However you look at the UK state’s finances, any rational person has to conclude the Uk state is spending too much. Labour and Conservative governments have in the past found that 38% of National Income is about the maximum level you can impose in taxes. Try to get it higher and rich people leave the country to avoid Income Tax, people stop selling assets at profits to avoid CGT, they drive less to avoid fuel duty, they spend less because their incomes are squeezed leading to less VAT and the rest.
This means that the long term rate of spending has to be lower than today’s. Even allowing for the current state of the cycle, it would be unwise to continue spending at current levels on a sustained basis. Of course the best way to get to these lower levels is through growth, avoiding painful cuts in spending. However, growth is elusive, and some action does need to be taken on the spending side.
There are four main ways of cutting current spending. The first is to idenify things we are spending on that we do not need, we do not like, or can be put off for a bit. In this category I would choose cuts to Overseas Aid for the time being until we have recovered the fiscal position. I would withdraw our troops from Afghanistan and Germany with no new foreign military adventure for bit. I would cut the large subsidies being paid for green energy, as we need to get energy costs down . We should slim down the programme of industrial and business subsidies and the costs of the Business Department, as Dr Cable proposed in opposition when he suggested scrapping it. We should negotiate a new relationship with the EU as we cannot afford our current membership.
The second is to manage necessary programmes more effectively. Welfare is a case in point. I do not want to take money away from the disabled. I do want to change future eligibility for benefits. We should say to new arrivals in our country that they have no entitlement to benefits for a period of years, until they have built up some contribution record under National Insurance. We should invoice health tourists seeking treatment for non urgent conditions on the NHS. I am pleased to report the government is going to limit entitlement to subsidised housing, to make sure it goes to deserving people who have been here on a waiting list. Mr Cameron announced some welcome moves in this direction yeasterday, but may need to go further.
The third is to have a drive for greater public sector efficiency and higher quality at lower cost, something that industry does every year. I have highlighted here before the excess equipment bought and not returned to the NHS. The stock levels in many public sector organisations are very high. A period of destocking would cut inventory costs, reduce wastage and write off by encouraging earlier use of stocks, and reduce storage and warehousing costs. The digital revolution should be more strictly applied to clerical tasks in the public sector. Capital spending should mainly be allowed only where it makes a recognisable contribution to lower cost and higher quality service. The gross inefficiencies of the nationalised rail network need to be tackled more radically, to cut the subsidy.
The fourth is to find assets and activities which can be transferred to the private sector, releasing money to the state. I would start by breaking up RBS and selling the pieces to the private sector.
March 26, 2013
John sorry but your dodging the real issue with regard to welfare cuts. Stopping (foreign migrants ed) getting a council house or billing (overseas ed) women who fly in to give birth in a NHS hospital will save comparative peanuts. Its the indigenous white non working class that you really need to tackle. Please take a trip up to the North East and visit places like Easington Colliery. If you are short of time have a look inside of the archives of the FT magazine and get a flavour of what life is like in these little towns where most of the population can only exist on handouts.
March 26, 2013
Clegg has no principles or values, as we have seen with his son being admitted to the Oratory School, in contrast to his party’s manifesto to stop faith schools discriminating and against his own beliefs in being an atheist. He also publicly stated his dislike for British culture before the last election. How could Cameron and Clegg create a strategy when the people creating it do not know what principles they stand for?
March 26, 2013
I do not think it is against an atheist’s beliefs to use a faith school. Surely as they do not believe in god they can do as they think best. Why on earth should they not choose a faith school if that is the best school around that is free to them, after all they pay the taxes that fund them. Maybe they see it as their role to be missionaries to spread atheism in these schools.
In Clegg’s case he should just send them to Westminster or Eton, which is doubtless what he would have done, had he not joined the barmy, wrong on everything Libdems and had obtained real job instead.
March 26, 2013
Why on earth would an atheist want their child influenced in a faith rather than a bog standard state school if they do not believe in the faith? Of course it is against their belief.
March 27, 2013
Not at all, atheists do not usually have any irrational belief system to bind them, they are pragmatic. If the school suits them better, is closer, has better teachers, or more likely a better intake of pupils why should they not go to it. Their taxes are funding it after all.
They may even think that the religious element is educational in showing them how many other people can have these strong belief systems, without evidence, where they do not.
These school are full of atheist and people of different faiths. Just because a child has a parent of a particular faith it does not make him hold that faith. Often quite the reverse.
March 26, 2013
Apparently you’ve forgotten that those indigenous white Britons in Easington were thrown on the scrap heap as part of the UK government’s noble efforts to prevent people killing each other in Darfur, the problems there being nothing to do with excessive population growth but everything to do with us burning coal.
Incidentally, please can you say how many of the new coal-fired power stations being opened in Germany will be equipped to capture and safely store that nasty CO2 which is destroying the planet and causing civil wars?
March 27, 2013
Denis Cooper – CO2 is destroying the planet and causing civil wars?
To the well practiced cry that “CO2 is the destroying the planet it now emerges that CO2 causes civil wars! Perhaps CO2 is also causing Islamic terrorism No doubt this statement is a continuation of the usual unproven “science” and alarmism. What clear indisputable scientific evidence exists that proves this statement to be correct beyond all possible doubt?
March 27, 2013
I was merely paraphrasing claims made by Nina Andreeva in one of her recent posts.
March 26, 2013
Well unless politicians can magically create more jobs that pay a living wage in these areas most of the people will continue to remain on welfare. Simply creating jobs is no longer sufficient as most people need to claim benefits if they work for a low wage.
March 26, 2013
U5 have a read of the article, inside there is lots of stuff you can use in your future comments. A resident in one of these towns would be defying rational choice theory in not picking up free money instead of doing an honest day’s work. This is especially the case when the government is confirming that your state of health disbars you from going to work when everyone else knows this is not the case. The fault here lies primarily here with Mrs Thatcher’s government who began the fraud of reclassifying people as “unfit to work” as a way of suppressing the unemployment figures.
March 27, 2013
Nina Andreeva –
Ah, so Mrs Thatcher’s goverment gets the primary blame again. Obviously it has nothing to do with 13 years of Labour tax, waste and spend when they were very happy to massage and spin the figures and continue whatever ” numbers fraud” suited their objectives.
March 27, 2013
Even if people are capable of working if there aren’t enough jobs available then they can’t work.
March 26, 2013
Why are they not working? There are no jobs could be a clue. No jobs. Can you understand this? They get depressed and sign on sick. They are depressed that they cannot find work.They in effect live without money. How? The wife works in a cleaning or supermarket job and they work for ten quid a day for a bit of beer/house money. Maybe they should live five to a room /car and move to London? Not all have 2k a week the help them find work. How (wrong-ed) are you Nina? A reply is required to this or do not write such nonsense again especially as the North East is where you are from.
March 26, 2013
As you say, it would be difficult to know how anybody could argue with your “Diary” to-day but that doesn’t in itself make it praiseworthy, because of course it doesn’t go nearly far enough. With borrowings per minute in the billions or whatever it is, and with balance sheet debt already phenomenally high already, it is not nearly enough to cop out by saying that “the long term rate of spending has to be lower than today’s”: it has to be lower than today’s, today, not at some non-defined time in the future, that is if there is to be a future. I didn’t know that Cable had recommended abolishing the Business Department but then nothing surprises me about the Government these days. The idea that that department full of jobs(not)worths is a help to business and not a complete waste of money is a joke. Even worse at the EU level. With all those highly paid and pensioned bum-sitters in Brussels and Strasbourg, and Lord knows where else, you would have thought that if there was a problem in principle with what Cyprus was doing they might have noticed it, in that Cyprus made not the slightest effort to disguise what they were doing. And all to save the wretched Euro. I confess I was in the camp last year that thought that that ghastly artificial construct would fail but how was I to know that the EUmaniacs could be so unbelievably callous as to force half of Europe’s people to go through Hell to preserve it? The hatred that this is engendering will not easily go away, with consequences that are totally unpredictable, some possibilities being simply awful.
March 26, 2013
With borrowings per minute in the billions or whatever it is
Time for a maths lesson. There are 60 minutes in an hour; 1,440 minutes in a day; 10,080 minutes in a week; 43,200 minutes in an average month; and 525,600 minutes in a non-leap year. So if the UK was borrowing £1 billion per minute they’d be borrowing £525,600 billion per year. Since the UK is borrowing £120 billion per year it is borrowing £228,310.50 per minute.
The hatred that this is engendering will not easily go away, with consequences that are totally unpredictable, some possibilities being simply awful.
The hatred is limited to the countries that needed to be bailed out and those that had to pay to bail them out. However the hatred is low in most countries as only Greece and Cyprus needed to make major changes. Spain, Portugal, and Ireland are having fewer problems because they didn’t need to cut back as much.
March 26, 2013
unanime–So “only” the best part of a quarter of a million per minute, is that it? Very profound I must say, indeed I can scarcely believe you would choose to respond in such a naive way. And it doesn’t take many people to hate with the intensity being engendered to cause (worse -ed)problems –then perhaps you’ll be satisfied.
March 26, 2013
@Leslie
Don’t you think it is odd that if “EUmaniacs” are forcing “half of Europe’s people to go through Hell to preserve” the euro that a recent poll[1] found 72% of Cypriots wanted to stay in the eurozone?
[1] Insights Market Research and the University of Cyprus, fieldwork carried out on 17 March, 2013
March 26, 2013
sjb–No I do not since you ask. What I heard (on one of the main News Channels, I am almost certain, and after the latest deal not before, and with discussion based on it plus their Archbishop wanting exit “but not yet immediately” ) was the complete opposite, viz that two thirds (as it was put) want exit. And in any event whether people are “going through Hell” was and remains only my opinion and course was not meant to be, and in any event is not capable of being, taken numerically because the phrase is highly subjective.
