Time to try controlling public spending


            Backing down over a £13 million cut in a grant to a charity giving books to young children is not going to make much difference to our public spending position. The government plans to spend around £700 billilon this year.

             The government’s friends will say it shows wisdom and flexibility. A  not very well judged cut attracted substantial opposition, so the administration has reversed it to avoid hassle in a well meant political gesture. The government’s critics may say it shows a lack of determination to control spending, following on a similar reversal over school sport money.

               The problem for the government is that it follows hard on the heels of the November public spending and borrowing figures. I reported here the record  borrowing, shortly after reissuing more ideas to curb spending. I showed how public spending was running more than 5% up on a year earlier, if you take the amount so far this financial year. Some of you pointed out that November monthly spending was more than 10% higher than the same  montha year ago. 

                   The government persuaded the markets and the wider world that it was cutting public spending, by the use of language talking about  25% cuts. As explained here, they were never planning to actually cut overall public spending in cash terms. If the high spending and borrowing numbers become too high they could face trouble with the markets, and be forced into higher interest rates and a bigger squeeze on the private sector to pay the public sector bills. Some of us urged them to go for lower total public spending figures this year, to make a bigger reduction in this year’s deficit. I did not urge overall cuts, but a lower rate of cash  increase, as I felt their public spending levels pose a risk to the wider economy and the recovery.

            If you wish to control public spending you do have to engage with the public sector lobbies and change the terms of the debate. If slower growth in spending is called a cut, you have problems selling your policy to the wider public. The more ominous noises for the government are now coming in the NHS. There the government decided on a ring fence to avoid all “real terms” as well as cash cuts. Despite that, warning noises are emerging that the NHS will not be able to manage on a very small real terms increase.

             Under the old rules of how to play the public spending game some of the figures for valued services are very tight in future years. As the government’s appetite to battle over public spending is likely to diminish the nearer to a General Election it gets, it makes it even more sensible to choose some battles on public spending today that it is prepared to fight, and dig in and win them. All that the state does currently is not affordable.  Choices have to be made. The government needs to change the way the public debate about increases and cuts is fought, and choose more areas where it is prepared to see spending actually reduced in cash terms. Failure to control public spending could leave us at the mercy of market movements that damage our overall standard of living.

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  1. Posted December 27, 2010 at 8:03 am | Permalink

    “engage with public sector lobbies”? Translation: vested interests. Each will tryvto protect all their turf at the expense of the other.

    Might be entertaining to just throw down the gauntlet and ask them to prioritise each line item across ALL departments outside core State responsibilities (defence, police, courts, prisons and mental health) with no two items to be ranked the same.

    Once done, count it up and present them with the Oskar Schindler question: ” this pen?…two more people…”. Would they weep like he did, or would they stubbornly refuse to yield or scale back as other services are cut entirely?

    There is not enough money and the sooner the public knows where the true self-interest lies, the better.

    • lifelogic
      Posted December 27, 2010 at 10:03 pm | Permalink

      Please can they also save funds by phasing out support for religious schools – they have incubated quite enough hatred already.

      I see that the Bishop of Winchester now claims that the legal system discriminates against Christians (from his unelected seat in the house of lords I assume). Remind me how many atheists get such reserved seats? And we do not even presume to order bishops at what times they can and cannot legally shop for their interesting purple and gold gowns, mitres, rings, wine, wafers or even their underpants. Nor do we get given slots on “Thought for the day” A program which is always a great source of amusement to me though rarely quite as funny as women’s hour.

  2. lifelogic
    Posted December 27, 2010 at 8:10 am | Permalink

    Very big overall public expenditure cuts are needed now if they are to have any effect in time for the next election. They must however be balanced by sorting out the banks and getting them (or someone else) to lend to the private sector sensibly again and by big cuts in regulation, changes in energy policy, and sensible tax levels.

