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How the Government could cut spending by over £10 billion without reneging on its policies

By Paul Goodman
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A big thank you to Andrew Haldenby of Reform, Ruth Porter of the IEA, Chris Nicholson of Centre Forum, Matthew Sinclair of the Taxpayers Alliance and Neil O'Brien of Policy Exchange for participating in our ThinkTankCentral series last week on how George Osborne could cut the growth of public spending further and faster in the budget.

I reckon that at a very rough estimate their ideas stacked up to some £50 billion - getting on for a tenth of all public spending.  Admittedly, some contributors' ideas overlapped and some calcultated savings differently.  As I read and edited them each day, I tended to divide them up in my mind into four categories.

First, there are suggestions that for better or worse won't be put into effect.  These include stopping the pupil premium, keeping overseas aid at 0.5% of GDP or freezing it at 2010-2011 levels, ending the ring-fencing of health spending, closing DCMS and/or BIS, scrapping the Green Investment Bank, abolishing the Human Rights Commission and cancelling Trident.

Second, there are ideas whose implementation is extremely unlikely.  I don't believe that Ministers will cancel HS2 but such a move must be within the margins of possibility.  I have no feel at all for some other proposals - for example, whether the Government could screw itself up to abolish the Technology Strategy Board.

Third, there are proposals that could be taken up in amended form.  Chris Nicholson floated the idea of allowing disabled people who lease cars from Motability to do so every six years rather than three years.  I can't imagine the Government doing so.  But I could just about see it raising the period to, say, four years - or raising the qualification age for free bus travel or TV licences.

Finally, there are suggestions that could be put into effect.  Some of these are new, at least to me.  Others would be intensifications of programmes that the Government is undertaking already. None of them are likely to scoop a popularity prize.  But remember: if some tax cuts aren't funded by further economies they'll have to be funded by other tax rises.  Here is the list:

  • Reduce housing benefit to a maximum of 95% of the rent, with this percentage declining gradually over time.
  • Limit child benefits (including child tax credits) to the amount paid in JSA to young adults.
  • Drop the commitment to extend the free early education available to three and four year olds to some groups of families with two year olds.
  • Scrap extending compulsory age of education and training to 17 from next year.
  • Cap statutory maternity pay at £800 per week.
  • Make the 6000 people who live in social housing and earn over £100,000 a year - such as Bob Crow - paying the full market rent for their housing.
  • Allow for-profit providers and mutuals to provide schools.
  • Privatise more prisons.
  • Cut subsidies to wind farms.
  • End national pay bargaining.
  • Trim the size of the NHS workforce.
  • Cut number of teaching assistants and revise the school working day.
  • Outsource and civilianise police back office functions faster.
  • Reduce the costs of childcare regulation.
  • Uprate court fines.

You will see that the list starts with specifics and ends more broadly, drawing largely on O'Brien's article as it does the latter.  I tot the savings total from the first five specifics up to roughly £10 billion, drawing on the authors' calculations.  Obviously, that saving wouldn't be available at once, but one could fund a lot of tax cuts with £10 billion.

P.S: I raised an eyebrow at a dog that didn't bark.  No contributor suggested re-opening the defence review.  I don't believe we should do so either, but we should prepare to stop major fighting wars outside the European theatre, and thus prepare in the medium-term to trim the defence budget.


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