March 27, 2013
sjb–And as a PS to mine hopefully below there was an article in the newspapers today (only the Mail I’m afraid) which referred to “the whole of Europe being blighted”. Hyperbole is what I think they call it.
March 26, 2013
Read Nigel Farage’s article in the DT today it gives a brilliant perspective of what is going on. It also raises the question what on earth is Cameron doing by supporting the German EU intervention when Germany can vote on what takes place in Cyprus but Cypriate politicians are forbidden to vote on the prised intervention by Germany and the IMF!
You also have to question why the UK loaned Ireland £7billion for a bail out when it was allegedly nothing to do with the UK (more if you add the UK comtribution to the IMF) and why indirectly the UK is again helping the German EU bail out of Cyprus through the IMF as well as “compensating” UK people. This is another bail out, by anger name, to help the Eurozone. The UK again paying twice! It appears to me that Cameron is deceiving people by the language he uses.
March 26, 2013
Well Cameron is clearly a very blatant liar. His “heart and sole” wants to be part of the non democratic, bank deposit grabbing EU and he supports it in every single way.
He even appoints the appalling Lord Patten to the BBC. Yet he is still happy to pretend he is a “cast iron” euro-skeptic merely to win votes.
No one trusts Cameron one inch or even one millimetre (as Cameron would no doubt have it) he cannot even keep his minor IHT promise.
Not one word, have I heard from Cameron against the blatant EU theft going on in Cyprus. What role do human rights, or the ECHR have in this EU inspired theft of citizens assets? You can have “human rights” but might not be able to eat as the government has stolen your bank deposits!
How can you have any “human rights” what so ever if the EU can merely rob your assets at will? Osborne even had the temerity to refer to this as a “tax”. These socialist Tory leaders are totally pathetic.
We might as well have the representative of Unison, Ed Miliband, he could be little worse.
March 27, 2013
Which human right are you referring to? I can’t find a human right to have your bank account guaranteed by the Government when your bank becomes insolvent.
You’ve also ignores that if the Government hadn’t taxed the people with accounts worth over €100,000 to bail out the banks then these people would have lost everything except €100,000.
I find it ironic that you lifelogic only consider something immoral when it results in the wealthy losing money but you’re perfectly happy for ordinary people to lose their employment rights, have their salaries and pensions cut for working in the public sector, and lose all their benefits for no reason. You also seem very willing to demand that the tax payer bails out the wealthy but strongly object to taxpayers money being spent on things that don’t benefit you. but such is the hypocrisy of the wealthy.
March 26, 2013
Good thoughts! Nicely divided up too. Everyone, whichever political viewpoint they come from, must agree that you are right.
Did you watch the Bank of Dave last night? Lazily, the FSA simply wiped him out. He fought and won. Their main tactic seemed to be simply not answering letters, breaking deadlines and not being there. Meanwhile, he was scrabbling round trying to keep the business afloat.
I had the same tactics over our Free School. It stinks.
Given that the bureaucracy is paid anyway, given their glacial pace of doing anything much, I do not expect common sense to break through any time soon.
Meanwhile, we are going broke.
March 27, 2013
Common sense wont break through because of Common Purpose.
Google it.
March 26, 2013
It seems to me that what is lacking is a clear framework to create a realistic and sustainable budget. For all the usual reasons of weak and strong ministers and departments, and flavour-of-the-moment politics, a sensible balanced budget is simply beyond the competence of this government. So I have a suggestion to make to get around this problem. The last time the UK had a small budget surplus was in 2001, so we take the expenditure by department at that time, adjust it for inflation (and possibly in some cases such as state pensions by the change in the number of people obviously qualifying for it), you axe unnecessary or undesirable expenditure (your suggestions are a good start), and then you prorate the 2001-adjusted expenditure by department so that it fits 38% of current GDP (your maximum tax take). Of course there will be some pain, there is bound to be, but nobody can claim that the level of public services in Britain in 2001 was unacceptably poor, so here you have a proven and sustainable framework to start from. I know there would still be a lot of horse trading over the details, and it may even be permissible to run a small deficit of a few percentage points as we are (still) at the bottom of the cycle, though personally I would opt to try for a balanced budget since it is clear that we cannot no longer trust our leaders to run a healthy surplus at the top of the cycle. Problem solved.
March 26, 2013
Your solution won’t work for the following reasons:
1) The employment levels in 2001 were higher, so fewer people were claiming benefits. Also tax revenues were probably higher due to more people working.
2) People in work also didn’t require the same level of benefits because their salaries were worth more.
3) There were fewer pensioners, so their welfare costs were lower.
4) Housing costs were lower so the cost of housing benefit was much less.
So it’s no longer possible for the UK to have a balanced budget based on the 2001 budget because the circumstances are different.
March 26, 2013
Why do you try to invent history when the facts are easy to check?
Employment in 2001 was 27.7 million, whereas now it’s 2 million higher at 29.7 million: back then income tax raised £108bn as against about £150bn now.
You’re right about housing: the legacy of Brown’s property boom is an unhappy one. But the bubble can be tackled to reduce those costs.
March 27, 2013
Ignoring all the figures that disprove your argument is a poor strategy.
Employment is higher now than 2001 because the population is higher. However the percentage of the population in work is lower than 2001.
You also failed to calculate whether income tax has risen in real terms. If it hasn’t then this means less revenue is being raised.
March 27, 2013
I’m afraid that your information is incorrect (e.g. employment is currently at an all-time high in the UK), and in making such a blinkered and myopic reply you are showing as little imagination and flexibility of approach as George Osborne and Mervyn King. You’ve obviously never heard the phrase ‘thinking outside the box’. Well, that’s what I’m doing and it’s what’s needed to get us out of this mess.
March 26, 2013
I would also stop ring-fencing the NHS and Education budgets. Where budgets are sacrosanct, there is no real incentive to deliver efficiency and to aggressively cut out waste.
The money thrown at education is beyond belief, but the standards relative to rest of the world keep falling. With an excellent teacher, attentive and committed students and effective discipline, we might get better results by sitting cross legged on the floor and just using old fashioned slate and chalk!
Computing in schools is becoming just a vacuum cleaner for sucking up taxpayer money. I bet if schools ditched computers, the standards would actually rise!
March 26, 2013
The money given to education will only improve things if spent wisely. Improving existing schools will help pupils, while spending billion on academies no one wants to use will not.
You can’t expect to get excellent teachers when the education secretary accuses them of being Marxists for not obeying his every command, even when the evidence shows that this minister is wrong.
You can’t expect to have attentive and committed students in areas where you’re likely to be unemployed no matter how much you study or when both the children’s parents have to work long hours because the only jobs available pay a pittance.
Finally your comments about computers shows that you have no idea what skills employers want. For nearly all jobs you will be using a computer or will have to apply using one, so someone who’s computer illiterate is effectively unemployable.
March 26, 2013
I agree with much of your suggestions to cut spending, although a couple of points strike me as difficult to fit in with ideology . If energy is to be produced temporarily by using fossil fuels would those industries not require a subsidy.?
I am not sure how much overseas aid is given and how it compares to donations by charitable organisations.
I agree that housing for immigrants should not take priority for those in the UK who have been waiting for years.
It is also unfair that people like myself who have paid NI for over 40 years only get the same entitlement as those who have paid little into the system.
As far as the NHS is concerned I could write a series of books on how the Nurses using total patient care managed patients, kept the finances in the black, and then were aggressively told that managers were there who had the experience to change the NHS around. They were and still are being brought in on high salaries to spend too much , introduce the private sector who glorify the doctors role, as it is in their own financial interest to do so and put the NHS in the red.They hang around doing very little and obstruct progress, they introduce new systems and the staff and training which is needed to complement the new systems and say it is saving money when they actually spend more.
They discriminate against the Nurses who are as well qualified or more than many doctors , make us take the responsibility for their lack of knowledge , deny us our qualification and experiential rights and then bring in new doctors to replace us who need teaching by the nurses to carry out their own roles and have large GP salaries in communities. The eyes are on the side of the cliques who consider themsleves superior because they are MRCP and not MRCN.The money is being removed from the NHS by those supporting the private sector as they can see their own roles as paying off if they put the NHS down.Who for example makes a consultation in the private sector with a Nurse? In the NHS consultations are with general practitioner Nurses on a daily basis , investigating problems, diagnosing problems , treating problems and referring problems,,,,,This costs 5 times less than the doctors .
March 26, 2013
A nurse as well qualified and capable as a physician with MRCP ? you really are deluded. All the Nurse Consultants work from 9-5 weekdays & are never around when the difficult decisions are made. Numerous studies show that Consultant Nurses spend much longer seeing patients than doctors & cost more per consultation and overinvestigate. Who’s ultimately responsible for the decisions of these (people? ed).
Reply These wild generalisations doubtless do injustices to nurses.
March 26, 2013
Postscript–Didn’t take long for my comment just now to disappear but what I was about to say, about Cyprus, was does anybody understand how 1) This “agreed” deal does not (whereas the first try did) need the Cypriot Parliament’s approval and 2) How it is possible for depositors in various banks to be treated so very very differently? Best I can (inadequately) understand, even large depositors in banks other than the two big ones get to escape the (30%) rape of their deposits. My gut reaction, on basis of non pari passu or somesuch is that this will not fly legally. On any basis 30% (or whatever) would seem a bit OTT for something calling itself a “tax”.
