Research by Richard Murphy (of Tax Research) has shown that the state recoups 92% of the cost of creating new public sector jobs – through lower benefit payments and increased tax revenues.
That’s a way to get tax rates down isn’t it? So instead of us having to pay £100,000 in taxes to employ a GP, we really only have to pay £8,000! The rest just magically flows from that perpetual money tree that is government.
The implication being that if we only hired a few more people then tax rates could be 8% of what they are now!
Sadly, Richard’s calculations don’t in fact say that, even he’s not that daft. What his calculations say (and I am saying nothing at all here about whether they are correct or not) is that firing a current civil servant, who then goes on the dole and gets all sorts of benefits, never to work again, only saves 8% of the cost of employing them in the first place.
This does not translate the other way around of course: pulling a current private sector worker into the public sector does not cost only 8% of the cost of their wages. It is only (by Ritchie’s calculations again) if it is someone on the dole, getting all sorts of other benefits, who would never gain private sector work, who gets the public sector job that this is true.
The thing is then, while Murph might be a little cockeyed at times, Swerotka is simply too dim to understand what he’s actually being told.