The scandal of MPs' expenses has shocked the nation more perhaps than it should. The warning signs have been with us for years had we taken the trouble to look, or better, to question what our politicians were telling us. It is really part of a wider deception, one in which we have ourselves colluded, at least until the credit crunch, that all was right with this country when quite patently it was not.

When Gordon Brown was still Chancellor of the Exchequer, his Budget speeches painted a picture of how Britain under his stewardship had become one of the world's most vibrant economies with the lowest rate of unemployment for 20 years, the lowest rate of inflation for 30 years, the lowest rates of interest for 50 years, and the fastest rate of growth in western Europe.

The paradox was that while all these things appeared to be true there was also another British economy.

This was the economy where a fifth of children were leaving school barely able to read or write, where the balance of payments had deteriorated so much that the deficits were among the highest in the world, where the survival rates from diseases like cancer were among the worst in western Europe, and where the basic infrastructure of roads, railways and airports was suffering from massive underinvestment.

Both these economies existed. But our politicians and much of the country had detached themselves from the wider reality and were prepared only to see and acknowledge the good bits.

Hence the importance of a just-published book, The Rotten State of Britain by Eamonn Butler.

He is the head of the Adam Smith Institute, which is ranked as one of the world's leading think-tanks on economics and free markets.

It describes itself as non political, and to the extent that Butler displays equal scorn for the politicians of both sides this is certainly true.

However, the sentiments expressed will be seen as more likely to appeal to the right, though they are probably far more in tune with the philosophy of the great 19th-century liberals of the Gladstone era.

The book looks at how poor political leadership, an increasingly dysfunctional democracy, an unbalanced economy, and an inability to face up to unpalatable truths have massively reduced the quality of life in this country.

He claims government by parliament has become government by clique. He details the attacks on the independence of the judiciary, on the levels of surveillance and snooping, on the erosion of core civil liberties, on the growth in the power of unaccountable bureaucrats. He sees these and the lies and deception about the true levels of performance in health and in education. He shows the other side as part of a greater whole and an unappealing one at that.

At times it seems like a remorseless rant — certainly by halfway through the reader is ready to cry “enough” — but its strength is that it is resolutely based on fact. The anti-terrorist laws have been used to arrest a person for wearing a T-shirt saying “Bollocks to Blair”. Train companies have met their targets by changing the definition of overcrowding from 10 standing in a carriage to 30 standing. Clostridium difficile, the hospital superbug, was recorded as the cause or contributor to the deaths of 8000 hospital patients in 2007. Some 13,000 people have been wrongly labelled as criminals by the Criminal Records Bureau, causing many to lose their jobs.

His comments on taxation also have a particular resonance. Even before the most recent Budget, he points out that taxes have risen by 51% since Labour came to power in 1997, and that is in real terms. Next week is tax freedom day. We will have worked all five months of the year so far, from 1 January to 2 June, solely to meet the demands of the tax collectors.

And in spite of the complaints of the relatively well off about the proposed 50% tax band, the greatest burden falls on the poorest. People on part-time work face a huge increase in the tax rates if they move to go full time, though not quite as much as those who try to go off welfare into work and find that when they start paying tax and losing benefit their effective tax rate in many cases is 70% and can be as high as 90%.

It promises to get worse given what has happened in recent times to public borrowing. We won't dwell here on the official figures but rather on those bits like MPs' expenses which government likes to pretend do not exist.

Among these are £148 billion of future payments for schools and hospitals built under the Public finance initiative — £5619 per household — £28 billion of guarantees for Network Rail's borrowing, £73 billion of nuclear decommissioning costs, the £48,000-per-household cost of future public-sector pensions, and the £83,000 cost per household of state old age pensions for everyone else.

And that, as they say, is before we even begin to mention bank bailouts…

* The Rotten State of Britain by Eamonn Butler, published by Gibson Square at £11.99. The book looks at how poor political leadership has massively reduced the quality of life in this country.