Today Parliament debates the Budget Deficit Reduction Bill. Don’t expect much light to be shed on how this government would cut spending on the scale needed to halve the deficit as promised. Ministers use every opportunity to turn the spotlight on the Tories, avoiding any comment on their own black holes and redaction.
Public spending comprises three main blocks. There is spending on staff, spending on benefits, and spending on bought in goods and services.
The state employs 6 million people, around 1 million more than it needed in 1997. The aim over the next five years should be to roll this back to 5 million through natural wastage. We should replace teachers, nurses, doctors, and uniformed personnel when they leave. The remaining numbers of the establishments should be cut as people leave. People from within the public sector should be promoted to the posts that do need filling. Given the high turnover, removing one million posts over five years should be possible without compulsory redundancies. This would save around £30 billion a year by the end of the process.
MPs could offer some leadership. The current level of staffing allowance allows each MP to have three full time staff at public expense. For all new MPs that should be cut immediately to two, and for existing MPs it should be cut to two as and when staff members leave.
We also need to amend public sector pension schemes to cut future liabilities. The MPs scheme should be closed to new members, as a prelude to reform of the other larger public schemes. These should all be closed to new members, and as with the MP scheme reviewed to control other future costs and liabilities.
The best cuts of all will be cuts in benefits to the unemployed because they have found jobs or have started to work for themselves. We need an enterprise package for all levels of income and activity. There needs to be an easier bridge from benefit to running your own business. You should not be penalised for trying to set up something that can provide you with a livelihood as at present. There needs to be lower tax rates on the higher paid and the entrepeneurial so more stay here and more venture their time and money here. We also need to review tax credits, and stop generous tax credits going to people on higher incomes in the future. The best way to reform benefits is to allow existing beneficiaries to keep what they have all the time they remain qualified for them, but to change the rules and qualifications for new potential claimants.
Bought in goods and services
We are often paying twice for the work the public sector wishes to do, paying for the civil servants in the area concerned and then for external consultants whom they hire to do the job. A new government should make it clear it will only use consultants when they save the public sector money or when they do things that no-one in house is qualified to do. The saving on the use of consultants could be large and immediate. There are also savings to be had on public procurement, especially in an area like defence.
This is in addition to all the specific areas and programmes identified in previous articles on this site for abolition or reduction.