Jonathan Isaby is Chief Executive of the TaxPayers’ Alliance
If a newly-arrived alien had spent the last month on the campaign trail with Britain’s politicians, it would be particularly struck by their fiscal discipline. A day does not pass without a contender for high office on May 8th touting their credentials to make tough choices and balance the books. Indeed, such is their ardour for a balanced budget, the alien would note, that in January all parties supported a legally binding Charter that would see the deficit cut to zero by 2018-19.
The alien might also note, as Ryan Bourne did this morning, that politicians aren’t overly keen on details. For despite the earnest protestations of housekeeperly prudence, none of them are brave enough to spell out what a plan to eliminate the £90 billion deficit would actually look like.
So we at the TaxPayers’ Alliance did it for them, in our nearly 200-page Spending Plan, which sets out a fully-costed series of measures that would see the deficit gone, as anticipated in the Office for Budget Responsibility’s official projections.
The Spending Plan is no substitute for wider and more ambitious reform of how government works, but it is an immediately effective complement.
If any chancellor is to ensure that Britain’s finances are sustainable in the long-term and that their grandchildren won’t have to endure an Athenian debt crisis, he or she would need to engage on an ambitious reform programme of the largest areas of spending – particularly pensions and the National Health Service – as well as removing the politically expedient ring-fences that leave too many budgets unscrutinised.
Leaving our bigger programmes unreformed wouldn’t so much be to ignore the elephant in the room as to whistle Dixie whilst Dumbo tears the plaster off the walls.
But they are long-term goals – in the interim, it is the size of government and the amount it spends that is the issue. George Osborne took a lot of heat from veritably incandescent opponents for his plan to see government spending down to 35.2 per cent of GDP – just a shade below the level it was in 2000. But the bleating of critics ignores the very real fact that since 1965, the average tax take as a percentage of GDP has been dead-on 35 per cent. So if the books are to be balanced, spending simply has to be at 35 per cent.
That’s what The Spending Plan is for – saving taxpayers’ money and putting Britain on the path to sustainable finances.
It requires savings to be found in local government as part of wider devolution of both spending and raising revenue. The welfare cap should fall to £20,000, which is still equivalent to a pre-tax income of around £25,000. These are just two examples of possible options which must be on the table if we’re to make the necessary savings, and there are many more examples in the document.
And we need more fundamental reform of the way Whitehall works, and what the role of ‘government’ really is. We should follow the advice of the Business Secretary who, prior to taking up his role, had suggested abolishing the department he now runs. The Department for International Development could be rolled into the Foreign Office without anybody noticing, apart from the fact it might make our aid spending more effective. The Department for Energy and Climate Change is another we need to seriously think about abolishing, not least because those in the Department seem to be in the dark – ironically – about the chaos that would be caused by a prospective and increasingly likely energy crisis. The useful functions of the Department for Culture, Media and Sport could also be slotted elsewhere in the Civil Service.
But getting Britain back on track would also require some less obvious decisions.
Our planning system is in dire need of reform, not least because of the additional bill for housing benefit created by artificially high house prices. Bringing that bill down would require a government to ignore the objections of the NIMBYs, the BANANAS (Build Absolutely Nothing Anywhere Near Anything) and the CPRE, the Campaign to Protect Residential Equity – but they should.
We’ve suggested removing many of the universal pensioner benefits, like free bus passes, and means-testing the Winter Fuel Allowance – or as it’s known in more affluent homes, the Christmas wine fund: since the Government has stopped giving Child Benefit to those with an income of over £60,000, there is no logical justification for handing these baubles to wealthy pensioners. It would mean getting rid of middle-class welfare like ‘tax-free childcare’ and policies quite clearly drawn up on the back of an envelope like free school meals for the children of the wealthy.
A real programme of savings to give Britain a solid financial footing would give local radio phone-ins enough material for weeks, but politicians should be braver – not least because Lord Ashcroft’s polling suggests that more than four in ten people understand the need for further savings in the next Parliament, suggesting austerity might be less toxic than the strategists and the spinners think.
However, it is possible to be optimistic about a programme that would see critics apoplectic. It is possible to make a positive case for smaller government, for sound finances, and for lower taxes. It isn’t just the fact that economy would grow faster and that a rising tide could lift all boats, or that freeing people and businesses to make more decisions with their own money about their own lives and futures is inherently a good thing.
It is that a prosperous Britain built on a sensible footing is one that would be able to face the challenges of the 21st century from a position of strength, not of managed decline.
And if politicians don’t like The Spending Plan, then we need to know what their alternative would be. After all, politicians shouldn’t make promises they can’t keep, should they?