    Countless sensible private sector investments are on hold for lack of cash while government make numerous daft “investments” like high speed trains, the Irish (half baked) bail out, the happiness index, payments to the EU and the absurd green energy agenda, wealth redistribution from the responsible to the feckless and the dysfunctional NHS.

    It could be a win win situation as more tax revenue would result but regrettably Cameron seems to be a loose-loose type of chap and is further held back by the mad Liberal agenda.

    The main cost of HS2 is not the pointless waste of billions on its cost but the huge damage that extracting this money from of the wealth creating sector will do and the consequential loss of futures tax revenues from these real investments.

    • lifelogic
      Posted December 27, 2010 at 10:31 am | Permalink

      Also backing down on this £13M book charity business actually just shows the power of the mainly left wing Charities/Arts lobbies and the BBC types. Everyone can get themselves a kindle book reader – soon they will cost less than one book anyway and many classic books are free anyway.

      • lifelogic
        Posted December 27, 2010 at 10:42 am | Permalink

        I would probably would abolish tax relief on almost all charitable donations it only gives rise to yet more over paid, people and pressure groups pushing big state agendas on radio 4.

        Just give a general tax deduction to compensate.

        • Steve
          Posted December 27, 2010 at 9:19 pm | Permalink

          I would take the opposite view. All charities should be funded by “charitable donations” the state should not be dishing out “grants”.

          The charitable donations should attract tax concessions both to the charity and to the donor. That way the charities that the public want to fubd will survive whereas the “charities” that the left promote would wither on the vine.

          Wouldn’t that be democratic?

          • lifelogic
            Posted December 28, 2010 at 7:09 am | Permalink

            I would like to see all combined taxes/government expenditure taken together down to about about 25% from the circa 50%. At that level I do not think it is worth giving the charitable tax deductions. Let people and companies give after tax. If however they do retain gift aid it should be for charities that actually do real good and with very low administration costs not pressure groups or charities that are mainly interested in raising funds for their own wages, agenda and enlargement.

    • lifelogic
      Posted December 27, 2010 at 9:24 pm | Permalink

      Also the going rate for second hand books is only a few pounds a ton anyway – what is wrong with e readers which will cost almost nothing very soon with many free books too or charity shops.

  3. alan jutson
    Posted December 27, 2010 at 8:29 am | Permalink


    This cut in Public Spending farce (as that is what it really is) leaves me absolutely baffled.

    In my business life, if I had a department that refused to cut its costs after being instructed to do so in an agreed and sensible manner, then I would drag the person responsible for overseeing that expenditure into the office for a chat about how, and why. Much the same as you would a failing salesman for continuing to fail to meet set targets.

    After a sensible discussion (are the targets too high, have all avenues been explored, were the instructions clear, etc) and an exchange of ideas, a set plan would be agreed, and future performance monitored on a more short term basis.
    Failure to perform again would result in someone else being put in charge who would agree to enact the policy of the business.

    Is anyone actually monitoring the trends and results (of agreed actions) in the Public Sector, and if so, why are they still spending money like water ?

    Have the correct instructions ever been made clear, or even been given to anyone ?

    I have reluctantly come to a few conclusions, none of which will help us.

    1. The Public Sector is now so totally out of control, it just spends money as it pleases with little control.

    2. The Government have never made it clear as to what it really wants, other than to just pull a figure out of midair, and let them get on with it.

    3. The Government has made its policy clear, but lacks the talent to enforce its plan.

    4. The Government has no real plan, but has talked up a good game so far in the hope that increased tax revenue and inflation will help it out.

    Not a good outlook for 2011 and beyond for getting us back on track, and reducing the tax burden on the workers and wealth creators.

    • alan jutson
      Posted December 27, 2010 at 9:36 am | Permalink

      We seem to have a number of situations of late where decisions taken are being reversed. I am all in favour of reflective thought, but should this not happen before a final decision is made public.

