How do we cut public spending?

You can’t, runs the conventional thinking.

While Britain might be lurching into a spiralling debt crisis, many seem to believe that the answer must mean higher taxes. Why? Cutting spending is all very well in theory, runs the defeatists’ argument, but the impossibility of actually doing so leaves higher taxes as the only real choice if we are to balance the country’s books.

Reinforcing such conventional wisdom is Michael Portillo, quoted as saying that: "In 1979, we faced a big public spending problem … but [Mrs Thatcher] didn’t cut public spending.  I was Chief Secretary between ’92 and ’94 – big public spending problem – I was trying to cut public spending; I did not succeed in cutting public spending.  I don’t think the Tories will succeed in cutting public spending. 

He goes on “ I think the cuts are almost impossible to make and what will happen, whoever wins the next election, is not so much that there’ll be public spending cuts, there will be restraint, but that there will be tax rises."

Far from proving that public expenditure cannot be cut, this shows merely that one cannot leave the task to Ministers alone. 

Government does not like to curtail its own expenditure.  Executive fiat cannot be relied upon to rein in the executive – no matter what its political complexion. 

When was the last time a Minister went into Cabinet to argue that his empire be slimed down? Most Ministers quickly see their role as arguing for more money and greater powers for their department and quangos.

Both the Conservatives and Labour seem to acknowledge this problem; one promising to delegate some of the task of restraint to a quango – the Office of Budget Responsibility. Labour want an Act of Parliament to provide the necessary discipline.

Maybe.

Perhaps instead we need a radically different approach. If the executive cannot be relied upon to keep its appetite for public money in check, why not get our elected legislature to do so? It’s surely the reason we have a Parliament in the first place, no?

Commons Estimates days, when £ billion are put through Parliament on the nod, no longer provide any meaningful Parliamentary oversight over government spending. So why not change the rules and require every government department and quango to have its budget annually approved by each Commons Select committee?

If Ministers and quangocrats had to plead for their budgets before each committee on TV each year, it might focus a few minds on how our money was spent.  No approval, no budget.  You'd be amazed at what they could suddenly do without.  We'd suddenly discover lots of waste. 

As MPs have discovered elsewhere, direct accountability can suddenly mean less public money gets spent.  Giving such a task to Select Committees might also give our MPs something purposeful to do.

Posted on 22 November 2009 by Douglas Carswell

Comments

Public spending - how do you cut it?

Well, it'll happen anyway -there is NO as in NONE, NADA, ZIP = no money.

Interesting concept for the Sir Humphreys to get their heads around that eh?

Cash flows from the Treasury to local government are already hiccuping - recent Housing Benefit delays are a case in point.

This has the makings of an extremely messy business indeed.

The tax junkies will be around your place soon for more money - be sure of that.

Posted on 22 November 2009 14:42 by Tom

John Redwood manage to hack lumps out of expenditure when he was looking after the Welsh Health Service. So it can be done.

http://www.johnredwoodsdiary.com/?s=welsh+cuts

Posted on 22 November 2009 14:56 by wonderfulforhisage

While I don't doubt you are correct, perhaps you could explain to me what would encourage a Commons Select committee to challenge a department's budget, rather than just putting through plans on the nod?

I don't exactly how the Select Committees work, so this is more of a 'I agree but I'd like more info' comment than a "you're wrong" one

Posted on 22 November 2009 15:48 by Mark M

Hear! Hear!

When do you start?

Posted on 22 November 2009 16:28 by Stephen Almond

Finding expense lines to cut is easy, anyone with 6 months business experience knows what to look for and can offer positive ways to cut costs and improve service and business effectiveness.

The problem any reforming government must prepare for is the guerilla fighting by those with vested interests - civil service, unions, quangonistas - particularly in education, but all over local and national government.

Conservatives must have plans to outflank this and to be able to move fast, slow down and they will be biting at our heels.
Your suggestion for public review of budgets is an excellent method.

It can be done, must be done, prepare for casualties, but just keep buggering on!

Posted on 22 November 2009 16:45 by Stu

I think massive amounts of public money could be saved by vastly cutting down on the amount of red tape strangling businesses (And everything else), by streamlining the tax system so it is clear and easy to understand and by putting an end to vast govt vanity projects, like identity cards and supercomputers that do not work.

Then we could bring in builder's contracts such as the ones used in Germany, where the company pays penalties for late work, rather than being paid more for being late. Making compensation-hunting lawyers work on the basis of 'no win, no fee' and forcing them to accept a percentage of what they gain for their client should cut vexatious litigation horrendously, too.

That's just a few examples. It's perfectly possible to wipe out immense costs just by adopting better practise, so making savings is far from a hopeless task.

The other side is boosting the economy, which requires lower taxes and a drop in fuel bills, as well as significant cuts in bureaucracy.

None of this is really hard to grasp. Except for far too many MPs, it would seem...

Posted on 22 November 2009 16:58 by Elliot Kane

Quite agree Douglas, but feel you are maybe banging your head against the proverbial brickwall due the institutionalisation' of government.

