Wokingham Times

Sometimes people come to see me at my surgery with debt problems. They often have a large mortgage, and on top have borrowed too much on the Credit card and personal loans. The first advice I always give them is to go through all their spending and see how they can cut it. If each month you need to borrow more you end up on the road to personal bankruptcy. More and more of your income is swallowed paying interest on what you overspent in previous months, and in trying to meet the repayments of your debts. Most people cannot suddenly increase their incomes or win the lottery. If you start reining in your spending early enough, it is just the luxuries and the nice to have items that need to go from the budget. If you leave it too long, you can’t afford some of the necessities either.

So it is with a government running a county. If you allow your spending to exceed your income each month, each month your debt increases. If you do this for short period when your tax income is temporarily depressed by a poor economy, that can make sense. When the economy recovers revenues bounce back and you can get your finances back into order. The trouble with the UK today is two fold. We went into the recession spending and borrowing too much, before we lost tax revenue. We also relied on massive tax revenues from banking and other City activities, and from buying and selling expensive properties. Some of this income has gone for ever, now the bubble has been punctured.

In Parliament we keep returning to this central problem. All parties now agree the deficit needs to be at least halved. That means an astonishing £90 billion a year less spending, if you do it all by cutting spending. No previous government has ever attempted anything like that. The remaining argument is over how soon you start. As my advice to an overborrowed constituent implies, I think the sooner the better. The sooner you start the less damage you do in the longer run. Every extra pound the public sector spends today is another pound we the taxpayers have to pay back soon. In the meantime it is another pound we have to pay interest on. If you tried to do it by increasing tax rates you could end up with less revenue, as people and businesses moved elsewhere.

There is no such thing as government money. There is just taxpayers’ money. Every penny the government borrows, they expect you and me to repay. Their debt is our debt. The advice I have been giving to the odd constituent I now have give to Parliament as a whole. If they carry on like this we all end up in deep debt, debt we did not want and debt we cannot afford.

The good news is much of the extra spending being undertaken is money not well spent. I do not wish to see Wokingham losing teachers, nurses, police and doctors from the payroll, and there is no need for that to happen if we act now. What I do want to see is less bureaucracy, fewer high paid quango heads and quangos, the end to unwanted South east regional government, the end to ID cards, and expensive centralised computer schemes. It is quite easy to do more for less in the public sector, and that is what all of us working in it have to do. The private sector in a cruel recession has had to work share, keep pay down, remove bonuses, cancel prestige projects and favoured new schemes, and work smarter. Now it is our turn in the public sector to do the same.

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3 Comments

  1. Antisthenes
    Posted March 15, 2010 at 10:46 pm | Permalink

    Since NuLabour came into power productivity has gone up 28% in the private sector, it had to, to counter disastrous government policies and Browns obsessiveness with wealth redistribution. Wealth redistribution has it's place in moderation but at current levels it is self defeating it destroys wealth creation. Successive Labour governments have always penalising the wealth creators and the country has suffered the economic consequences, now is no different. The public sector has seen productivity fall by 4%, why because it is bloated and inefficient it is impossible to instill the private sector work ethic into the public sector. So to cut government spending is easily possible but tough unpopular measures are going to have to be made such as privatising the providers of the health service, follow the example of France and make payment for health provision partly by government and partly by the patient a safety net for those who can not afford any contribution. Get rid of any public post that does not remotely assist in adding value to the nation and laws and quangos that forces you to relinquish your individual responsibility to the state (get rid of the nanny state, it's an insult and patronising). Devolve power to the electorate, I am Welsh and have a regional government so if I want the responsibility then I have to accept the cost. I could go on in similar vein about education etc I am sure you can work out what I will say next.

  2. Roy Worsley
    Posted March 20, 2010 at 7:49 pm | Permalink

    John

    A couple of things you might be interested inn developing for good of country without too much pain

    i George osborne should introduce a property sales tax on the gross proceeds of property sales with owner occupiers anble to set off tax against their own tax liabilities with a tax credit for balance not available for set off
    Result non residents penalised although available to set off property tax in their own countries.
    Reintroduce advance corporation tax which would have effect of uplifting share prices and ikmproving pension funds
    outlaw non domicile and make payment of uk tax dependant upon residency/ holder of british passport.

    these 3 measure would produce billions for exchequer whildst being tax neutral to ordinary british citizens

  3. cheap ghd
    Posted May 7, 2010 at 9:51 am | Permalink

    Devolve power to the electorate, I am Welsh and have a regional government so if I want the responsibility then I have to accept the cost. I could go on in similar vein about education etc I am sure you can work out what I will say next.

  • About John Redwood


    John Redwood won a free place at Kent College, Canterbury, and graduated from Magdalen College Oxford. He is a Distinguished fellow of All Souls, Oxford. A businessman by background, he has set up an investment management business, was both executive and non executive chairman of a quoted industrial PLC, and chaired a manufacturing company with factories in Birmingham, Chicago, India and China. He is the MP for Wokingham, first elected in 1987.

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