      How long before we get Child Benefit re-installed for all.
      Why not just limit it to the first two children only.
      This policy could be easily to introduce for families after a 9 months notice is given (no change to this Benefit for existing families).
      Would be easy to administer.
      Would send out the right message to try to limit family sizes, for those who use child production for the simple reason to increase Benefit purposes and additional housing requests.
      Would perhaps help reduce the increase in population.
      Above all, it would be fair to all.

      If you want more than two children its absolutely no problem, but you pay for them all yourself.

      Housing Benefit. Is this going to be watered down with ever more delay.

    • Gary
      Posted December 27, 2010 at 4:42 pm | Permalink


      When people are spending other people’s money very little is done sensibly. They have 5 years to bribe the electorate, failing that they pick up a cushy directorship in the City. There is no incentive for any nonesense like sensibility.

      So, the people now have to force govt out of our lives, and it may take a revolution to do that. But horror, the voters are now thoroughly addicted to those “welfare” bribes, and so nothing will get done there. The markets will step in next and it will be ugly.

    • Stuart Fairney
      Posted December 28, 2010 at 6:54 am | Permalink

      We have replaced a big spending statist party, with two others of the same ilk. Is anyone surprised at this? Really?

    Posted December 27, 2010 at 8:37 am | Permalink

    We continue to believe, as we advocated after the election, that the most effective way of restricting spending was to freeze expenditure at 2010/11 levels for 2 years in all departments irrespective of inflation.
    That is the kind of thing real people do with their business and household budgets and is easy to understand and implement without the gobbledegoop.
    On top of that the particularly wasteful areas – highlighted on this site time after time in the last few years – could have been eliniated or severely cut.
    As ever government seems to have complicated many issues and copped out on others whilst over-claiming how ‘tough’ they are.

  5. Nick
    Posted December 27, 2010 at 8:54 am | Permalink

    Still spending more. Just shows that neither the Tories, LibDems or Labour can control themselves.

    • eddyh
      Posted December 27, 2010 at 11:58 am | Permalink

      There is no essential difference between Tories, LibDems or Labour. Time to give someone else a try- UKIP.

    • Javelin
      Posted December 27, 2010 at 12:19 pm | Permalink

      Agreed. Short and sweet. Still spending more. Politicians cant control themselves.

      Is George following my suggestion of waiting for an immanent ratings cut to shift responsibility?

    • lifelogic
      Posted December 27, 2010 at 1:53 pm | Permalink

      No the natural system with an incontinent government and ineffective democracy only reaches a tax equilibrium when the people will accept no more taxes or the state cannot collect any more – either they will go abroad or they will cheat their taxes or they will revolt.

      Technology improvements have enriched us all but have also enabled the state to slowly increase its cut to about 50% without a rebellion – as yet.

      Perhaps we need to make taxes more apparent everything should give two prices one with no tax and one with tax (all taxes). So Gin could be say £14 with tax £1.10p without. Petrol £1.40 with 40p without, one hour of a plumber £30 with £15 without. Also if people could pay their taxes at the year end rather than having it taken off them under PAYE so they do actually notice.

      You could extend this further to include cost of pointless regulations too then you could probably halve the above no tax figures again to give a (no tax no pointless regulation figures of maybe 65p, 20p and £7.50). Then we might perhaps be able to pay for our own health and education.

      After all if 100% slavery is illegal why is 50% slavery legally enforced and promoted by the left.

  6. Steve Cox
    Posted December 27, 2010 at 9:24 am | Permalink

    Polls show a majority of voters opposing the Government’s ring-fencing of Overseas Development. Why doesn’t it listen to the electorate instead of going against peoples’ wishes? I’m sure that a few billion could easily be trimmed from that budget without causing immense suffering. Instead it has hit the armed services with cuts that make the Blair and Brown years look like Nirvana. Does a majority of the electorate agree with this approach, leaving us with an aircraft carrier without any aircraft, and an air force that is now being compared with Belgium’s? Anecdotally, I’d say no, they don’t.

