Other ways of cutting spending

 

               There are three big areas where public spending can be cut without touching the core public services which are popular with many voters.  These are unemployment costs by getting unemployment down, money given away overseas, and the costs of regulation. Cutters can also look at  services and activities not valued by so many or as strongly as the core services.

            All political parties agree on the need to get unemployment down, though there are arguments about how you do it. Much is riding on the government’s welfare reform programmes, designed to equip people to work and to give them the incentive to find a job. The UK cannot afford more than 5 million people of working age on benefits.

             The issue of giving money away overseas is far more contentious. Now our gross contribution to the EU is around £20 billion a year it is a major item. The money we get back often comes back in the form of payment for spending that is marginal, little valued, or could be better controlled and spent under a UK programme. Overseas aid at £8 billion a year does not all go to the relief of famine and disaster, or entirely to very poor countries. The work being done to improve the effectiveness and to target the direction of the spending could allow reductions in the level of total spending for at least a year or two whilst we get the national accounts into better balance and work out more effective ways of using overseas aid. Many of us see no reason why the Uk should be contributing to Euro area bail outs. Nor should the UK pick up a large bill to help the UN in Libya, when others are better placed to do that.

                 The costs of policing and complying with all the regulations heaped on us over the last decade or more by a hyper active national and EU government should also be the centre of the deficit reduction programme. The UK needs a great Statute of Repeal, to confine to the dustbin of history many of the needless or infuriating measures passed in recent years. They were often the sledgehammer to miss the nut. There may have been a very worthwhile and moral purpose, but the regulation usually failed to tackle the heart of the abuse whilst burdening the many largely law abiding with big costs and complexities.

            I suspect the government itself will conclude that items one and three are central to its task of deficit reduction, but will prove shy of tackling the easy money going abroad. High on the list of areas outside the core services  that bloggers would like to see reduced are all the different expenses on climate change. That too may prove too difficult for this government.

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42 Comments

  1. lifelogic
    Posted April 20, 2011 at 7:04 am | Permalink

    In other words for lack of a sensible lead we are likely to be stuck with the current absurdly expensive green energy agenda, huge over regulation, EU £20B costs + more mad EU regulation costs, endless waste and money sent overseas.

    So jobs industry and investment will go overseas too – they have no choice should they wish to compete.

    And labour in 2015 to look forwards too if not earlier at this rate.

    • lifelogic
      Posted April 20, 2011 at 9:06 am | Permalink

      I see Bruce Anderson in the Telegraph telegraph is very concerned by Cameron’s wedding attire. Personally I would be happy for him to go in a Bikini if he would just cut government expenditure and over regulation down to something sensible and allow industry to compete again on a world stage.

      Also (surprise, surprise) we see from research at the Iza research institute that Boys are more competitive than girls and remain so in adulthood. I assume they will go on to show that men are usually taller too.

      • lifelogic
        Posted April 20, 2011 at 9:26 am | Permalink

        So, if this is true, then for Harriet Harman or Polly Toynbee type of “thinkers” or even this government and its equalities and human rights commission to achieve its goal of equal pay. They will need either some genetic re-engineering or some very severe and clearly grossly unfair discrimination against men of similar ability.

        Which plan are they proposing one assumes the latter.

  2. Mike Stallard
    Posted April 20, 2011 at 7:06 am | Permalink

    1. Bring back stamps. Only when people have worked a certain length of time and got the stamps should they be allowed to get the dole. Stamps make this obvious. I have been on the dole, so I really do know how it destroys you.
    2. Read Dan Hannan who neatly explains the swindle of the two EU funds, one big for Euro Members and one Small for Non Euro members. We signed up to the small one. Now, guess what? Since the two have virtually the same names, they are being deliberately confused and, with the Finnish opt out (why didn’t we get an opt out too?) we are about to be faced with a hefty bill.
    3. Allow me to announce: the British Empire is DEAD. We do not need to prop up dictatorships all over the world with our freshly printed money.