March 26, 2013
The reasons some depositors escaped the haircut is that their cash is held in banks that are solvent. It is the Laiki and Cyprus banks that are bust and whose depositors take the hit. Allister Heath, over at CityAM, sets out the main differences between the original proposal and the final settlement. His principal criticism is that the deposit insurance scheme was not actually implemented as designed – that would have involved a haircut for everyone, with the state then compensating deposits up to 100,ooo euros. But, as he points out, that would require a solvent state – and Cyprus, the state, is bust. Now where does that leave us in the UK? Easily solved – more QE.
The Dutch finance minister has said that the final settlement provides a template for the future. In short, everyone will get a haircut apart from the shareholders who, rightly, are decapitated. That means bondholders (disgracefully let off in the first proposal) will be converted to shareholders and deposits of over 100,000 euros will take a loss. This is as it should be. It signals to big depositors in other countries what precautionary steps they should now take – namely take all your money and run from any remotely dodgy bank.
March 26, 2013
Oldtimer–Thank you and I take your point about the banks’ varying solvency but I had thought that Brussels were very keen, at least previously I believe, to keep countries responsible for their banks–I do not remember in the Spanish go round any differentiation between the banks–though I do see that it makes sense to have such differentiation. It is hard to believe the extent to which the bailout plan has been changed as we go along. People that have already been sorted that wouldn’t have been under the new approach are not going to be very happy. And I still haven’t followed why all of a sudden the Cypriot parliament (never mind the people) no longer need to be consulted.
March 26, 2013
Postscript–The collapse of Cyprus was caused by the collapse of its banks (itself caused by their taking a 75% crewcut on their deposits with Greece). On this basis there is indeed at least something to be said for each Cypriot bank’s depositors being treated on its (de)merits in terms of solvency (rather than taxpayers being asked to help). But you would never guess that that is what is going on, because every article about Cyprus at least by my memory talks of what is going to happen to Cypriot “depositors” in general and uniformly (at least in the early articles) rather than to each bank’s depositors according as I say to the relative bank’s solvency. But how can that possibly form the basis of any future template when surely a country’s banks’ becoming insolvent is not the only way in which a country can collapse–for example via its own sovereign debts becoming too large and hence un-roll-over-able.
March 26, 2013
All sounds like logical commonsense.
You say it is known that taxing people any more than 38% is known not to work. Can I ask, does anyone else know this ?
If so, why do they persist in a known failed policy of the past.
You say we are spending too much, clearly this is the truth otherwise we would not have a deficit and be in greater debt, so why does it continue.
So do we have a link for failure !!!!!!!!.
We spend too much, and we are trying to tax too much to pay for it.
Pray tell me this is not news to the Chancellor and Prime Minister.
If they are aware of the above, why do they persist with known failed policies of the past and continue spending and taxing ever more.
March 26, 2013
Alan, you have wisely posted for many years. You know the answer to your question, Cameron going into Coalition was about changing the Tory party rather than address the failings of the last government and to change the country’s fortunes.
Clegg has no principles or values, as we have seen with his son being admitted to the Oratory School, in contrast to his party’s manifesto to stop faith schools discriminating and against his own beliefs in being an atheist. He also publicly stated his dislike for British culture before the last election. How could Cameron and Clegg create a strategy when the people creating it do not know what principles they stand for?
March 26, 2013
@alan jutson
“So do we have a link for failure !!!!!!!!.”
http://www.dailymail.co.uk/news/article-2298936/France-lost-million-jobs-repressive-tax-regime-report-claims.html
March 26, 2013
This article fails to distinguish between French people who left because of the tax rate, French people who set up businesses outside of France because of the cheaper labour, and French people who set up businesses outside of France because of the more lax legal system. As a result it does not show that high taxes result in job losses as it failed to account for other variables.
Yet another poor article by the Mail assuming that everyone left for tax reasons and that they would have created these jobs in France, even though there’s no evidence to support either claim.
There’s also no evidence that people buying luxury houses in London will live there, as people often buy these homes as an investment. So don’t expect the UK to benefit from the higher French tax rate.
March 26, 2013
You say it is known that taxing people any more than 38% is known not to work.
It works fine in Denmark as they can get 48-49% of their GDP in taxation.
If they are aware of the above, why do they persist with known failed policies of the past and continue spending and taxing ever more.
Well the Government tried cutting their budgets but found that it was difficult to cut them by 1%, let alone 20%. It seems that the Government cannot make large cuts without becoming very unpopular.
March 26, 2013
They cannot make cuts without being unpopular.
So I wonder when we have gone bankrupt like Greece, will the government still be popular.
Ah yes, only stuff the so called rich, or only those who have money in the Bank.
Problem is, those who have money keep the economy going and pay for those who either cannot or do not want to work. when they have no money, we really are all in it together. So guess you will then cheer.
Clearly you have never run a business as being popular, is a very fast way of going bust.
Bit like going to the pub and buying everyone a round, very popular in the short term.
Running a Government the same way will eventually lead to the same result.
You have highlighted the fault with the present system, we have too many people who will only vote for for a Political Party if they give them something, and yes, that cuts two ways.
March 27, 2013
As long as the UK can print its way out of debt it won’t ever go bankrupt. Though the pound will be devalued.
March 29, 2013
Unanime5
Is that your solution ?
March 26, 2013
It’s not 38%, it is 40 %, it was a piece of work done by DB Smith some years back. ” … the ratio of UK non-oil tax receipts to the factor-cost measure
of non-oil GDP … chart … includes a horizontal line at 40% because this seems to represent an approximate upper limit to the sustainable taxable capacity of the economy. There are signs of business cycle fluctuations in the tax ratio, as one would expect with a progressive tax system, but it does look as if 40% or so represents, as an approximate rule-of-thumb, the economic limit to the taxable capacity of the non-oil economy.”
Do you guys understand that if you slash, neo-con style, public sector spending, a lot of private sector companies go bust, with the subsequent unemployment, because their business depends on £200 billion of public spending on goods and services, and £170 billion of public employee wages spent on exactly the same things as the private sector employees do.
Public sector and private sector spending are another private sector persons wages. No wages, no spending, hence no sales for private sector firms. No sales mean less employees required. The unemployed spend less, and the circle of decline begins and accelerates.
If you insist on cutting public sector spending, you have to repeal a lot of expensive laws made by politicians. Those laws require people to operate them and regulate them; just look at the size of the DWP and HMRC now. All caused by amateur politicians changing rules and regulations; responding to Daily Mail etc., headlines and lobby group vested interests looking to secure a monopoly in some area.
Wise up, your being sold a pup, or likely a pig in a poke. No nation that issues its own currency can go broke in that currency. If others think your economy which is backing your currency is dodgy, they will tell you with the exchange rate they will offer you.
Are you getting it yet?
March 26, 2013
Acorn
Oh yes I do think I have got it.
Some public sector spending is perhaps positive, but not all, so why not cut out the inefficient stuff, and the waste, and the overmanning.
Please do not tell me their is no waste, there is no overmanning, there are not more efficient ways of doing things, because I simply do not believe it.
Only this week we have had reported that 2,500 NHS staff who took voluntary redundancy with huge pay offs, have been re-employed by the NHS, indeed one of our family members knows of such cases in their hospital.
Anyone who has worked in the private sector and then joins the public sector will tell you of a totally different mindset that exists with regard to deadlines, work and management ethic, customer service and attitude to budgets.
March 27, 2013
If the link does not work, go to youtube & type laffer curve in the search box.
JD.
March 26, 2013
You make very sensible points. Good growth will come only after the state sector gets spending down to sensible levels. It is necessary to enable it to compete in the world. About 20% is the best level for maximum good for most people but getting it down to the maximum they can raise in taxes (about 38%) would be a good start (from an absurd nearly 50%).
It is not hard, firstly much of what the state does is actively damaging not only doing no good but doing much positive harm. Just close those sections down. Secondly the state sector is over paid (including pensions) by 50% relative to the rest. Then there are the sections that just do nothing useful to be closed down and the sections that do some good, but do it very inefficiently indeed, and make them efficient. Also the benefits that encourages people not to work and augments the large number of feckless.
There is no reason why the state sector could not be just 20% of GDP with no real loss of any services at all (ones that are actually useful to the public that is).
Add to that some deregulation, easy hire and fire, cuts in taxes, a positive low tax vision, sensible banking, cheap non (green nonsense) energy, and growth will accelerate hugely.
Alas we have Cameron and are saddled with the Libdems (entirely due to Cameron’s incompetence and “modernisation”) and Miliband, the voice of the state sector unions, to follow – again thanks to Cameron.
It is easy, but there is no vision and no leadership from Cameron. Someone who appoints Ken Clarke, Lord Patten and Heseltine is clearly never going to do the right things.
He and his government prefers to prance about, pretending he can cut benefits to the new wave EU immigrants (with all his heart and sole), ratting on the EU and IHT, dealing with royal succession, gender neutral insurance and annuities, gay marriage, pigis bail outs, aid, calling people (far more moral than this government) “morally repugnant” and conducting pointless, counter productive wars.
Can Cameron just tell us why he does not want to be a Greater Switzerland, just one reason for a start please?
March 26, 2013
20% of GDP is unrealistically low.
30%, maybe, if a very tight ship was being run.
March 26, 2013
Not really, if the government only does the, rather few things, that it can actually do better than individuals. This and does not divert tax payers money to their mates, into quack energy systems, HS2 nonsense, pointless wars. Nor use it to buy votes, augment the feckless or to purchase propaganda. Then 20% is just fine. It is perhaps unrealistic given the electoral system and the sort of dodgy people we seem to get as the majority of MPs.
March 26, 2013
Or paying for nuclear power nonsense? Even more quackery than windmills as it is much more expensive and dangerous. Whats that? Its a dog whistle from a fantasist.
March 27, 2013
Nuclear is far cheaper than wind and the power is not intermittent and random.