    To make major cost savings, though, there is really only one place to look, and that’s in the biggest budget of the lot, welfare and benefits. While I applaud Ian Duncan-Smith’s progress so far in a very difficult job, I personally don’t believe that he is cutting benefit costs sufficiently or quickly enough to help the deficit situation much during this Parliament. One of the stories we hear most often is that so many people don’t bother working as they are financially no better off in low paid employment than they are on benefits. I realise that IDS is fully aware of this and his master plan is aimed at removing or at least reducing this disparity. A simpler way of doing so, though, and one which would save a lot of money is simply to reduce the level of benefit payments so that even a job earning the minimum wage would be significantly more attractive. This could be introduced within months and would go a long way to reducing the budget deficit and increasing employment.

    Health and education are also very large budgets where significant savings could be made. Sadly, the Coalition have ring-fenced health expenditure, and the plans to get rid of Primary Care Trusts and give their budgets to GP’s may be a brave move, it may even be the right move, but will it save much money in the near term? It seems to be aiming more at improving efficiency than saving money, in itself no bad thing, but many doctors are voicing their concerns about the proposals. Education is an area where cuts can certainly be made. Why on earth do teacher’s need Classroom Assistants? Both you and I had a perfectly sound education without them, and they appear to be little more than a comfort blanket for inadequate teachers. They can all be cut and put into productive employment in the private sector. Stop building any more new schools and hospitals under PFI. These liabilities may be off-book now, but in future years they will have to be paid for, increasing future deficit levels.

    Then of course there is the EU, a massively wasteful organisation to which we contribute far to much compared with our national wealth (which becomes smaller every day as the pound continues its inexorable slide). Get back the rebate that Tony Blair gave away for a start. Now wasn’t that supposed to be in exchange for a root and branch review of the CAP? OK, if the Eurocrats won’t give us our money back, then let’s play hardball over the CAP and reduce our expenses that way. Centralise the European Parliament in one location and stop the incredibly expensive migrations between Brussels and Strasbourg.

  7. norman
    Posted December 27, 2010 at 9:33 am | Permalink

    ‘Choices have to be made.’

    And therein lies the nub. Modern politicians seem completely unable to make any difficult decision, so nothing is being cut.

    Fostered by the coalitions desire to ‘get tough’ on the mess Labour left there is a misconception in the public at large that, not only are the coalition going to be making massive spending cuts at some opportune moment in our above trend growth future, they are actually cutting spending now!

    If you were to ask people what is being cut so far many may say the student tuition fees, but this isn’t a spending cut, simply an extra tax on graduates (in the form of a government backed loan).

    There seems to be a pathological fear for any political party, collectively, to state in definitive terms what the government shouldn’t be doing that it is now. Before the election we all thought it was because you never wanted to scare people off, or to tie your hands before seeing the books. It seems now that it wasn’t that but that all leaders do actually believe that more and more government spending is the road to happiness, not the road to serfdom.

  8. Stephen Almond
    Posted December 27, 2010 at 9:50 am | Permalink

    I have no problem with supporting (as a taxpayer) books for poorer children.
    I detest the idea of buying books for Alan Sugar’s grandchildren or any MP’s children or grandchildren.

    I wish we could apply a ‘television test’. Any family with more than one television buys there own darned books! If books are so important to such families – let them sell a TV to fund them.

    • alan jutson
      Posted December 27, 2010 at 12:52 pm | Permalink


      Anyone heard of a Library, they have been around for a few years.

      Mobile ones exist in Rural Area’s, or at least used to.

      • hope
        Posted December 28, 2010 at 6:01 pm | Permalink

        it costs £74 for every book taken out of the mobile library service in my county.

    • Stuart Fairney
      Posted December 28, 2010 at 6:59 am | Permalink

      The government busybody employed to check on my son’s health (i.e. spy on his mother and I) proudly produced two books in a ‘bag for life’ type deal. These promptly went straight in the bin as low quality as well as making no discernible difference to the hundred or so he currently has.