  3. alan jutson
    Posted April 20, 2011 at 8:14 am | Permalink

    Just an interesting observation about cuts locally.

    It was mentioned at our Lions club meeting last night that we now seem to be getting more and more requests for help, from people directed to us from the Social Services Department of the Council.

    Now clearly as a voluntary service organisation, and charity, we do what we can

  4. alan jutson
    Posted April 20, 2011 at 8:27 am | Permalink

    Cont’d

    Now clearly as a voluntary service organisation, and charity, we do what we can to help deserving people, but is this going to be a trend, where social services try to cut back on front line help, whilst other departments continue to paint white lines and lay coloured tarmac all over the borough, as if money was going out of fashion.

    Is this the version of the big society that David Cameron wants to create ?.

    Local reports suggest that a number of charitable type organisations are having grants cut back (not us, we do not get a grant, our members self fund our own operating costs, and 100% of all public donations go into our charity account)

    Think we need to look at the statutary duties of local authorities, and perhaps exactly what services they have to provide under law.

    • Geoff not Hoon
      Posted April 20, 2011 at 9:38 am | Permalink

      Alan, Your comment does not surprise me but as a former Lion how do they expect you to deal with such matters? In my area Citizens Advice has received a third year of double figure cuts from the council and yet in parallel the council have set up a 4 person debt advice office as well as added to their benefit advice bods. If someone had forecast this ten years ago we would have said they were mad.

    • David Price
      Posted April 20, 2011 at 5:04 pm | Permalink

      Think we need to look at the statutary duties of local authorities, and perhaps exactly what services they have to provide under law.

      Absolutely agree – you start planning by having mandatory stuff above the line and optional stuff below the line, then move the line to match available funds. Otherwise, how do you know when you are in trouble legally and what exact justification is needed for budget increases.

  5. Martin
    Posted April 20, 2011 at 8:47 am | Permalink

    I find it strange that the Conservative grass roots complain about EU spending and yet the Foreign Office (even during times of Conservative Government) keeps supporting EU enlargement. Most of these new entrants are usually poor and need cash support. The EU has taken on a lot of new member states in the last twenty years most of whom are substantial recipients of funds.

    Regarding EU regulations – the UK is notorious for gold plating these.

    If it were just the EU that was the problem I could sympathise with you. How big a bookshelf do I need to hold UK Tax Law now? When will this bookshelf get smaller?

    • rose
      Posted April 20, 2011 at 6:08 pm | Permalink

      I suppose the purpose of supporting wider membership was that it would make the EU empire shallower in political terms, and free trade more potent. Or so they hoped.

  6. Magnolia
    Posted April 20, 2011 at 8:54 am | Permalink

    Hospital consultants are forced by management to leave their cancer patient work while they attend fire lectures, hand heigine courses, anti-bullying courses, resusitation courses etc. etc. This is accompanied by reams of work in ‘revalidation’ excercises which usually involves ticking boxes between professionals, which has no relevance to reality or good quality of work. The bad apples should get sorted without forcing the good apples to constantly prove their worthiness! The fire lectures are an annual event and after ten or more years of them you could pretty much say them in your sleep! Professional bodies dicatate how ‘best practise’ should be done which is enforced by management who are in fear of doing anything that might involve thinking for themselves because, under labour, all their performance pay depended on carrying out government orders to the exact letter. Management in hospitals ‘choose’ the clinical managers and usually pick the most unsuitable people because they appoint according to qualifications rather than appropriate character and ability. The whole system is clogged up with fear of rules and regulation. You are quite right to draw attention to this and the government might even get a good economic recovery if they concentrated on this one issue alone accross the board of all of our lives. It would even be popular with almost everyone.

    • Fox in sox
      Posted April 21, 2011 at 7:38 am | Permalink

      Ending the farce of revalidation would do more to make the government popular than anything to do with mr Lansley. It would show a real willingness to abolish unnessecary regulation and save money also. A win all round.

