But if you are running at 2 per cent it is much harder to do so.Professor Congdon argues that the promises made by the welfare state have to be honoured. But that need not be done by the present system of public spending. The task of the government is to ensure that people receive high quality services, not to provide them itself. Just how this might be done comes in the good Professor’s next edition, but you can already see the general point here.

It is that all developed countries are going to have to spend the next couple of decades rethinking the frontier between the public and private sectors.This will be driven by two forces: company mobility and labour mobility. Ireland has been a great beneficiary of company mobility, as has the UK, though proportionately to a lesser extent. Insofar as countries can attract inward investment, they are able to boost their growth rate and jump on to a virtuous circle of lower taxation and faster growth. As for people, the greater labour mobility becomes, the greater the competition between governments to lift their game and provide them with high quality services and a benign tax environment.There is a further twist to the tale: public debt levels. You may recall that the Chancellor argued in his recent budget that by paying back debt he had released money that might be spent on interest for spending on services It is a very good point. Fortunately, the UK has fairly low debt levels compared with most European countries, the main exception being Norway, which thanks to oil revenues, has just about eliminated its debts. But even heavily indebted countries such as Belgium and Italy, are starting to cut back debt levels.

The US, in theory, will pay off its national debt over the next decade and a bit, though some of us will believe that when we see it. Expect Japan, either under its new prime minister or his successor, to start to correct the surge in debt that has happened in the past five years ­ the result of an ill-advised and unsuccessful attempt to stimulate the economy by spending on unnecessary infrastructure projects.So the mood to cut public spending as a proportion of GDP seems likely to be mirrored by a parallel effort to cut public sector debt. The UK is well-placed on the debt front, less well-placed on the spending one.The most difficult thing, from the politicians’ and public sector point of view, will be to persuade people that the state will be doing less in future. You can already catch a glimpse of the way the debate will line up. We can already see the Tory line that people have paid the taxes but are not getting the services. And we can see the Labour response that lots and lots of improvements will come through shortly but improving things takes more than four years and they have not been in power long enough.But that is just to put a parochial spin on a global problem. If those OECD projections are correct, the developed world is now firmly on a “shrink the state” path.

If Professor Congdon is right, it should be possible for countries to ensure that people receive high quality services. But to do so may mean the state getting out of the provision of services, which most people in Europe at least have become accustomed to regard as core public sector.Are we ready for that? One other small fact from those OECD statistics: in 2002 public spending in the Netherlands, one European country whose social welfare system has received wide acclaim, will have fallen to 40 per cent of GDP, just one point above the UK. Will our system be as good as theirs? If not, will the voters notice?. Being Secretary of State for Trade and Industry can be a humbling job but yesterday was supposed to be Stephen Byers’ big day. Being Secretary of State for Trade and Industry can be a humbling job but yesterday was supposed to be Stephen Byers’ big day. First he marched into the Commons and handed out a £2,500 bung to each of the 12,000 steelworkers sacked by Corus since January last year. Then he was due to announce the creation of a free bank for three million impoverished pensioners and benefit claimants.

Anybody would think an election was about to be called.Unfortunately, the second instalment of Labour’s double whammy had to be postponed at short notice. Royal Bank of Scotland is not quite ready to sign up to the new Universal Bank and the civil servants are now sweating on whether Mr Byers can get the announcement out before his boss fires the starting gun.There are some who hold Mr Byers responsible for the Corus job losses because of the industrial policies he has inflicted on the country, a charge which is denied, naturally. But he cannot escape responsibility for the Universal Bank since it is the direct result of the Government’s decision to abolish the giro cheque and start paying state benefits direct into bank accounts.The Post Office, oh very well Consignia, blanched at first as it saw £400m worth of income disappearing from its Counters business. But Mr Byers stepped in with the Universal Bank, which will be available, maybe, at a post office branch near you from 2003.Apart from being a social experiment in compelling everyone to operate a bank account, its is also part of the great drive against benefit fraud. The previous government’s attempt at this, which went by the name of the ICL Pathway project, ended in a heap and a large bill for its backers. But neither does the Universal Bank’s course promise to run true. The high street banks have had to be dragged kicking and screaming into bankrolling it because there is no profit in it for them.