monopoly, and it is impossible to say whether it is doing the job as well as private enterprise could do it. In other instances competitive conditions are not equal as between the State and the private employer. The State enterprise may be aided by cheap finance, even credit, while the private enterprise is under the handicap of an anomalous taxation system. Finally, the private enterprise must show a return upon the capital employed— or it cannot continue —while the State simply writes off the loss and , says that the Government has given service and that is better than profit. This latter argument is fundamentally misleading, and shows a political misuse of terms. Service to the public is rendered, not solely by the Public Services, but by private enterprise. If it were not, there would be no justification for the continuance of the enterprise. Moreover, the public, by withdrawing support, would soon end the enterprise. Profit is the reward for ser-

vice and the measure, to a great extent, «f its faithful and useful performance Tf the service is required and is carrit^l out efficiently, the public will pay for it, '»nH the man who organises the service and provides the capital will have his reward. If the service is not wanted or is inefficiently given there will be no reward. The cardinal weak-

ness of much State activity is that it ignores this test. The failure to show a profit —indicating that the service costs more than the public are willing to pay for it—is even claimed as a virtue, instead of being recognised as a gross fault. Of course, this argument does not apply to some of the social services, in which value cannot be directly measured.

There is, however, the telling practical argument against State expansion. It must steadily revolutionise the system of taxation. Half, possibly more, income tax is paid by business, much of the land tax comes from commercial enterprises. Business is the collector of sales and Customs taxation. The more business comes into the hands of the State the more must the field from which taxes are drawn be narrowed—and the greater will be the demand for tax revenue. When 'the taxation becomes throttling to business, the individual must pay it directly and fully. With the minimum income tax rate about 2s 3d in the pound and Is in the pound for social security, people are complaining now. They will complain still more when Mr. Nash's anticipated State expansion takes place, and they will ask themselves seriously whether the service they receive is worth what they pay —or whether, after all, they were not having better service from private

enterprise,