Posted on 22 November 2009 17:08 by WitteringsfromWitney

One solution would be to abolish every single quango, without exeption as the first act of a newly elected government. It would soon become apparent which, if any were really necessary. I suspect none.

Posted on 22 November 2009 17:14 by eddyh

It's very easy to make government bigger - any idiot can do it. And very hard to make it smaller. That's the best reason not to make it bigger in the first place.

Two ways to cut spending:

1. Do less. State health care is as much a grotesquerie as state food provision would be. State education is a direct threat to liberties. So dump whole areas of government.

2. Do the same for less and leave it to civil servants to make the savings. If they can't or won't, find others who can and will.

Neither of these things will be done, because HMG (of whatever stripe) has no interest in being smaller and weaker.

One positive suggestion, DC: let a new Conservative government begin to resurrect the friendly societies, offering them tax breaks and the like, as a first step to dismantling state health and security provision.

Posted on 22 November 2009 18:23 by eeyore

Well you'd better get thinking Douglas, because if you don't cut public spending, and fast, when you get into power, the bond market will force you to do so in rather more hurried and drastic terms than you might like.

Better to have a managed tactical withdrawal than a rout forced on you by defeat on the battlefield.

It may just be dawning on you that you are going to be part of a govt that must do the right thing, at the expense of popularity, even re-election. What is right for the country as a whole must come before party advantage.

Labour has already gone down the route of party before country. The Tory party is now our last hope. Do not fail us.

Posted on 22 November 2009 18:45 by Jim

Easiest thing in the world for any business person to identify cost savings and halt expenditure.

In the public sector you are fighting vested interests, so very easy way to do it is to introduce zero based budgeting.

Posted on 22 November 2009 20:55 by libertarian

We might correspondingly have an NHSFactor Prog, where the Golden Gunner trains his sights on which politicians have most offended on that topic over the past year . . ?

Sayonara, Planners . . .

Posted on 22 November 2009 21:20 by Quietzapple

Another excellent idea. I'm definitely not a Tory but I find many of your radical localizing and democratizing ideas incredibly exciting. Keep up the good work. We need more like you in Parliament.

Posted on 22 November 2009 23:47 by James Schneider

Give the job to the current Mayor of Doncaster.

Posted on 23 November 2009 07:19 by Johnny Norfolk

Generally agree, but as several have pointed out, how? Government (at the moment) makes the rules and I can't see them voluntarily relinquishing the power to do so. (Incidentally, I liked the "Minister went into Cabinet to argue that his empire be slimed down". Freudian slip?)
As Stu said "The problem any reforming government must prepare for is the guerilla fighting by those with vested interests - civil service, unions, quangonistas - particularly in education, but all over local and national government." As with most fighting, an initial heavy bombardment should disorient the enemy and give you a breathing space. eddyh had it right, abolish all quangoes, whether or not they are apparently doing something useful. If any of them were found to be doing something necessary that can only be done by government they can be replaced - there will be very few. That should put the frighteners on anyone planning Whitehall guerilla activity.
However, there are two essential actions required first:
1) Leave the EU. Nothing is possible without.
2) Repeal the Parliament Acts and restore a purely hereditary House of Lords (no, there is no possibility I would be in it, I am of pure plebeian stock). This would do more than anything else to effect the controls on government that we want and is a tried and tested solution. It would also cancel for ever Labour's ability to restore their Client State when they next get in, which, given the necessary disruption these plans will cause, will be after one Parliament.

Posted on 23 November 2009 08:12 by Disputin

Portillo may have failed but John Redwood, as Welsh Secretary, made substantial cuts, most of which went elsewhere but £100 million of which was sent back to Westminster. Correcting for inflation & that Wales is only 5% of the UK makes that about £4 billion but government is now much more profligate. The Taxpayer's Alliance have also done sterling work identifying waste.

My personal preferred option is a hiring ban, excluding doctors & nurses, continued over several years which would lead to a 5% annual reduction, together with identifying a few of the most parasitic ministries & a lot of quangos for massive culling "pour encourager les autres".

Posted on 23 November 2009 11:02 by Neil Craig

As has been commented, Redwood did quite well at this in Wales. Perhaps making him Chancellor would be a good first step with a likeminded chief secretary.

Posted on 23 November 2009 11:39 by Pete Wass

Get rid of the useless Scottish parliament for a start (and I'm Scottish) - an expensive fools gallery.

Posted on 23 November 2009 13:46 by Iain

One reason why civil servants waste money is probably that they don't think of it as *their* money. And they probably don't really know how much tax they pay themselves -- when I was full time the payslip was an arcane mystery to me.

Perhaps the answer is to require every civil servant to make a personal tax return, and ban them from using PAYE. If they had to write cheques for their own tax, they'd feel rather differently about it?

Posted on 23 November 2009 16:24 by Roger Pearse

It does rather sound as though you would be disappointed if there is no "Spiraling Debt Crisis."

Posted on 23 November 2009 20:56 by Quietzapple

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