      Don’t forget most doctors vote conservative, even if they elect medical politicians who think otherwise.

  7. waramess
    Posted April 20, 2011 at 9:07 am | Permalink

    I believe it has not been made very clear that any cuts will not be structural but simply an attempt to tinker; that any attempt to cut budgets will result in managers simply ensuring cuts are politically sensitive; we will remain in the EU no matter what and we will therefore continue paying; that any bail out required by the Germans and French will be complied with by Cameron whether or not we are signed up to it.

    I also believe this administration is more about talking and that we will end up after five years with an even larger debt and no plan to reduce it or control its expansion in the future.

    What I can’t believe is that notwithstanding this state of affairs we are still in Afghanistan and Iraq and even more outrageous that all but 11 MP’s either voted for or abstained on the vote to undertake the Libyan adventure.

    We do indeeed seem to be led by donkeys.

  8. Iain Gill
    Posted April 20, 2011 at 9:08 am | Permalink

    you could cut tax and national insurance dispensations to foreign workers in this county, make them pay at least as much as a native worker

    you could cut free state school places for the children of foreign workers supposedly here short term

    you could cut free nhs to foreign temporary visitors from a country which does not offer similar healthcare to brits in their country

    you could put up the price of work visas significantly, especially those with thousands of ICT visa holders who are clearly abusing the system

    divert the 650 million going to schools in pakistan to schools in the UK

    and so on

  9. Brian Tomkinson
    Posted April 20, 2011 at 9:12 am | Permalink

    There should have been no ring fencing of any public spending. One area that the Conservative party never included in its ring fencing before the election was EU contributions. Ministers are so full of their own importance that they clearly feel not a shred of embarrassment at telling us one minute that we have no money (correct) and the next that they have found £x billions for EU bail outs, overseas aid and extra staff for Huhne’s climate change department. As you have already shown this government is planning to spend more not less money and its attempts to reduce the deficit are based on higher taxation.

  10. sm
    Posted April 20, 2011 at 9:12 am | Permalink

    If we exit the EU we will be able to save £20bn + start to make work attractive & available for the 5million you mentioned. Reducing tax on low income earners and labour intensive industry. Setting up a clean bank or two. Stop the bank subsidies.
    Reduce immigration in all its forms until we have proved we have it under real control.Temporary skilled visas should be capped and sold at auction to top this fund up. Ensuring that companies train their own or contribute to a central training apprentice fund.

    We might even be able to form better trade agreements with other countries.

    We may even stop passing off EU directives and policy as UK policy.

    Do any other MP’s exercise and engage their brains? i am unable to understand or relate to them as a group? Is their some equality diversity rule where they share this task out?

  11. Posted April 20, 2011 at 9:17 am | Permalink

    Well get over to the ‘Red Tape Challenge’ website then and recommend a few for the chop.

    The Distance Selling Regulations are a burden on people setting up small mail order businesses. Ooops, sorry, they are EU.

    As are most of them.

  12. ferdinand
    Posted April 20, 2011 at 9:19 am | Permalink

    The trouble with most civil servants is that they have had no experience of business. An increase in demand for services is seen as an opportunity to agrandise themselves not a need to analyse the cause and make better use of income. We can all find things we would like to do and people we would like to help but when it is our money we are more careful and circumspect: when it is other peoples money the same care and attention is not excercised. It seems to me that the only way this matter can be managed is for ALL local expenditure to come from council tax payers. That way they would be more careful at the ballot box. The same should apply to central government so that other countries or organisations cannot influence our decisions.

    • lifelogic
      Posted April 20, 2011 at 7:58 pm | Permalink

      There are three types of spending – your money spent on something for you – someone buying something for you as a present with their money that they think you want and someone like the government using someone else’s money to try to buy your vote. Efficiency perhaps 80%, 30% and 10% respectively.