  9. DavidB
    Posted December 27, 2010 at 10:52 am | Permalink

    I am appalled. On its merits, giving money to a charity providing books is a waste of resources and serves mostly as a subsidy to publishers and authors. Is there a high street in any town that does not have charity shops full of old books, or a shop selling cheap surplus books? How much did the authors who lobbied for this subsidy retention earn between them last year?

    The coalition disappoints more with each new day. Please could they grow some balls. They have to stop backing down. Why did they instead not come out fighting here?

    The readers of this blog know the mess we are in. We are not going to be able to fix the mess if we don’t cut. And we are not going to be able to cut if we back down every time some lobby applies pressure.

    I had hope after May. Was it misplaced? Do the rest of the public not realise the state our country is in?

    • Stuart Fairney
      Posted December 28, 2010 at 7:04 am | Permalink


      Uninterested and uncomprehending X-Factor viewers and vested-interest looters prevail.

      Those of us who want cuts are not represented by the main parties. Let’s stop pretending we are.

  10. The ESSEX BOYS
    Posted December 27, 2010 at 11:28 am | Permalink


    1. The Coalition lives up to the slogan that we believe would have won the General Election outright:

    2. ‘The Big Society’ is ditched and the concept rethought and renamed for a later time.

    3. The government finally recognises that their job creation and training schemes are inadequate given the sheer size of the problem and they create as a matter of urgency a permanent program for young, lesser-skilled people. There would be an automatic job opening for all school leavers, extended to all unemployed people in due course. ‘County Service’ and ‘A free employee for 3 months’ are 2 workable schemes we have advocated here and to ministers (without reply!)

    4. The narrow ‘New Free Schools’ initiative is replaced in importance by the much broader strategy of modelling every State School on the superior Independent School model in every major respect.

    5. Road congestion is eased by incentivising haulage firms not to use major roads between 7 & 9am and 4 & 6pm every weekday and by allowing and encouraging more night time deliveries.

    6. Strikes are forbidden by law unless 50% of ALL members of the relevant union specifically VOTE for industrial action.

    7. Bank account depositors are given the choice of a ‘low & rock solid’ or a ‘higher & speculative’ interest rate account or one that contains a specified element of both. Only the ‘low & rock solid’ element will be government guaranteed. Speculative bankers will have to abide by depositors wishes and the low rate deposits will assist home buyers and solid businesses.

    8. An analysis for the general public of the criteria and make-up of Bankers bonuses paid in 2010 and then an adjustment of the rules and commission rates to better reflect effort and genuine commercial skill.

    9. The Conservatives agree to the Lib-Dems EU policy of an ‘in/out’ referendum to take place in this Parliament.

    10. This government starts to walk the hard walk instead of just talking the tough talk…
    (oh, and its ministers start acknowledging correspondence from those of us with positive ideas and a genuine sense of public goodwill!)


  11. GJ Wyatt
    Posted December 27, 2010 at 11:33 am | Permalink

    IF the pattern of public expenditure before the “cuts” had been appropriate then a uniform 5% (or whatever %) cut across the board would have made sense because the incremental social value of spending in all the different public services would have been roughly the same. The simplicity of such an approach, with no exceptions, would have made implementing the cuts much easier and avoided invidious comparisons between different public services. All the puerile talk of “salami slicing” and “ring fencing” would have been avoided and special pleading shown up for what it is. The NHS, the EC, overseas aid and the luvvies should have been treated on a par with everything else. Then we would truly have all been in it together.

  12. Posted December 27, 2010 at 11:59 am | Permalink

    The trouble with such grants is that £13 million may be peanuts when compared with the total government budget, but how many similar “charities” are there which are going to say “but our grant is so trivial in terms of the overall budget”? Ten, a hundred, a thousand, or even more? All no doubt equally deserving and doing very good work, but where does this work fall in the priority of things?
    Personally, I’m strongly opposed to charities receiving grants out of taxpayers’ money, whether from central government, local government or indeed government run organisations like the NHS. If such money is given, in no way should it amount to more than say 10% of a charity’s budget, as otherwise it can become effectively controlled from outside. The whole concept of a charity, surely, is that it should rely on voluntary donations and should have sufficient appeal to the general public to bring in such donations.
    Personally, I will not contribute to any charity where I am aware that it is in receipt of public money on the basis that I have already had to make a forced contribution. The only acceptable exception, is where the government asks a charity to carry out a specific task that is within the charity’s remit because they have the necessary resources to do so and where it is not a long term commitment.