March 27, 2013
Japan manages to keep it in the low thirties, I think. The UK managed about 33% in 1955. Getting down to 30% is just about do-able but you have to transfer some activities to the private sector – e.g. health care. There is neither the political will nor popular support at the moment. However, by the 2020 election there will have been sufficient NHS horror stories for opinion to change. If you make a service more or less free at the point of consumption, and you don’t allow private sector health premiums to be set against income taxed, then you effectively create a Stalinist monopoly. It’s almost bound to be a nasty one; it is asking too much of human nature to hope otherwise.
March 26, 2013
Then there are the sections that just do nothing useful to be closed down and the sections that do some good, but do it very inefficiently indeed, and make them efficient.
I suspect you couldn’t name any of these sections because you have no idea what you’re talking about.
Also the benefits that encourages people not to work and augments the large number of feckless.
You mean like sick pay and disability benefits which prevent the sick and disabled starving to death? Are you referring to job seekers allowance that gives people an alternative way to survive other than crime? Clearly you don’t know what you’re talking about.
March 26, 2013
Desperation creates work? Explain lifrlogic.
March 27, 2013
Do you like a good drink before posting?
March 27, 2013
A drink of the stupidity of these posters does the trick.
March 26, 2013
Laid out in black and white it all looks so obvious. Unfortinately in politics votes and the shrill voices of the liberal “progessive” influencers mean that the “deserving” trump the contributors.
When did wishing to provide for your own but to keep much of what your earn become such a derisory aim? I would happily give more to charitable causes if so much was not taken in tax. Especially my wife’s tax free allowance which for some reason I am not permited to use even though I bear the costs of the whole household.
March 26, 2013
I’m sure that the deserving are content to get what the can from taxes, rather than having to be dependent on your charity.
March 26, 2013
It’s the undeserving, the anti-social, work-averse, scallywags who need to get their money from taxpayer funded welfare. If they were dependant on the charity of their neighbours, they would have to stop trashing their neighbourhoods, they’d have to clean up their act, pay their bills, feed their kids, and make an effort to at self-help.
The neighbours can see what you’re doing, all day. The Benefits Office doesn’t even look. So no wonder the welfare class are “content” to get what they can from state benefits.
The deserving are going to do just fine, whether their temporary safety net is provided by the state, by the charities, or just by family, friends, and neighbours.
March 27, 2013
That may be the case but their shrill representatives and apologists do not share that view.
Whenever cuts or indeed freezes are suggested a cohort of progressive liberals shrieks “tax cuts for those who are succesful and gruel for evrryone else”
Several sacred cows need slaying
March 27, 2013
Why should the richest get tax cuts while everyone else gets benefits cuts? Forcing the poorest to endure the additional hardship so the wealthy can enjoy greater opulence is a recipe for disaster.
March 27, 2013
Only problem being the huge % swallowed by the bloated bureaucracy in between the taking of the tax & the delivery of the benefit.
March 27, 2013
Many charities are NGOs (non governmental organisations) in reality with funding from private donations in single figures in percentage terms.
March 26, 2013
Agree. But why on earth is this not happening
March 26, 2013
JR, we all agree with you as we did 3/4 years ago. Cameron (Osborne and Letwin) is NOT listening.
Cameron has made no difference he has treaded water for three years, countless U-Turns, failed guarantees, he has made the Labour mess worse by not taking any action.
Yesterday he was restating the EU rules on immigration without the ECHR part preventing the UK from deporting failed asylum seekers and suspected terrorists. He is a waste of space.
The Saville Channel at the BBC went into overdrive to promote immigration in such a bias way it leaves most people why Cameron has not cut it down to size or forced it to become a private business and off the taxpayers list of useless ways to spend money.
The International Free Health Service, according to Jeremy Hunt, is costing the UK £200 million a year. How long does it take them to have a practical grip on reality of what is happening? Your energy would be better used supporting UKIP, unfortunately your party is doomed- at least that is one success Cameron can claim in 7 years.
March 26, 2013
Interesting that 38% is the amount that people will tolerate being stolen from them before they revolt. Illustrates the difference in attitudes between statists and libertarians.
Why would you only stop the military adventures for a while, Mr Redwood? Since every one has been a disaster morally, financially and practically it is surely better to stop them permanently.
I like all the other ideas but I’d say we don’t need a renegotiation with the EU just a leaving card would do. Also you’ll never, ever make the public sector efficient. The best you can hope to do is make it smaller.
March 26, 2013
Indeed, I think that we can forget thinking about military adventures full stop unless we have to defend ourselves.
zorro
March 26, 2013
They’ve not all been disasters; Sierra Leone is widely regarded as having been a success. However we should stop biting off more than we can chew.
March 26, 2013
“The UK state is spending too much” on climate change nonsense.
March 26, 2013
The UK state is spending too much money denying climate change and reversing prvious decisions instead of getting on with providing for the consequences by building flood defences, improving the resilience of our houses to cold weather etc.
March 26, 2013
Do you still honestly believe this stuff?
When the electricity fails, when the gas stops I shall be cold, hungry and very, very angry.
Won’t you?
March 26, 2013
“The first is to identify things we are spending on that we do not need, we do not like” The list is so huge it would probably be enough to almost eliminate the deficit on its own.
Here’s one – contract out all infrastructure tasks run by councils to the private sector – all councils do the same thing so pooling resources so that anything to do with back office and infrastructure is contracted out so you drive in efficiency, get some corporation tax back from taxpayers money and of course lose large future pensions liabilities.
If industry did not have one arm tied behind its back courtesy of the EU we would probably be in a much better place. So Govt needs to take a leaf out of France and Germany and simply ignore EU compliance rules that don’t suit the UK – that would be a start!
March 26, 2013
Thank you John.For a more conservative veiw to fixing our problems than i,ve heard in a long time.All you say makes sense to me,just a couple more points in saving money this Cyprus debacle is a Euro thing nothing to do with us at least nothing we can do about it,so any monies lost due to supporting our troops and civil servants through this period should be taken off our subs to the E.U.
One other point that you have touched upon is the billions being touted to be spent on HS2.I don,t know if you have been out there lately but driving on our roads makes most journey,s like doing a section of the Paris-Dakar,there are millions more of us using the roads than the rail don,t you think that would be a good as any place to start with capital spending on infrastructue?
March 26, 2013
If we avoid ideology and do the most efficient thing at all levels we will cut benefits where appropriate, move wasteful public sector provision to efficient private sector provision, break up monopolies, leave the European Union, back Scottish independence, end subsidies to rail and other lost causes, build motorway infrastructure and get rid of taxes on business like the carbon tax and the increased national insurance. We would also build sustainable energy resources like nuclear and make use of fracked gas….
March 26, 2013
Alternatively we could accept that we are in the EU and stop rewriting every directive that they produce.
We could stop wasting money on matorways and improve and expand the rail system.
Get rid of the proposal for Scottish independence and all the money being wated on it. Alternatively we could get rid of most of the UK wide functions of Westminster and devolve them to an English, Scottish or Welsh parliament.
Merge fragmented offices into a single central office removing the inefficiencies involved.
etd.
March 26, 2013
I will never accept continuing UK membership of the EU under anything resembling the present treaties.
Never.
To quote from the 1644 Soldier’s Catechism:
“I fight for the preservation of our parliament, in the being whereof (under God) consists the glory and welfare of this kingdom. If this foundation be overthrown, we shall soon be the most slavish nation in the Christian world.”
Either you support the sovereignty of our Parliament as the central institution of our national democracy – even if many of those who have got into betray us by denying its sovereignty – or you support the primacy of the EU and thereby make yourself an enemy of our national democracy.
March 26, 2013
@Denis Cooper: Denis, isn’t that a bit extreme? You won’t lose your parliament in this EU, even when you accept a supranational authority, which you are part of, for certain areas of cooperation. While you soldier on resisting the EU, the CBI, the American government and the City, will not be on your side, and, as you have pointed out previously, they will use their influence during the run up to your referendum. The world didn’t stop in 1644. It won’t stop in 2013 either. Larger cooperation blocs will happen, one of them the EU.
March 26, 2013
Yes, but the EU loathes us Brits. You have only to look at the sheer anger in the speech of Mr Guy Verhofstadt and the jeers which greet Nigel Farage. You have only to see the way people do not listen to Roget Helmer to see that if you do not agree with the EU theory, you are treated really badly.
It is a lesson which the Cypriots are just learning.
March 26, 2013
No, Peter is not extreme; it is merely urging a return to the normal constitutional position for an independent sovereign democracy, which prevailed for the UK before January 1st 1973 and still prevails for many other countries around the world. What is extreme, and abnormal, is your passionate desire to wind up Dutch national democracy and accept legal subjection to the EU.
March 27, 2013
Dad probably gave you the same spin in 1940.
Talking of soldiers, I remember when I first clapped eyes on the Dutch army in 1974. (etc ed)
March 26, 2013
Good for you Denis.
March 26, 2013
You have the perfect recipe for wasting as much money as possible. Congratulations! Your Gordon Brown Award awaits.
March 26, 2013
Largely agree.
I have 5 more suggestions …
Shut down DCMS.
Phase out Trident.
Stop all government funding for sock puppet organisations.
How much was wasted on researching, planning and promoting alcohol minimum pricing? Now that it has been abandoned has all that spending been stopped?
A large increase in the availability of building land will encourage housebuilding which will reduce unemployment, saving on benefits. This would take effect before any grandiose white elephant scheme such as HS2.
March 26, 2013
The financial damage of excessive public spending is obvious.
However, in my opinion it also damages society.
When the state directly provides funds to those perceived to be in need, it lets off family, friends and neighbours from this responsibility. Worse of all (with some exceptions), it lets off the recipient themselves from responsibility.
