Today we will learn the full list of reducitons in spending to take this year’s total down by £6 billion. This is a most welcome development, because for the first time the UK government will be acknowledging the problem of the collosal deficit needs tackling immediately. For the first time in years a government will announce a whole package of reductions, trying to change the trend.
The government and most of the commentators also know that £6 billion is nothing like enough to deal with the problem. It is an early downpayment, a signal of intent, the aperitif before the main meal.
We are told that the Business Department will have to find a substantial proportion of the total. That is a good idea. The business lobbies have rightly demanded cuts in spending for some time. Sensible businesses want low taxes and internationally sensible levels of regulation. They do not need government grants and government guidance.
The Business Department has one of the smaller budgets – around £22.5 billion this year including capital spending. There are two elements of this spending that should be singled out for substantial reductions.
The first is the payment of grants to businesses. When I was a DTI Minister, always sceptical of the wisdom of paying grants to companies, I was pleased to find many letters coming in from companies in competition with grant recipients complaining that their competitor was getting special treatment. The complaints were particuarly vociferous about EU grants to European competitors.
The second is the quango empire centred around the RDAs. Central and local government has substantial involvement in business through planning, transport and a wide range of regulation. We do not need another layer of administration and intervention through these unelected bodies. What needs doing can best be done by Whitehall or Town Hall, at no extra cost.
The government should also pursue the waste of public money at the EU level, where we need a budget sharply lower than last year’s , not higher.
In opposition Mr cable proposed the abolition of the whole Business Department – before it was also responsible for Higher Education. That should make it possible for him to find billions rather than hundreds of millions of cuts from his departmental inheritance. These are the easy cuts, so let’s make them large enough to have some impact.
It will be later this year that the government goes on to tackle the huge benefits budget, the one where we need to make big inroads by getting people into work.