  13. oldtimer
    Posted April 20, 2011 at 9:41 am | Permalink

    The only reason I can think of for the enlarged foreign aid budget and the huge dues paid to the EU club is to enable the PM to strut the world stage on borrowed money at our expense. It is misguided. The UK is broke.

    The exorbitant cost of the Carbon Plan, with its multiple subsidies to vested interests, is probably the greatest financial scandal of them all. The proposed withdrawal of subsidies for large scale solar schemes (restricting it to householders only) is a minor victory for financial sense. Subsidies need to be withdrawn from windfarms too. The Muir Trust recently published a study which demonstrated just how useless and unreliable they were.

    Even the Carbon Plan says it is necessary to duplicate all these renewable resources with fossil fuel energy. I quote from para 2.12
    “Lastly, if the UK`s energy supplies are to remain secure and affordable, fossil fuels will remain part of the energy mix for some time to come, with a role to play in balancing the intermittency of high levels of renewable electricity generation…” They can say that again.

    To complete the folly the Carbon Plan contemplates “…contracting with companies to reduce energy usage at times of high demand – so called `negawatts` “. I fail to understand why any business would contemplate investing in, say, new manufacturing facilities when faced with the prospect of an over expensive and unreliable electricity supply and also being paid (how much is unclear) not to use the capacity it has installed. Perhaps Messrs Cameron, Clegg and Huhne, the signatories to the Carbon Plan and Mr Cable, the Business Secretary, have a convincing explanation why they should invest – but I have yet to hear it. Are you in the loop? If so, would you be so good as to share with the rest of us just what that compelling reason is?.

  14. lojolondon
    Posted April 20, 2011 at 9:44 am | Permalink

    The thing is, John, this is why David Cameron should have kept his promise about a referendum on the EU. Following a ‘no’ vote, there would be a hard stop on the membership and the UK would immediately save £20billion per annum, freeing up spending in other important areas, like defence and infrastructure.

    Even so, there should still be a clean up of local government costs and salaries, the back office in the MOD and NHS and others as well as a proper bonfire of the quangos. AND cut the BBC budget by at least 50%.

  15. Posted April 20, 2011 at 9:47 am | Permalink

    I read in today’s FT that keeping the banks afloat is still costing us £50 billion a year in liability charges. And the EU costs us £118 billion a year…and rising.

    Those would seem to me to be the most apposite areas for cutting. However, Reuters yesterday suggested that LIBOR manipulation might have had quite a lot to do with banking salvation. So one wonders why we bothered, really…

  16. Tedgo
    Posted April 20, 2011 at 10:04 am | Permalink

    I am more relaxed about unemployment, its much cheaper from the nations point of view, to keep people permanently on the dole rather than employing them in public sector NON jobs. Not only does one save tens of thousands in terms of yearly salary but also future pension liabilities.

    The cost of regulation is overblown, do we really want to go back to unsafe factories and processes, unsafe cars, stale food in the shops, lead in paint, etc etc etc. That would be the direction miserly business leaders would take us if they had the opportunity.

  17. wab
    Posted April 20, 2011 at 10:16 am | Permalink

    “Many of us see no reason why the Uk should be contributing to Euro area bail outs.”

    This chart in the Economist tells you everything you need to know:

    http://www.economist.com/blogs/dailychart/2011/04/europes_debt_crisis

    Given the exposure, Britain has so far escaped pretty lightly on Euro area bail outs, and the anti-EU / anti-Euro brigade should stop whining.

    On the “overseas aid” front, a lot of that is really to do with trade deals. So it would be useful to know what percentage of the “aid” is philanthropy (using money we don’t have) and what percentage is just the UK government greasing a deal for some corporation or other.