Every £1 that is taken from a taxpayer and given to somebody else is a dagger in the fabric of society.
We need to drastically reduce welfare payments and concentrate on the disabled and destitute, making this as local as possible.
This will not only improve our finances, it will surely lead to a happier society.
March 26, 2013
Indeed it is socially damaging to. Other than a basic safely net for the very sick and ill you are quite right.
March 26, 2013
Bowwwwowww! You have lost any respect. Silly fantasist with extreme right wing views that will never apply to himself.
March 26, 2013
Instead, we have a government which prefers to be tough on the disabled and increase REMPLOY closures…..
zorro
March 26, 2013
With Cameron’s striving for his brand of conservatism to be more touchy, feely libdem I couldn’t understand why he sanctioned that piece of insanity but has u-turned on so much else. That and the treatment of servicemen demonstrates more than anything a bully mentality
March 26, 2013
I can think of a few more choice words to describe it…..It certainly tells me something.
zorro
March 26, 2013
Any plays for what will happen to the 2.5 million unemployed people when their benefits are cut off and crime becomes their only way to make money? Making the most vulnerable poorer never ends well.
March 26, 2013
Four excellent points, John, and who could disagree with you?
I just wanted to point out again that a person on a salary of £50k a year is not paying £10kpa in tax, they are paying 20% PAYE plus 10%NI plus 10% Company NI, plus 20%VAT plus 40-80% tax on alcohol, fuel, cigarettes, even rail fares are up to 70% tax (“franchise” fee). We are well into the supertax league, even for an average worker on a unenvieable salary, 38% is a very distant dream!
March 26, 2013
Employers NI is now 13.8% not 10%!
March 26, 2013
Not to mention CGT, stamp duty, insurance premium tax, car taxes, parking taxes, VED tax, planning taxes, building regs taxes, bus lane fines, box junction fines, death duties, passport fees, driving licence fees, council taxes, there is just no end to it.
March 26, 2013
The worry is not just that we are subjected to so many taxes but the huge costs of administering them and chasing and fining those who avoid them Savings could be made simply by merging many of them. For example:
1) Income tax and employees NI contributions.
2) Television licences etc and council tax.
3) VED and fuel tax. Each vehicle would simply display an insurance disc.
March 26, 2013
Imagine this on 71 quid? Don’t come ot very often do we lojo? Wonder why?
March 26, 2013
A voice of sanity and maturity.
Rare in Britain these days, I’m afraid.
March 26, 2013
JR: “The UK state is spending too much”
We have known this for years and had the forlorn hope that by voting for your party we would have a government that rectfied this. We didn’t know that your party’s leaders were just as addicted to spending other people’s money as their predecessors and coalition partners. They talked about austerity, which mainly meant more taxation and reallocating a still increasing current account, and “paying down the deficit” which was meant to fool us into thinking the national debt was reducing when in fact they planned from day one to double it in their 5 years of office. They are happy to pay more money they do not have to the EU and for overseas aid. They have failed in the one area that was the raison d’etre for the formation of the coalition – sorting out the economy. They have squandered the opportunity and look increasingly Micawberish as they hope that something will turn up. The Labour party is similarly led by men clearly inadequate to face up to the economic realities and deal with them. The three main parties in the Commons are virtually the same – tax, borrow, spend and waste – that is their shared economic manifesto. There are those in the Commons who know this is the wrong approach but are ignored and regretably are unable to persuade their leaders to stop the unrelenting march to the financial abyss. What are they to do? Sadly, it appears that party loyalty trumps all other considerations.
March 27, 2013
During Labour’s 13 years of tax, borrow, spend, (sorry I meant invest) they knew that they were due to be kicked out by the electorate. However, they also knew that the ratcheting up effect of the spending and legislation they had already put in place could not be changed quickly or easily by an incoming Conservative government.
The election result in 2010 with the Conservatives not being able to win an overall majority must have come as a surprise to Labour. They also must have been surprised that they entered into coalition with the LibDems a party to the left of the Labour party. So the goverment we now have is basically the same as the previous Labour government with spending & borrowing going up. None of the political parties will talk about making real cuts to public expenditure because they know or think it will lose them votes. Too many people in this country have grown up with the belief that the goverment will provide them with a living and successive Labour governments have continued to prove them correct in this thinking. Consequently, large sections of the electorate vote Labour because they see it as the party that will continue to provide plenty of state handouts to their client voters.
It looks highly likely that the next election will be won by Labour either with a clear majority or with a LibDem coalition. Onward we shall then march to the final destruction of Sterling and the UK economy. However, there may be one interesting development if Alex Salmond and The SNP win the referendum for Scottish independance that will rob Labour of some nearly 50 seats in the HoP.
March 26, 2013
Cap child benefit to a maximum of 3-4 children; starting in a year’s time, with no additional benefit paid for families already over that number, again starting in a year’s time.
There is no reason why the state should subsidise families to rear 11 children on benefits.
Delaying implementation prevents the bleeding hearts brigade from publicising how huge families will be penalised, because everybody will know the position before they decide to have another child.
March 26, 2013
@NickW
“Cap child benefit to a maximum of 3-4 children; starting in a year’s time, with no additional benefit paid for families already over that number, again starting in a year’s time.”
Agreed. Long overdue.
And a stay at home spouse should be allowed to transfer at least some of their personal allowance to their working spouse.
March 26, 2013
Three or four?! If I was feeling generous, I might propose limiting it to two children per couple.
March 26, 2013
@Wonky Moral Compass
“Three or four?! If I was feeling generous, I might propose limiting it to two children per couple.”
Like taxation in general, you pitch it low at first to establish the principle, and once accepted you can do the “fine tuning” in successive annual budgets.
That’s how we ended up with 20% vat and fuel duty at £3.60 per gallon.
March 26, 2013
Police state Bob defending freedom. Anther fool. No reply Bob?
March 26, 2013
Generally agreed but I’m not sure how many families there are in the UK with more than (say) 3 children so I don’t know how much such a measure would save immediately.
I think something like this would be much easier to push through if it didn’t affect those families who already have more children than the limit.
I see no reason why something like this couldn’t come into effect in 12 months’ time though. As you rightly point out, this would give everyone reasonable notice of the changes and leave it to them to decide whether or not they can afford to raise another child.
This type of measure is not just about saving money, though; it acts as a reminder that YOU are responsible for you and yours and not “the state” (i.e. everybody else) – a notion which really needs to be brought back to the fore.
March 26, 2013
Do pay a visit to the revenuebenefits.org.uk website and check out their table (put together with the support of HMRC) indicating what the maximum levels of income are before a family ceases to be eligible for working tax and child tax credits. The amounts are amazing and then consider if a family earning that sort of money is really poor? My parents raised five kids in the 70s and 80s on a combo of family allowance and a semi skilled factory worker’s wages. Looking at the table if they were doing it today, my father could be earning as much as recently qualified NHS consultant before his “credits” ceased
March 26, 2013
More poverty needed. Desperation will solve the problem Nina?
March 26, 2013
As we have said previously, a lot of legislation passed in the last 20 or so years has pushed up costs particularly in the public sector, and they seem unable to make sensible efficiencies with modern technology. They seem too wrapped up in project speak rather than actually providing public services or enforcing the law.
I have mentioned these big, expensive public sector projects which take so long (if ever) to actually deliver what’s needed. The practitioners seem to be kept out of the design stage and then when confronted with reality they have to review systems. In the immigration world, the Points Based System was a disaster in its initial implementation. There were countless media reports of all these bogus students circumventing silly tick box forms rather than being interviewed to ascertain their bonafides. Who designs these systems? They must cost a lot of money to design and implement, and then deliver something worse!
I see that the Home Affairs Committee have been scathing in their criticism of Lin Homer, and she was promoted to be the CEO of HMRC. However, it was Cameron and Osborne who appeared to have agreed the appointment. But this is rife throughout the public sector with Sir David Nicholson in charge of the NHS. What’s it all about?
zorro
March 26, 2013
John, with the basket of measures that you propose, how much do you think that you could actually shave off public spending, and how long to implement it?
zorro
Reply I would start with a minimum of £10 billion in the first year, building up to larger figures in the second year as the privatisation proceeds came in, as the interest bill started to come under better control, as the manpower and other efficiency savings accumulated and as changes to benefit eligibility started to be felt. MY proposals at the outset of the Parliament would have spent around £170 billion less over the Parliament, by having a cash freeze for the first year only, thereafter increasing spending at the government’s chosen rate
March 26, 2013
Reply to reply – Thanks for the clarification on that. I think that people sometimes don’t realise how much you can actually save on a cumulative basis over a Parliament with freezes in spending. If we had continued with perhaps a two year freeze, we would have gotten substantially more than the £170+ billion over the five years in less expenditure. I remember looking over some calculations a good few years ago where if the Blair government had held public spending increase at around inflation from 1997 to 2004-5, then we could have abolished income tax by that stage! I don’t have the figures immediately to hand as I’m out but will try and find them. Income Tax raises only around 20% of public pending totals.
zorro
March 26, 2013
Off topic. I have just read a best rating comment ( about fourth down) beneath the Welcome to Blackout Britain article in the Telegraph, which says that demolition of the recently-closed, coal-fired Didcot power station has begun, presumably, as the commenter says, to prevent it being mothballed.
We need an immediate change of leadership. We cannot afford any longer this stupidity.
March 26, 2013
How about saving a few more billions by scrapping the unfair Barnett Formula which allows the rest of the UK to send their kids to university for free or heavily subsidised whilst youngsters in John Redwood’s constituency and everywhere else in England are told it’s unaffordable for them. Their choice is either spend their working lives with crippling debts hanging over them or don’t bother going. In these times of austerity, why do Cameron & Osborne refuse to stop sending billions of extra bribe money to other parts of the UK resulting in no prescription charges or £75K+ care home fees for them, only England.
