Calling it “Taxpayers’ money” creates bureaucracy

Everyone speaks of money as if the taxpayer created it and passed it across to the government, if not with outright hostility then certainly with great circumspection.

But since the financial crisis we know that we spend first and tax later. Where otherwise, did that almost half a trillion of ‘Quantitative Easing’ come from? Was it in the warehouse out the back? And if it was, how long had it been there? How many more are there and where are they?

Yet still the government and mainstream media particularly, insist on calling it taxpayers’ money. It isn’t and that’s why the notes in our pockets have written on them “I promise to pay the bearer on demand” signed not by a taxpayer or a group of them but by the Chief Cashier of the Bank of England.

The misleading concept as to where money actually comes from leads to an over zealous control of how it is accounted for. Austerity makes things even worse since the taxpayer has so strenuously provided what is seen as such a scarce resource that it must be obsessed over, counted and accounted for within an inch of its life – all so that we can be assured it is not wasted. Which means we collectively do the job it was actually allocated for, so much worse. We have, for example, schools, police, charities, fire services, and health professionals wasting their time form filling and accounting for every last jot and tittle of money who are in consequence unable to concentrate properly on the day job. So since we mustn’t waste taxpayers’ money there is an ever increasing bureaucratisation which is required in order to account for it.

When democratic control has allocated the funds for a purpose then those receiving it should be the right people to be trusted to spend it properly for that purpose. Any difference in outcome should be seen primarily as a failure of that democratic control – the resources have not been correctly allocated to those people best able to use them.

So the democratic decision on where to spend the resources should be where the accounting really lies. Resources may be scarce in which case the government should be careful who it gives them to, but requiring professionals to justify how money is spent is a problem better suited to its allocation that its receiving. That needs a government with more courage than we have had for some time. It is much easier for governments to blame the bureaucrats.

The “taxpayers’ money” framework needs heavy control bureaucracy when government created money would be light touch.The accountability comes at the wrong end.

How remarkable to think that, as the government is not straightforward about where money comes from, and by using instead the small misleading phrase “taxpayers’ money”,  they weigh down our public servants with paperwork and thus make them less efficient in using the money allocated to them.

You would have thought our elected representatives would think they have a duty to frame the language in order to save resources but no, their “taxpayers’ money” automatically creates additional bureaucracy.


  1. Grace Sutherland -

    The reason everyone speaks of money in terms of the taxpayer cliche is because they haven’t really a clue how it operates.There is dumbing down in the interests of those with money to keep the general population ignorant but isn’t it also true that even economists don’t all agree about how money is created? If so, what hope for the rest of us mortals? Any which way, I think it’s huge hole in the general education of the nation. I would love to see a thoroughly comprehensive schools programme that goes all the way down to nursery education and all the way up to government but it’s not likely to happen is it? Or maybe it would a good way to spend the next 10 years.

    1. Peter May -

      I’d say that there are some economists that still consider money unimportant in the actual working of the economy but I think now the Bank of England has admitted that private banks create money every time they make a loan there cannot be much disagreement as to how money is created. And ‘Quantitative Easing’ was widely seen to be just printing money for the banks. The trouble is that the government doesn’t want to engage in it itself. It sees it all up to the Bank of England and nothing to do with them. Except, of course, the government owns the Bank of England and so it is a sham. That’s why I get worried that disseminating incorrect ideas on money creation is not a misunderstanding but a conspiracy to impoverish the majority population rather than to ensure a prosperous economy.
      But as Sean says it’s all down to Maggie, who made it seem so simple. It’s true it was.
      But it was also wrong. I think people had or have for so long been aware of the gold standard (which itself has even fallen into linguistic use to indicate something that is almost perfect) that they are almost hard wired to think that money is limited. Economist Ann Pettifor says money is a social construct, which I think is exactly the right concept.

  2. Sean Danaher -

    Prof Bill Mitchell argues that taxpayers do not fund anything
    Prof Richard Murphy says “there is no such thing as taxpayers money”

    Margaret Thatcher said “there is no such thing as public money; there is only taxpayers’ money.” Its a meme that has crept into the subconsciousness of the public and part of the neoliberal strategy to dumb down the public and make them resentful of taxes.

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