Half of new jobs are created by the state

The Labour party were elected on a manifesto to expand the state and state provision of services so it is not a major surprise that state sponsored jobs have increased.

To an extent the financial sector provided huge revenues for the government but little in the way of employment(no-one in the city of London lives in West Midlands...) So the government took the revenue from finance and used it to expand the public sector.

stueyhants wrote: »

This gives a nice short term help for an area but when tax revenues fall (like they have done) and the financial sector doesn't bring in as much money your going to have to cut back in those areas. Whereas creating real wealth producing industries in those areas is a much better long term strategy.

I don't think the conservatives would have been much better, perhaps its the short term political planning (5 year elections) which stops long term thinking.

I think all governments would have been greatful to receive the bounty generated by financial services which seemed to grow and grow. With hindsight it is easy to see that there were risks, but it is interesting that few oil producers have been able to diversify their economies despite the fact that really is a finite resource. Perhaps the same is true for the UK with financial services. If nothing else it would have bid up the exchange rate and hurt other exporters. But also to close down suck a profitable and dynamic sector would never have worked.

It depends on which Tories got in. Had it been Redwood/early Portillo/Hague/IDS then I would have expected a smaller public sector and tax cuts. The outcome might well have been higher private employment - but much in non-tradable sectors and closely related to government expenditure(private healthcare, nursing, etc). Had it been the more Michael Howard then as they had promised to mirror most of Labour spending bar about £10billion then we would be in exactly the same place.

I think the UK system is preferable to the US one which seems utterly paralysed by political cycles. But a beefed up second chamber which actually debates financial issues properly and perhaps has some method of being less politcal influence might help. I can imagine allowing them to serve for one eight year term and thereafter being debarred from parliament, with a pension large enough to keep them from working again might help. But it won't happen.