  13. waramess
    Posted December 27, 2010 at 12:29 pm | Permalink

    Have you ever had that funny feeling that nobody is listening? Have you ever felt that the agenda might be quite different from that which you had imagined? Presumably there is an agenda.

    Mind you everybody thought John Major had an agenda that was deeper than fighting his own right wing. They were wrong.

    Maybe they still think they can talk themselves out of this one.

  14. Posted December 27, 2010 at 1:35 pm | Permalink

    The government’s friends will say it shows wisdom and flexibility. A not very well judged cut attracted substantial opposition, so the administration has reversed it to avoid hassle in a well meant political gesture.

    And what of those of us that are now to be forced to pay for it? Sure, it’s only £13m, but lots of things are only £13m.

    As of now, I have seen no-one present any evidence that the money spent on Booktrust was good value. Unless the government is prepared to engage at that level of debate, or at least to play a far more tactical game then we’re not going to get out of this mess for a very long time.

  15. oldtimer
    Posted December 27, 2010 at 2:14 pm | Permalink

    The Coalition lives on borrowed time as well as on borrowed money. More months like November, more cave ins to pressure groups and the Coalition will be in big trouble. The talk has been “tough” but the results, so far, have been weak and in some respects misguided.

  16. Alte Fritz
    Posted December 27, 2010 at 2:54 pm | Permalink

    It seems inept to decide upon a cut and then retreat simply because the ‘usual suspects’ are brought on to cry foul. Surely a reading initiative is properly the province of publishers and wealthy authors. I have no problem at all in their receiving tax relief on charitable contributions. Meanwhile, government can work through schools and public libraries to promote reading. That used to work quite well.

    The real thrust, as already observed, needs to be on welfare, and it must be an attack on the dependency culture. There really are lots of people out there who see no reason to work if the state will subsidise. There really are teenage girls who see a pregnancy as a key to a flat of their own and sytate support as long as they have children. That is a huge bill to pay.

    A real assault on dependency would take immense courage, but, in my view, would pay big dividends both in terms of public finance and public opinion.

  17. Brian Tomkinson
    Posted December 27, 2010 at 4:33 pm | Permalink

    I am afraid that it has become increasingly obvious that this coalition government is no more determined to control and reduce public spending than Labour. It must be embarrassing, even to them, to keep announcing small cuts and then re-instating them as soon as someone speaks out against them. What hope is there that any proposed reductions will go through? The scene has been set for the militants in the unions to flex their muscles and take us back to the 1970s. Please explain why we will not be like Ireland by the middle of next year because it looks as though your colleagues haven’t the stomach for the job but don’t mind collecting our cash for themselves and wasting it just like Labour.

  18. Andy
    Posted December 27, 2010 at 4:52 pm | Permalink

    The Political Class as a whole seem to lack the will to trim public expenditure (present company excepted) but there is another problem: US. Every supposed ‘cut’ produces the howls of outrage from this section of the public or that. Look at the row over Child Benefit. Is it not absurd to pay child benefit to people who pay 50% income tax ? The system is insane. But try and reform it and you see what happens. The latest is the book scheme. If parents want books go and buy them. All this scheme does is subsidise publisher and authors, and I speak as one. Again it is absurd.

    The only way to control public expenditure is to radically reform Whitehall. We need far more business brains in government and we need to change the whole culture of the civil service. Another thing we need to do is privatise more. Why does the state need to own every school and every hospital ? It is because the state owns most schools and hospitals that standards in both are so abysmal. Fat chance that any of this will come to pass. But we need to reform in such a way that those reforms cannot be undone. Labour is still what it has always been: a tax and spend party. The LibDems are, in my view, not much better.

