I’m delighted to
see the rise in output in the service sector announced today because
it means more people have a job of some sort however poorly paid.
But we really should be looking at the manufacturing sector to try to
get a proper picture of economic performance.
The problem of the
service sector is that it is predicated on the nonsensical belief
that we can get richer as a country by cutting each others hair more
often and that is just silly, but that’s how it works. Without an
improving manufacturing base the service sector is no more than a
giant ‘Ponzi’ scheme; a hoax perpetrated on us by city spivs,
treasury wide-boys and political con-men and it will end in tears as
all ‘Ponzi’ schemes inevitably do unless we do something about
it.
Prior to the
introduction of VAT we had a Selective Employment Tax which was more
or less revenue neutral. What it did was to increase the Employers’
National Insurance in industries classified as ‘service’ and
reduce the same tax for employments classified as ‘manufacturing’.
It was very successful in diverting new investment into the
manufacturing sector. Maybe it’s time to bring it back and Brexit
might just offer that opportunity if government is bold enough. But
I doubt whether they are.
