This brief overview of the role of government illustrates that while the range of activities is as wide as ever, how the intervention is managed has changed considerably.

Although, for example, the proportion of national resources in the public sector has diminished considerably in the last 20 years, by operating through regulators, the government can still exercise considerable influence over the operation of the privatised utilities.

Micro economic policy is now probably a more effective tool for achieving the government’s objectives than macro policy. Through public sector bodies such as the Competition Commission and Regional Development Agencies, industrial and regional policies have become much more activist.

In terms of macro economic policy, the role of government has changed and the ambitions have become much more modest, even minimalist. Stability via the control of inflation has been and will probably remain post-recession the number one priority, in order to create the environment in which the private sector invests, employs, produces and creates wealth.

Just as the goal has changed, so also has the means to achieve it. The role of monetary policy as the principal instrument of short-term economic management has increased in the last 20 years, with a corresponding decline in the use of fiscal policy and direct controls.

Interest rates, moreover, are no longer the responsibility of government but the independent governor of the Bank of England. The recession has seen the authorities introduce the new policy tool of ‘quantitative easing’ to support the huge cuts in interest rates. This is as much a response to the turbulence in banking, however, as it is a mechanism to stimulate economic activity.

For households and firms, these changes to economic management do not imply cheaper government. Expressed as a share of GDP, tax receipts peaked in the 1984-85 fiscal year at 38.8%. Thereafter, it declined to 32.6% nine years later but since 1993-94 it has been rising again.

According to the 2009 Budget, the Chancellor’s projections show net taxes and national insurances contributions at 35.1% of GDP in 2008-09 and staying in this area through to 2013-14.

These forecasts are however based on some optimistic assumptions about growth and if performance falls short, the tax share could well be higher.

Since the radical departure in policy in the 1980s, the debate on government policy has shifted. The idea of ‘value for money’ from public services is now an important consideration and accepted by the current government.

In addition, alternative ways of providing many key services (such as London Underground and foundation hospitals) are sought to a far greater extent than previously.

Although the public sector is alive and well, and continues to make a significant contribution to the UK economy, how it exercises its influence, the way it uses its resources and the results it achieves have changed and are now under closer scrutiny than ever before. And, given the difficulties the private sector has faced during the recession, the role, size and cost of the public sector will be subject to much greater political scrutiny in the run up to the next general election.