Clearly we are not all in this together. It seems the Tories, just like Labour before them don’t give a stuff about the unfair manner in which every man, woman & child in England, their constituents, are discriminated against both financially and politically. Maybe someone should remind them where they get their support from and no matter what Cameron thinks, it isn’t and never wil be Scotland.
March 26, 2013
Actually Scotland more or less pays its way, unlike Wales and Northern Ireland and many parts of England.
March 26, 2013
I totally agree with the need for public sector organisations to destock.
1) Get rid of the need to spend the budget by the end of the year that results in money being spent on purchases many of which are never used. In many private companies managers are bonused on unspent budgets at the ens of the year.
2) At the trivial level get rid of the multiple layers of stationery holdings. You will find stationery stores in individual desks, each small office, each department, each office block etc. This attitude spreads to all departments that need to obtain “parts” from stores. The field engineer holds spares in his van, more at the local depot, and at the main depot and also at central stores. Each of these stocks involves employing someone to administer them at least on a part time basis.
3) Get rid of the attitude that requires copies of every communication to everyone in the mangement chain and anyone else who might be interested. The electronic office has removed the need for paper copies and the huge filing systems required. This has been replaced by electronic distribution of even more copies. In theory these are held at a single central “cloud”. In practice nearly everyone has their own copies on their office machine and laptop. Often these are multiple copies as the people involved are sufficiently IT illiterate to retain only a single copy. The cost is large expenditure on un-needed IT resources.
March 26, 2013
1) If you have a budget for providing services to the disabled and you run your services so that you don’t spend all your budget expect those who are meant to be receiving this care to complain that you’re cutting back on their care for your own benefit.
March 26, 2013
I agree with your analysis of what needs to be done. Unfortunately this government – and for that matter the opposition – seem to have given up on the idea of getting state spending down to tolerable levels. They are all debt junkies, dependent on one QE fix after another.
March 26, 2013
All scared to take on the public sector unions. That’s the truth of it. Scared to be painted as ‘nasty Tories’. If Tories are not going to be ‘nasty’ (i.e. sensible), what is the point of them. We might just as well have left Brown in charge. At least the country could have moved on to bankruptcy with a more definite sense of direction.
March 26, 2013
Since when has alienating the people who are meant to be implementing your ideas been considered the hallmark of a successful leaders? If someone in the private sector acted like that they shouldn’t be surprised if all their staff left and their department floundered.
The Conservatives are painted as the “nasty Tories” because they only implement their own ideology and refuse to listen to those who explain why it won’t work.
March 26, 2013
“If someone in the private sector acted like that they shouldn’t be surprised if all their staff left and their department floundered.”
So speaks a divvy with no experience of the private sector. Especially in the current climate.
Incidentally, whether in the public or the private sector, the leadership is not there to please ” the people who are meant to be implementing your ideas”. They are getting paid to implement your ideas.
The agent you must not alienate is called the CUSTOMER.
March 27, 2013
Hey Monty can you provide any examples of companies being successful despite alienating their staff and having a high staff turnover? If not then you’ve just proven that you are the one who doesn’t understand how the private sector works.
What happens if the leader is doing something that will make the customers unhappy? Should the employees just blindly obey the leader and ruin the company or should they tell the leader that he is an idiot who doesn’t know what he’s talking about?
March 26, 2013
A very sensivle agenda which would certainly, if puirsued vigorously, get us out of recession quickly.
I only disagree with the statement that growth is elisuve. IO do not think any attempt to truly find growth has been made, indeed much of government & opposition policy, not least the ecofascism, cannot be understood as anything other than a deliberate attempt to prevent growth.
March 26, 2013
Everyone knows that the Uk economy can be saved by
-increased public sector efficiency
-a smaller state
-low taxes
-sound money
but no one does it .
There seems to be a collective parliamentary pact not to do anything other than tax,borrow, waste to varying degrees.
At a recent party AGM I made the point that the coalition have and will be borrowing £10bn a month into the distant future. To avoid a disaster we need to eliminate this asp.
Our MP [and junior member of Govt] agreed we should ‘do a little bit more ‘on this front.
My response was that we need to do a huge amount more ,as I have seen in Ireland and Estonia.
I find it all very depressing.
March 26, 2013
They are all scared of the public sector unions going on strike. But, alas, just as in the 1980s when the nationalised industries were sucking the life out of the economy, now the public sector is sucking the life out of the economy. With a hefty contribution from Welfare.
We need a Maggie. We have Cameron and Osborne.
March 26, 2013
Do you have support within the Conservative party if so why is it not happening? We’d like to see backbench pressure applied to get Cameron & Osbourne to listen.
Go further, stop ring fencing the NHS and education. Cuts could be made without effecting frontline services.
Cameron has started to concentrate on getting re-elected not sorting out the country.
Reply Yes there is support for this amongst Conservative MPs, but not sufficient to offset the large numbers of Lib Dem and Labour MPs who wish to spend more.
March 26, 2013
@Wokingham Mum
” stop ring fencing the NHS “
How cruel.
Think about the wannabe models who need 36DD NHS funded breast enhancements in order to prevent “emotional distress”.
http://www.thesun.co.uk/sol/homepage/news/4859852/Taxpayers-fund-wannabe-models-giant-36DD-NHS-boobs.html#ixzz2OeDyUonb
March 26, 2013
Exactly
March 26, 2013
Reply to reply.
So why not at least make it clear what needs to be done and who is opposing it.
We have massive failure at the moment. And you are going to get the blame for it.
By 2020 the Tories will not have won an election for 28 years. The party may well disintegrate after (certain) defeat in 2015. Then we will have a mess of Labour/Liberal politicians forever.
You owe it to the country to stand up and be counted. Before it is too late.
March 26, 2013
JR, you write:
“Labour and Conservative governments have in the past found that 38% of National Income is about the maximum level you can impose in taxes.”
Please could you supplement that by saying where we are now on both taxation and public spending as percentages of National Income?
Reply Public spending this year is forecast at 43.6% of GDP (TAble B5 Red Book), but the adjusted figure is around 45.5% – need to adjust for the interest and royal mail pension fund credits. Public sector receipts are forecast at 38%.
March 26, 2013
Thanks.
So for a balanced government budget the required reduction in public spending would be equivalent to about 7.5% of GDP.
But putting that another way, about 7.5% of GDP is dependent on the government borrowing money and spending it into the economy.
Or rather a little less, because some of the money spent by the government is not spent in the UK but is sent out of the country, so let’s say that about 7% of GDP is dependent on government borrowing either from investors – and to be effective that really has to be money which would not otherwise find its way into the UK economy, for example money from foreign investors – or from the Bank of England.
It seems self-evident that any reduction in the level of government borrowing must tend to reduce GDP, counteracting any natural growth, and therefore thanks to the profligacy of the Labour government we now have a very long and hard haul ahead of us to get the government finances in some kind of order.
It also seems self-evident that as the government constantly borrows vast sums of money to spend into the UK economy without any discernable positive effect on GDP similar sums of money must be flowing out of the country by various routes – net payments for the excess of imports over exports, repatriation of profits by foreign owned companies, not least the utility companies, remittances of foreign workers to their home countries, capital moved out of the country by both domestic and foreign investors seeking a better return or a safer home for their money.
However this is just the unsophisticated view of a chemist, and I await correction by those more versed in the complexities of economic theory.
Where is Gordon Brown when you need him?
March 26, 2013
On the very relevant subject of maximising our tax revenue I have just seen that unanime has been re-spouting how according to her there is no loss of tax from high earners leaving.
unanime–Even on your own warped way of looking at it when “they” leave and some of them (only some) are replaced it is not at all likely that the newcomers will earn as much. Suppose ( a famous entrepreneur-ed) leaves (Forgive me if he has already left), is he going to be identically replaced? Also you ignore high rolling self employeds leaving (QC’s as a specific example, going to HK, what with you having studied Law) where not at all obvious they will be replaced, certainly not at the same large salaries. As I have said to you before, quit looking at somebody earning £10 million as a filthy greedy (etc–me not ed) and instead look at him as £4 million badly needed tax for the UK that will go West (or these days East) each year.
This is a very serious effect and you make a fool of yourself (again) for attempting to pretend it doesn’t exist. Even if, which I do not concede, the effect is exaggerated the true effect would still be enormous. Try and see the wood for the trees.
March 26, 2013
Postscript–Just realised that I unthinkingly put 40% which is of course way out of date–nearer to £4.5 million now.
March 26, 2013
Let’s assume that there’s an executive in the UK who earns £200,000 per year who either retires or decides to leave the country. There is now a vacant job that will pay about £200,000 per year. Eventually someone else will get this job. If they’re paid £200,000 the tax revenues will be the same, if they’re paid slightly more the tax revenues will be slightly more, if they’re paid slightly less the tax revenues will be slightly less. So in a corporation this “newcomer” will earn much the same amount and pay much the same amount of taxes as their predecessor. Thus the change in tax revenues is minimal.
Regarding entrepreneurs leaving the UK what will happen to the tax revenues depends on what these entrepreneurs do when they leave. If they appoint someone to manage their business for them and this person is paid a similar salary to the entrepreneur then the tax revenues will be similar. If the entrepreneur leaves the country, goes to another country in a different time zone, and tries to run their company they’ll probably end up either appointing someone in the UK or returning to the UK due to to difficulty of running a company this way.
While the entrepreneurs may close down a company that’s paying them £5 million every year, after taxes, and move to another country I doubt that they’ll earn that much money for many years since they’ll need to establish their company before they can acquire large contracts. Assuming it’s possible to obtain such large contracts in another country. So they have strong incentive not to leave. Even if they do leave the UK someone else will be willing to do this work in exchange for £10 million per year.