  18. Winston Smith
    Posted April 20, 2011 at 10:41 am | Permalink

    John, I admire your persistence in raising these concerns, shared by the vast majority of the public. However, you are outside the Cameron and the Coalition clique. They are not listening to you or the public. You are wasting your breath. I have come to the conclusion that change within the Conservative Party will not happen in the near future. This is why have resigned and I will be campaigning for UKIP in future.

  19. Robert
    Posted April 20, 2011 at 11:34 am | Permalink

    Sadly John you know this does not really go far enough to address the issue of us living well beyond our means (its not just the deficit – but more importantly our total debt/liabilities o/s both on and off balance sheet) as well as th fact of the state interfering in such an oppressive and dehabilitating way!

  20. acorn
    Posted April 20, 2011 at 12:38 pm | Permalink

    JR, I have a cunning plan. The Law Commission (LC) is likely to come up with its next Statute Law (Repeal) Bill next year. The last one in 2008 was rubber stamped by parliament. As the LC appears to move at the pace of the average glacier, I think they need some help. Could you slip in a few amendments? I am sure we could come up with a few Acts to repeal. If we play it cool, non of your fellow MPs will even notice, (except Bill Cash).

    • Posted April 20, 2011 at 9:13 pm | Permalink

      That’s how they do it in the US isn’t is? (well according to ‘The Simpsons’ it is)

  21. Derek Buxton
    Posted April 20, 2011 at 12:54 pm | Permalink

    An excellent article, which means that, like the Owen Patterson report on the CFP, it is surely destined for the bin. What a pity. So many sensible things that could be done but all ignored by the toy PM. It is enough to make grown men weep, it just makes me angry that this can happen and keep on happening. Surely there are more MPs who see these things, I can only assume that they keep their heads down in the hope of preferment.

  22. Posted April 20, 2011 at 12:56 pm | Permalink

    The EU “Enterprise Commissioner” a few years ago siad EU regulations destroy 5.5% of the continent’s economy. I am confident it has not decreased in the interim.

    Foreign aid is a more difficult problem, for both sides, because it is often a method of buying friends. It tends to go much more to friendly dictators than to the very poorest countries. Yje money given to Afghanistan and now to Libyan rebels & UN is of that nature. Should we cut all that is not true charity ie give only to the poorest – or cut all that does not benefit is?

  23. Ralph Corderoy
    Posted April 20, 2011 at 1:24 pm | Permalink

    I’d always assumed overseas aid was a bribe, e.g. a bung to those countries to buy more of our exports. Why else are we giving aid to India, a country with technology like nuclear power so quite able to help itself if it wanted? And if it is a bribe then I hope some civil servant is monitoring the performance of all of them so we can see we’re getting value for money. If we’re not, cut back.

  24. Jose
    Posted April 20, 2011 at 1:30 pm | Permalink

    Whatever happened to Phillip Green’s recommendations? Wasn’t he talking about identifying billions of pounds of waste?

    It seems the coalition is doing the same as Labour, commissions reports and then files them in the drawer so that nothing changes!

    • forthurst
      Posted April 20, 2011 at 8:22 pm | Permalink

      Maybe buying nuclear submarines is more complex than buying flat and hanging garments?

  25. forthurst
    Posted April 20, 2011 at 1:44 pm | Permalink

    We are grotesquely overgoverned and overadministered. There are far too many levels; far too many bureaucrats. The universities are churning out people in their hundreds of thousands with no useful skills whatsoever. Where do these people go? The best option for them is to find a self-perpetuating gravy train in the public sector where they can empty the treasury of our tax money whilst tilting at their departmental windmills. The post by ‘eddyh’ on April 18, 2011 at 3:49 pm should make salutary reading for any politician seriously concerned about cutting the fat.

    The more levels of government and adminstration, the more bureaucrats, the more money spent. The responsibility for creating genuine added value is resting on fewer and fewer shoulders, year in, year out. The fate of Greece beckons us all.