  19. Bazman
    Posted December 27, 2010 at 5:45 pm | Permalink

    If there are undeserving poor then by default there must be undeserving rich. What is need as well as controlled spending is a crack down on tax avoidance. That is tax that should be paid and is not collected by the inland revenue from rich individuals and organisations. Anyone disagree. Another point is that the most wealthy 10% in Britain have an average of £4 million. A 20% tax in this would wipe out the deficit. However these wealthy hypocrites attack the poorest six million people who only have debts. Any cuts here will cause terrible hardship and where will it lead? Nowhere good thats for sure. All these companies and individuals squealing to leave Britain needs to have their bluff called.
    Wait until some of the cuts affect you personally, see if you remain true to your ideology.
    If you can think middle class values can be forced onto the lower classes by causing hardship then your are wrong. If you charge twenty quid to go to the doctors then they will just not go, and the argument that if they can afford SKY TV then they should spend it on books and can do without free school meals for there children is for nitwits. If you believe this and many other simple arguments like this, then you clearly did not get where you are at by your own propulsion and it would be interesting to know how you hold down your job and how you got it.
    The reply to this is that it’s is not personal. The bank bonus culture and the MP’s expense scandal nailed that one!

    • Mark
      Posted December 28, 2010 at 7:23 pm | Permalink

      I’m not so sure about your statistics. The ONS estimate that total household wealth is about £9 trillion, and the top 10% have £4 trillion of wealth. Half of that is in the actuarial value of their pensions, which in the case of (former) public sector employees and state pensions is mainly unfunded and not counted in the normal national debt measures either: there is no real wealth to tax. Those with wealth are mainly those just either side of retirement, with their houses paid for and the pensions having accrued and not yet paid out (even a basic state single pension is actuarially worth about £140,000 on retirement). Those with negative wealth are dominated by young recent students: they are supposed to have the earning potential to become among the richer people by the time they approach retirement, and they are also those who are among the most likely to be squealing to leave Britain to avoid their student debt (an argument in favour of not having a formal student debt programme – but that is a separate story).

      It is not clear what attempting to impose a 20% wealth tax on property owned would achieve: at best the state would get 20% of the property of the wealthy on which they might obtain a rental income – there would not be buyers on such a scale: likewise for financial wealth – forced sales on the stock market would cause a price collapse, and the new owners of shares would be foreigners as the only ones with sufficient wealth to purchase in the grand sale. Collapses in property and share values would devastate the value of all pension funds and bank collateral for mortgages, impoverishing everyone. Socialists usually prescribe equality of misery as the solution to everything.

      When I was young and impecunious (my first job offered gross pay £16.10 net pay after deductions which did include a shared room in hostel lodgings £6.49 per week – not per hour) I certainly forwent any extravagance such as spending on entertainment. I learned to survive off what I earned.

      Reply: it is unfortunately a myth that we can solve our financial problems by imposing a wealth tax on the few. I assume this 20% levy is a one off, and I am not sure how many rich would stay to pay it. The national accounts need a huge increase in tax revenues every year, not a one off, if government goes on spending at current levels.

  20. Martin
    Posted December 27, 2010 at 6:40 pm | Permalink

    There are 2 problems

    1) Spending. Until the Government grasps the salary nettle in the public sector the spending will continue to rise. The present system of a few bits of ritual slaughter for the press is the wrong direction.

    2) Income. Concentrate on creating private sector jobs wehere people pay real taxes. More minimum wage jobs don’t generate much tax. £30 and £40k per annum jobs do! (Nu-Labour never undertood this – does the Coalition?)

    • Mark
      Posted December 28, 2010 at 7:29 pm | Permalink

      Minimum wage jobs have some impact on benefits. The value of a job to the government deficit is the benefits it saves plus the taxes it raises, less the income paid out if it is a state sector job (which will also entail extra benefits such as pension).