QCs are a specialist type of barrister and for every QC that leaves there are at least a dozen barristers who want this job. So a new QC will be quickly appointed after the old one leaves.
March 27, 2013
Sorry Uni, but with 30 years experience in these areas I have to say you are wrong.
Para one
You assume the executive will be replaced with an identical person which is not happening . Companies currently are just spreading the role around the remaining executives and saving £200,000
Para 2
Most entrepreneurs will take their company with them and set up afresh elesewhere thus the all jobs will be lost to the UK along with the tax
Para 3
Its very easy to supply the world from another base nation and these are the kind of companies that are leaving.
Para 4
As I have no experience of the law or QC’s in particular I will accept what you say
March 28, 2013
Edward2–If the mention of QC’s seems strange let me just mention that HK uses English Law (at least for its Commercial business) and there very much is a need for our QC’s out there–the very best QC’s I might add. I know for a fact that our QC’s move over there to handle commercial law disputes (vast sums at stake) and become Members of Chambers there, as well as here, to do that.
March 27, 2013
unanime–You have a ghastly, left-wing, the-brothers-are all-equal, fill-the-slot-by-anyone, mentality and seem incapable of understanding how the world’s best and most charismatic rake it in. Many, as individuals, and very far from merely filling a vacancy, command astronomic sums because they are perceived to be the global best and, though you will hate this, large multinational corporates will pay whatever it takes to get what they see as that best–it makes little difference to them as they have budgets in billions, and their philosophy is that money is no object to ensure they get what they want–maybe there is a huge multi-million, or even billion, pound contract at stake for instance. Your hatred of such people shines through as usual, but that doesn’t affect the truth of how to maximise tax revenue, which is what we are here discussing. One does not need vast numbers of ultra-high-earners for amounts saved to be very significant. BTW, if your argument is so wonderful why don’t your left-wing buddies in say the Labour Party talk like you? Right up their street I should have thought, that’s if it were true.
March 28, 2013
Postscript–And do not forget the ever so relevant fact that it’s not just individuals who up and leave but whole companies, and there your ideas on like-for-like, as if we were talking peas-in-a-pod jobs in a factory, do not even get out of bed. I am not sure of the exact current position but it has been in the papers a number of times that for example Honkers and Shankers might be moving back to HK and if they do they will assuredly take a whole slew of ultra high paid exec types with them. Indeed it was the other way round and Honkers not too long ago moved to London, one of their reasons (Don’t bother to tell me it wasn’t the only one) being the then more benign tax regime. Companies deciding to set up in London is unarguably a huge positive effect in itself.
March 26, 2013
John,
the State Machine/main political parties will not reduce spending to the extent required
If the question is more along the lines of ‘how to keep feeding the machine?’,at which point would you expect blatant State confiscation of assets to kick in?
The ‘mansion tax’ has already been heavily trailed and can’t be far away. ISA’s and Pensions force converted to Govt. bonds? Bank account levies?
March 26, 2013
John, I think your ideas are excellent.
The important thing is act quickly. If we don’t, the debt will build up to astronomical levels and we shall face austerity for years on end. The electorate may not like austerity, but it will vehemently detest prolonged austerity. We should strive to get the pain over with quickly.
March 26, 2013
There are tens of thousands of bureaucrats and numerous government depts that need to be culled. Their disappearance will have little impact on front line services.
We need the % the State takes from GDP to be nearer that of the USA i.e. 22% (ideally 20%). We will not be able to compete and survive unless we radically restructure the State. Being member of the EU exacerbates our current problems and staying a member will drag us into the economic abyss.
March 26, 2013
Won’t any sensible investor start to move their money out of all EU banks.
March 26, 2013
Excellent suggestions Mr Redwood. Keep scattering those seeds, maybe one day a few will fall on fertile ground.
I have long thought that the public sector (which seemed to grow beyond all sensible proportion under “New” Labour) desperately needs looking at.
There are some services and roles which are absolutely essential and it is proper that a centralised body such as Government should run gather revenues in the form of tax to fund these.
However, there are some services and roles which might be considered “nice to have” in an ideal world and it is these that need pruning. The world is far from ideal at this moment.
It’s like hiring a servant for your house when you can barely afford the mortgage.
Tough, unpopular decisions need to be made and fast but do we have anyone in the country with the guts to make them?
March 26, 2013
And what about all the things the state pays for we don’t need?
Give me a list of the jobs that the 5000 people employed by Wokingham Borough Council do, and I will guarantee to remove 1000 of those jobs with no noticeable affect on essential service provision.
Do we need an Arts and Communities Officer?
Can we afford an Arts and Communities Officer?
Maybe in a lovely civilised world where money is sloshing about, we should have one. At the moment, borrowing £150 billion a year to pay for our public sector, a bill that will be paid by our grandchildren – it us utterly immoral to employ anyone, or provide ourselves with any service, that is not absolutely essential.
So, yes to bin men and social workers and, even, planners – but no to Arts and Commnities Officers and Diversity Co-ordinators and their ilk.
And, salaries and conditions in the public sector are now way out of kilter with the private sector. A whole raft of middle management jobs paying salaries of 50k plus could be got rid of. And public sector pensions must be reformed properly.
And what about the ‘bonfire of the quangos’?. Didn’t happen. Nothing happens. Spending is rising. Hope (that ‘growth’ will miraculously appear in a globalized economy where we are becoming progressively more uncompetitive) is fading.
Mr. Redwood – as something of an old hand now on the political stage – maybe even on the verge of being ‘a veteran’ – surely you need to start shouting the facts of life to whoever will listen.
March 26, 2013
Mike that’s a really good idea. Getting the job title, and job description of everyone on the local authority payroll. The data must exist in a fairly compact computerised form, in the Personnel Department. A censored subset of that data file (maybe taking out either the names or the salaries), should be accessible to someone with a FOIA request. Volunteers in each constituency could go through that data with a few simple common rules to discriminate between direct workers (eg Refuse Collector, Cook, Teacher, Public Health Inspector), and the rest (eg the Delivering Excellence Team, and the Policy Steering Group, and the Carbon Footprint Strategy Group, and the Children’s Play Facilitators, and the Healthy Lifestyles Outreach Team).
At the very least it could lead us to an understanding of just how much of the local authority wage bill is going to people we could well do without. It could form the basis for a challenge, to force a significant reduction in the wage bill, especially at the top end. And a round of cuts at the top end would be difficult for the Unions to strike over, if it was explicitly done to protect the job security of the lower paid direct labour.
March 26, 2013
Putting the rather well heeled ‘crats out of work, could also be economically beneficial. The occupants of the cosy sinecures, once redundant, tend not to qualify for any means tested state benefits because they are far from destitute. And the longer we keep them locked on to the tax titty, the greater the pension liability we incur.
March 26, 2013
Totally agree with you on ONE. NI contributions should be the key to benefits. Invoicing health tourists is naive. They should pay up front via insurance or credit card.
On TWO.,and THREE. ,I am sure the Public Sector needs a thorough and ongoing professional audit especially in the area of purchasing. Noone from the civil service should be let loose anwhere near it. Time and again they have proved themselves to be incompetent, despite their double firsts. Who in Gods name thought it a bright idea to employ a failed head of the Border Agency as head of HMRC. She is no tax professional like many senior members of HMRC. In the senior civil service there is no such thing as failure, the incompetent just move on to another honey pot. Sadly it is so much more serious than “Yes Minister”
I would extend FOUR to getting Government out of our lives and into bare essential roles like defense, but I do not really trust them with this either. We do not need masses of jobsworths to tell us what to do and what to think. Who will rid us of this pestilence.
Were Cameron a decisive leader he would act over Cyprus by compensating all British Ex-Pat bank account holders to the extent of what is being stolen from them. By deducting the total from the £50,000,000 per day we pay to the EU. Sadly he is all smoke and mirrors, a sound bite man of no real leadership potential.
March 26, 2013
The effect of UKIP on the conservatives is really working. At last they are beginning to start to talk about the right things. Its a pity its three years late.
Remember I have been talking about controlling spending from well before UKIP came second in a by election!
March 26, 2013
John, Yes I know you have, but this is the first time that your leaders have started to talk about some of these things. That is due to their fear of UKIP.
March 26, 2013
Some very sensible responses to your blog today . I believe you have the priorities right and should do your utmost to get your ideas implemented . I wish you could influence HMRC to simplify their approach to taxation ; it is enormously complicated and unwieldy – a sure warning to any intending investor and a great turn -off to the confidence boost the economy is badly in need of .
March 26, 2013
Let’s try to focus it. What can be done in FYR 2013/4 and 2014/5? It is a pity that Danny Alexander’s remit to pull out another £11.5 million of expenditure only refers to 2015/6 and beyond.
In your first category, some of the items you list will be opposed by the LibDems, others by the Prime Minister.
In your second category, health tourism is OK provided that they pay (Dubai has a Health Care City including a Moorfields Eye Hospital). I recently had short spells in two Hampshire NHS hospitals. I was asked for my date of birth umpteen times, for the first line of my address many times but never once for my nationality. The ‘free at the point of consumption’, ‘run for the benefit of the staff’ model has to be questioned.
I would dispute that subsidised housing is a ‘necessary programme’. Why tie subsidy to particular properties rather than particular people? Now that we are applying a cash cap to housing & other benefits, we could sell off all social housing and leave it to the markets. And do pensioners need all of their concessions?
Your third category, the efficiency drive, has to be driven by Ministers and management. Stocking levels, yes. You wouldn’t believe the amount of gym equipment there is in Basingstoke.