  26. David John Wilson
    Posted April 20, 2011 at 1:45 pm | Permalink

    The government needs to look very seriously at anything called a licence (even if it has a different formal name). Many of these can simply be cancelled and money saved in the process. Examples vary from canoe licences (£10 to put a canoe on the Thames), gamekeeper’s licences, through to television licences and car tax. The costs of checking and prosecuting people without licences soaks up a large proportion of the revenue collected.

    Car tax could be replaced by the requirement to display an insurance certificate, which could only ber issued if there was a current MOT and any revenue lost balanced by fuel tax. The insurance companies already have to register the fact that a vehicle is insured. In particular this would correct some of the disadvantage that our goods vehicle drivers have over foreign lorries.

  27. Simon
    Posted April 20, 2011 at 1:57 pm | Permalink

    Fine words John but none of them will be acted upon .

    Nick Clegg asked us after the election to send him suggestions of where cuts could be made . It has since emerged that this was a sham and not an authentic offer of consultation and that they were not read .

    We might get a bit of bluster from Cameron but he doesn’t want Britain to assert it’s sovereignty because it would slow down his beloved EU project .

    People no longer believe the leaders of your party mean what they say .

    Despite their best efforts their true colours are shining through .

  28. JimF
    Posted April 20, 2011 at 6:35 pm | Permalink

    There will be more and more calls for you and other thinkers of the Conservative Party to abandon all hope within that party and to set up either separately or in unison with UKIP.

    There is a major iconsistency when you keep batting for a side where the captain and several members of the team use tennis racquets to defend the wicket. With the weaker bowlers they hit a six, but when the true bowlers come into action they’re out for a duck, their tennis racquets looking both silly and against the rules of the game.

    There is no alternative to living within our means as a Country. Most people believe this even if it is unpalatable. The question is how long can you push this line when your leaders and Libdem partners are really saying and doing the opposite. Most of us knew this would happen if Cameron was elected, alone or in Coalition; Blair lite; you must have hoped it wouldn’t, but it IS HAPPENING. The Labour policy of currency ruination and inflation continues under this government. Your voters in Wokingham voted for something different, and they aren’t getting it.

  29. Tom
    Posted April 20, 2011 at 7:45 pm | Permalink

    100 new peers since Cameron became PM. Where are his priorities? And what difference will they make?

  30. Posted April 20, 2011 at 8:14 pm | Permalink

    I have hit upon a way of reducing public expenditure.

    I was one of very few people who thought MPs were underpaid for what they did, before and after the expenses scandal.

    However, perhaps there is some scope to reduce MPs salaries after all.

    As Parliament loses competence in any given area, this surely reduces the level of responsibility it has. Ask any human resources or recruitment specialist and they will tell you that a reduction in responsibility means less reward.

    I propose that Parliament EITHER:

    (i) works to regain powers lost to the eu quango

    OR

    (ii) MPs and ministers accept a pay cut commensurate with transfers of powers abroad

    • A David H
      Posted April 21, 2011 at 9:11 am | Permalink

      Kenneth – You forgot to add “retrospectively” as the last word of your last sentence.

  31. Derek Duncan
    Posted April 20, 2011 at 8:36 pm | Permalink

    Overseas aid. I have no objection to money going to poor countries abroad (provided it gets to its targets); we live in a fabulously wealthy and safe country in comparison to so many other countries in the world.

    Libya. Why don’t the EU countries that backed the UN resolution, but that haven’t lifted a hand to join us in air strikes, etc. repay us for the enormous costs we are incurring in their name?

  32. stephen
    Posted April 21, 2011 at 9:05 pm | Permalink

    Getting unemployment down is the main way to reduce welfare expenditure. But i’m not very confidant thateven a growing economy will reduce unemployment in the UK; wont most employers simply engage young east europeans who will flood into the country when vacancies start to appear again. After all displacement of UK nationals by Poles ,etc, occured a few years ago, and then we were in a positon to do something about it, now we are’nt and Uk employers will simply hire those who they think will be the most amenable.

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    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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