  21. John Wrexham
    Posted December 27, 2010 at 9:25 pm | Permalink

    Many charities that rely on government funding combine the worst of all worlds: the high salaries of the private sector, the accounting approach of a nationalised industry, the equal opportunities employment practises of the mafia, the bleeding heart of the most liberal do-gooder that ever walked the earth and the efficacy of a chocolate fireguard. no one ever asks the question – if the big name charities eg the NSPCC and RSPCA, are so brilliant how come many have been around for over a hundred years and the problems they claim to solve have actually worsened. time for a rethink.

  22. Mike Stallard
    Posted December 27, 2010 at 9:28 pm | Permalink

    I was told just before Christmas of a man with 7 children. Not only does he live in an enormous house, he also gets everything free. This time, he has been given about £50 a week petrol money to run his gas guzzling van.
    Meanwhile, the £25,000,000 BSF on the local comprehensive is going splendidly. The local gym is being refurbished with a new turnstile. AND – we are going to be given the enormous and useful gift of a huge new Local District Council Office right in the middle of our College! Cheap at the price, it will cost just a few million pounds (15 actually).
    Draconian cuts!
    (I am missing out the letter “n”).

    • Bazman
      Posted December 28, 2010 at 7:05 am | Permalink

      Not a banker or a council ‘Chief Executive’ is he? Our local council have just built themselves a palace. A simple piece of hypocrisy and stupidity sees them place new car parking charges and close town centre toilets whilst talking about their commitment to the town centre shops. The pay and pay-off’s of high ranking officials is somehow ‘personal’ We will have to ask the council taxpayer on that one.

  23. Posted December 28, 2010 at 1:30 am | Permalink

    At any time, politicians should act to make a positive differance. That is they should try to make the world a better place, no matter how small. Books are accessible to young children through the public libaries, the school libraries, those gifted by parents and relatives and those available in the classroom. In the days of the Internet, alternatives to books are available as well, as well as the traditional alternative – direct teaching.
    If we provide free books to children we must recognise that
    1. Those provided to those who already have good access to reading material will having little is no marginal benefit.
    2. Those who have least access – those who have been sat in front of the TV from before they are one, and spend most of their waking hours in front of the box, or playing video games, will never open the book.
    3. For many in between, if the book does not inspire or interest it will go unread.

    In a resource-rich country, it is doubtful if one book in ten will end up being read, and one in a hundred will be a useful addition to a child’s education. The £13m will most probably involve far greater cost than benefit. Therefore, any politician who is still naive enough to want to make a positive difference should favour axing such marginal activities.

    In times of budget constraint, the non-core activities that cannot show a net positive benefit should be axed. There may be one or two mistakes made, but from a global utilitarian perspective society will be better off – even without the need to stabilise debt as proportion of GDP.

  24. BigJohn
    Posted December 28, 2010 at 3:27 am | Permalink

    Why is there not a law that stops any govenment from spending more money than they receive from tax payers ?

  25. hope
    Posted December 28, 2010 at 5:58 pm | Permalink

    Lets not get too carried away about the lack of cuts. In Local Government the reductions are real. The grant reductions for our local council over four years come to 26.8% (plus whatever rpi based increases removed also). That means the RSG will be going from about £7million in 2009/10 to just over £5 million in 2014/15. Our capital housing budget has just gone, completely kaput. About ten million pound of yearly capital expenditure at a stroke of a pen, gone.

    I welcome the latter as much of it was wasted on employing staff. But that isnt the point. Dont claim these cuts arent happening, they are.

    Many councils are going to be making exceptional levels of savings, far more then any government has ever done.

  • About John Redwood

    John Redwood won a free place at Kent College, Canterbury, He graduated from Magdalen College Oxford, has a DPhil and is a fellow of All Souls College. A businessman by background, he has been a director of NM Rothschild merchant bank and chairman of a quoted industrial PLC.

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