We have to raise the contribution of the fourth category and also to look to non-taxation sources of revenue. Levying tolls for some road improvements such as motorway widening should be acceptable given our situation and the need for capital expenditure.
March 26, 2013
I think there’s a real fairness issue about restricting benefits and healthcare to immigrants based on past contributions, while handing it out freely to locals who’ve never contributed anything in their lives.
Why is nobody talking about restricting benefits to a certain amount of time? It worked in the US. In Switzerland, you get 80% of your salary as unemployment benefit, but only for a while. This encourages people to look for work, as the moment where their lifestyles will take a dive approaches.
Get people a hand-up, not a hand-out. Help them get into work, don’t just pay for them to stay at home for the rest of their lives.
Speaking of homes: having a part of the population work for 20-30 years to pay their mortgages on very expensive and often small, sub-standard housing, with the estate tax looming over them – while at the same time paying through extortionate taxation for housing for a large (and growing) part of the population that simply expects it for free, for life, and to leave it to their kids, is also disastrously unfair.
The British welfare state is not there as a safety net. The left-wing has successfully transformed it into a massive, perverse machine for generating and perpetuating poverty and hopelessness, and thus creating more votes for the left-wing parties.
March 26, 2013
The benefits in the USA don’t work, that’s why so many people turn to crime to get money. The system in Switzerland only works because unemployment is much lower than in the UK.
Despite all your complaints about the welfare state you’ve failed to propose a viable alternative. In many parts of the country the number of unemployed people is several times the number of jobs available, so no matter what you do the majority of people will remain unemployed. Just because you don’t like this doesn’t make welfare wrong.
March 26, 2013
You mention bringing back our troops from Germany and Afghanistan. This is underway now. It will take time but the moves should be complete by 2020 at the latest.
There are 3,000 service personnel in Cyprus. Some are supporting the UN peacekeeping operation, and probably should stay. Others are supporting the operations in Afghanistan and will, I assume, be withdrawn when the Afghanistan campaign is over; but what about the others?
Will we be closing the sovereign bases? If not, why not? If NATO wishes us to keep the bases then NATO should pay for them. If NATO doesn’t need them, then why do we?
The Treasury is demanding more money from the Defence budget. Personally I am against that but if more cuts have to come from the already depleted budget then our troops should come home from Cyprus.
March 26, 2013
Just a thought about the benefits reforms as they affect claimants with what’s called “extra bedrooms”. In case of doubt, no-one ever calls me “liberal” – I guess I’m pretty much right-wing. Why, I even believe in the reintroduction of capital punishment for certain categories of murder.
But I’m instinctively wary of a proposal which will penalise people who, for no fault of their own, suddenly find that they’ve got “more bedrooms than they need” – by order of HM Government.
None of these people contrived to gain advantage by moving into their homes when they did. At that time, the property was the right size. Circumstances have overtaken them and they now find that their homes are “too big” – again by Government definition.
We seem to be going out of our way to alienate and punish a significant number of people by changing the rules on them. These families, these people, are not criminals. I guess that many of them have “promoted social stability” by looking after their homes, contributing to the local community and being “decent citizens”. Aren’t these the very people we want to encourage as a progressive and enlightened Conservative Party?
Yes, we have to reduce welfare. Yes, we have to cut waste. But let’s not do that by punishing decent families and by driving out of their heads any notion that the Conservative Party stands for common sense and justice.
Just look around and see where we go easy on criminal behaviour and on lawlessness because it’s easier to go after soft targets.
One other thing – will the Government role-model this appetite for cutting waste by cutting MPs’ expenses?
March 26, 2013
They need tightening up for being poor.
March 26, 2013
All good ideas. We needed some tough medicine in this parliament to stave off the need to radically cut back things like the NHS in future years. Its not being tough enough.
The government pensions are far too generous even after the tinkering and the Teachers today voted for paid sabbaticals for the rise in retirement ages. Would they want to fund the same for all the builders, electricians, plumbers, cleaners, hod carriers, road workers, factory workers, office workers and so on. The country is still in la la land.
March 26, 2013
Labour and Conservative governments have in the past found that 38% of National Income is about the maximum level you can impose in taxes.
Maybe these Governments should consult countries such as France, Italy or Denmark as these countries are able to get over 40% of their GDP in tax revenues. I think it has something to so with having a low income disparity, rather than being reliant on a small, wealthy elite.
The first is to idenify things we are spending on that we do not need, we do not like, or can be put off for a bit.
In my opinion millionaire politicians who aren’t reliant on the anything provided by the state are the wrong people to determine what is essential. Public consultation will be essential to avoid deeply unpopular cuts.
I would cut the large subsidies being paid for green energy, as we need to get energy costs down .
I trust that you also want the subsidies cut for non-green energy. After all if these areas are so profitable they shouldn’t need a subsidy.
We should negotiate a new relationship with the EU as we cannot afford our current membership.
The only way to do this would be to leave the EU and join the EEA. This would mean that the UK will no longer have to pay the EU for the cost of making laws but we also wont have any influence over these laws. Though we will still have to obey these laws.
We should say to new arrivals in our country that they have no entitlement to benefits for a period of years, until they have built up some contribution record under National Insurance. We should invoice health tourists seeking treatment for non urgent conditions on the NHS.
This is already possible under the existing laws.
The third is to have a drive for greater public sector efficiency and higher quality at lower cost, something that industry does every year.
I find that in the private sector lower cost also means lower quality, mainly because it’s easier to use cheaper materials or people who’ll work for lower wages than create a more efficient process.
The fourth is to find assets and activities which can be transferred to the private sector, releasing money to the state.
Given how privatisation hasn’t reduce the cost of buses, rail, energy, or water transferring more services to the private sector may not be good for the UK in the long run.
March 27, 2013
Uni
It seems from the various posts on this subject that your solution to our current economic problems is much higher levels of state borrowing, much higher taxes on the rich, much higher state spending, more subsidies for green energy, immediate rent controls on private landlords together with massive council house building, higher welfare benefits and unrestricted immigration.
Am I right?
March 27, 2013
While I have recommend increased borrowing the extra money should be used to stimulate the economy. Once the economy has recovered borrowing can be reduced.
The purpose of higher taxes on the wealthy is so that the Government doesn’t have to borrow more. This was proven to be effective between 1950 and 1970 when there was high growth and a 90% tax rate on the wealthy.
Though I have called for higher state spending this is mainly in areas that are currently underfunded and suffering as a result.
I haven’t called for more subsides for green energy, though cutting subsides for non-green energy would be an effective way to encourage more green energy.
Given that the cost of housing benefit is one of the largest parts of the welfare bill rent controls and more council houses would be an effective way to reduce overall welfare spending without punishing those on welfare.
I actually called for welfare to be the same in real terms, as the current 1% increase is a 2% cut in real terms. Though higher welfare payments would give the unemployed and those in low paying jobs more money to spend.
I’ve never called for unrestricted immigration and I suspect you just added that because you think I’ll like everything you hate. Though I have been critical of low wages which only immigrants can live on.
March 27, 2013
Your agenda and assorted views makes you just to the left of the socialist workers party
March 27, 2013
All very good points and clearly and logically laid out. However, I would question the practicality of witholding benefits and charging for NHS treatment to new arrivals. Once these people are here then I’m afraid that these ideas will remain hypotheses; the unions will continue to see to that.
March 27, 2013
I promised to display the figures showing the changes in UK public expenditure from 2001 to 2012. These are shown below in current prices, and so include about 35% of inflation. Total expenditure has risen by 90% as against an increase in GDP of 53%. Every category has grown by more than GDP. Pensions, health, welfare, education and transport show the biggest increases.
Also shown, in 2017 prices, are the likely effects of applying Liam Fox’s policy of an overall freeze of expenditure in cash terms for 5 years. Nominal GDP has been assumed to grow at 3.5% per annum (1.0% real growth plus 2.5% inflation) for 5 years. Even applying this “draconian” policy would leave total public expenditure growing by more than GDP since 2001.
UK Public Expenditure (£ bn current)
…………………………………………..2001………………2012……………….Ratio
Pensions……………………………….73.4……………..127.2………………..1.73
Health Care…………………………..54.3………………121.3……………….2.23
Education……………………………..46.4……………….91.7………………..1.98
Defence………………………………..29.9……………….45.9………………..1.54
Welfare………………………………..57.7……………….116.1………………..2.01
Protection…………………………….20.2……………….32.3………………..1.60
Transport……………………………….9.2……………….20.2……………….2.20
General Government……………….8.7………………..17.2……………….1.98
Other Spending……………………..39.2……………….75.4……………….1.92
Interest………………………………..26.4………………..47.2……………….1.79
Balance………………………………….0.7………………….0.1……………….0.14
Total Spending…………………….366.1……………..694.5……………….1.90
Public Net Debt……………………312.4……………1039.0……………….3.33
GDP………………………………….1021.6…………….1559.5………………..1.53
Liam Fox……………………………..2001………………2017………………Ratio
GDP………………………………….1021.6………….. 1852.2………………..1.81
Total Spending…………………….366.1……………..694.5……………….1.90
March 27, 2013
Thanks.
So in 2001 total spending was about 36% of GDP and by 2012 that had risen to nearly 45% of GDP; now it is even higher than that, while government receipts are only 38% of GDP and about 7% of GDP depends on the government borrowing money and spending it into the economy.
I suppose it could be argued that the financial insanity which developed over a decade could be reversed over another decade, but of course it is not that simple because people have got used to the higher levels of government spending and unfortunately many have still not fully realised that about a sixth of this largesse depends on unsustainable levels of borrowing.
If only Osborne had hammered this home to the public during 2009, when it was about a quarter of all government spending that was being funded by borrowing, then things would be very different now.