Of Banks, Charities and the Public Sector

February 10, 2009 4:44 PM

Until recently there were three roughly distinct sectors to the UK economy; the public, the private and the Orwellian sounding 'third' (consisting of charities and other non-profit groups). Political enthusiasm for out-sourcing services, the financial crisis and a current taste for bail-outs have, over time, come to blur the lines between these sectors. Indeed all of them now share an identical trait; they are all increasingly reliant on taxpayer funding.

It is a depressing reflection of our current circumstances that both so many banks and charities have to rely on taxpayers; many of the former can no longer make any money, many of the latter just can't raise it. Regardless of the reasons, the taxpayer has now stepped in to prop up both, with Government announcing last week that it would help charities with financial assistance of over £42 million. This is on top of the outstanding third sector commitments the Government has made over recent years, in its push to get it involved in the provision of public services.

While the amounts given to the banking industry and the third sector are not remotely comparable, the Government's involvement in all parts of British society is now firmly entrenched. To a greater or lesser extent, the future of the private, public and third sectors now rests in the state's hands. Unfortunately though, past experience tells us that those are clumsy hands indeed. The private sector understands efficiency and productivity, whereas those are still just aspirations in the public sector. The third sector knows that radical strategies are needed to help those most in need, while the public sector is still hamstrung by obsessions with targets and 'fairness'.

There are excellent people in all parts of the public sector, but as a whole it leaves much to be desired; waste, inefficiency and poor performance are endemic. So it is in all our interests to prevent the private and third sectors slipping into the grip of the state. Business will not be able to pick itself up if it is tied down with politically motivated prescriptions. Charities will lose sight of what it is they were set up to do if they become overly reliant on handouts from the taxpayer.

Until recently there were three roughly distinct sectors to the UK economy; the public, the private and the Orwellian sounding 'third' (consisting of charities and other non-profit groups). Political enthusiasm for out-sourcing services, the financial crisis and a current taste for bail-outs have, over time, come to blur the lines between these sectors. Indeed all of them now share an identical trait; they are all increasingly reliant on taxpayer funding.

It is a depressing reflection of our current circumstances that both so many banks and charities have to rely on taxpayers; many of the former can no longer make any money, many of the latter just can't raise it. Regardless of the reasons, the taxpayer has now stepped in to prop up both, with Government announcing last week that it would help charities with financial assistance of over £42 million. This is on top of the outstanding third sector commitments the Government has made over recent years, in its push to get it involved in the provision of public services.

While the amounts given to the banking industry and the third sector are not remotely comparable, the Government's involvement in all parts of British society is now firmly entrenched. To a greater or lesser extent, the future of the private, public and third sectors now rests in the state's hands. Unfortunately though, past experience tells us that those are clumsy hands indeed. The private sector understands efficiency and productivity, whereas those are still just aspirations in the public sector. The third sector knows that radical strategies are needed to help those most in need, while the public sector is still hamstrung by obsessions with targets and 'fairness'.

There are excellent people in all parts of the public sector, but as a whole it leaves much to be desired; waste, inefficiency and poor performance are endemic. So it is in all our interests to prevent the private and third sectors slipping into the grip of the state. Business will not be able to pick itself up if it is tied down with politically motivated prescriptions. Charities will lose sight of what it is they were set up to do if they become overly reliant on handouts from the taxpayer.

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