This is not a proposal to scrap the BBC but a more limited proposal to scrap the machinery of the licence fee and save, in the process, approximately £100m. The BBC would instead be funded by a direct government grant of some kind.
The former Director General of the BBC Greg Dyke has recommended that the machinery be scrapped and the £100m saving ploughed into public service broadcasting on commercial channels. Although Mr Dyke makes his recommendation as part of a report to the Conservative Party, Tory Culture spokesman Jeremy Hunt has already set out the reasons why he opposes this kind of move.
The alternative to Greg Dyke's suggestion is to simply scrap the licence fee, leave the £100m with taxpayers. That is what this StarChamber is suggesting.
Savings id: BBC licence fee.
Annual saving: Approximately £100m.
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Previous idea for saving: (23) Abolition of the Greater London Assembly.
Over the last few days we have been featuring ideas for spending cuts from the TaxPayers' Alliance and Institute of Directors. Today in another extract from their joint report on reducing the size of the state by £50bn we republish their argument for cutting spending rather than increasing taxes. For a PDF of the full report (including footnotes for claims made below) click here.
"The key element for debate is over the nature of the fiscal tightening. This section sets out why we believe it should be comprised of spending cuts rather than tax rises, although taxes have already increased this month.
There is a wealth of academic evidence on the effects of taxes and spending on economic growth and deficit reduction, which points to three conclusions:
1. Higher taxes reduce economic growth:It is not surprising that this latter conclusion is drawn. Increasing taxes reduces GDP growth, which makes deficit reduction harder, while reducing government consumption increases economic growth, making deficit reduction easier. While the reality is somewhat more complicated, with successful economic recoveries and fiscal consolidations depending on many more factors than discussed in this section, the broad trends are clear. It is better to reduce borrowing by cutting spending than by increasing taxes.
Using a dynamic model of the UK economy first developed for the TaxPayers’ Alliance in Spring 2007, the Centre for Economics and Business Research found that a broadly-based set of income and corporation tax rises would so damage the supply-side of the economy that the package would be revenue-negative after seven years. Increasing the basic rate of income tax to 25 per cent, the higher rate to 50 per cent and the corporation tax rate to 41 per cent would initially raise £15 billion, but by 2020-21 the package would lead to a 6.1 per cent reduction in GDP and a £33 billion increase in the deficit.
International leaders have also rejected the idea of responding to deficits with tax rises. Angela Merkel, the German Chancellor, has attacked a proposed VAT rise, saying: “An increase in the reduced rate would be unfair and would damage growth. Germany needs a swift exit out of the crisis. People need relief, not additional burdens.” President Barack Obama recently told NBC: “The last thing we want to do is to raise taxes in the middle of a recession, because that would just suck up, take more demand, out of the economy and put businesses in a further hole."
What makes the argument for spending cuts even more compelling in the UK’s case is the recent record of public spending. Between 2000 and 2007, in other words before the current economic crisis began, public spending increased by 7.5 percentage points of GDP, which was by far the fastest increase in the OECD. Comparing projections of public spending in 2010 with the actual numbers for 2000 puts the UK in an even worse light – next year, UK public spending is projected to be 17.5 percentage points of GDP higher than in 2000, an increase that only Ireland is expected to exceed."
This proposal is the first to come before the StarChamber that originates from Labour. It is also probably the least defined.
Although The Sunday Times reported Ed Balls MP as offering £2bn of spending cuts it is not clear if the Schools Secretary's economies do actually add up to that figure but they certainly offer savings.
The BBC reports:
"[Balls] said he planned to make sure wage rises were kept low in the next three-year deal, starting in 2011. He went on to stress there were no plans to cut the number of teachers and teaching assistants, but said reductions could be made to the number of bureaucrats and senior staff without the quality of teaching suffering. Mr Balls spoke of comprehensives merging to form federations, so a head teacher and a team of deputies would work across the different schools. He estimated this option could save the department about £500m a year.
He told the BBC's Politics Show that "pooling leadership together" in primary and secondary schools could free up resources to release back to the front line. "If a third of schools did that, that would be getting us about a third of a billion pounds savings," he said. Another £250m could be saved by losing about 3,000 senior school jobs, mainly through "natural wastage", he told the Sunday Times. It was also likely that more than 300 jobs in Whitehall which involve advising schools about the curriculum could go, he added in the interview."
Savings id: Reductions in the number of education workers and consolidation of school leadership.
Department: DCSF
Annual saving: Up to £2bn.
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Previous idea for saving: (18) One year pay freeze across the public sector, excluding members of the armed forces serving in conflict zones.
This suggestion comes from the TaxPayers' Alliance/ Institute of
Directors report on saving £50 billion. For a PDF of the full report
(including footnotes for claims made below) click here.
Compulsory education or training for 16 and 17 year olds, with the ultimate threat of criminalisation, will not make people work harder and indeed is likely to add to disaffection. As the chairman of the Professional Association of Teachers, Geraldine Everett, has said: “To make them [16 and 17 year olds] conscripts is likely to reinforce failure, leading to even greater disaffection. Enforcement could lead to mass truancy, further disruption to other learners and staff, maybe even needless criminalisation if enforcement measures are imposed.” The other question that needs to be addressed is the 10 per cent of 16-18 year olds who are not in education or training but are actually in employment. What possible benefit could be gained by potentially criminalising this section of society?
Raising the compulsory school leaving age to 18 is an ill-thought out proposal, will not work, and is likely to have damaging effects on the people it is trying to help. It should not go ahead."
Savings id: Abandon plans to extend the compulsory school leaving age to 18.