George Osborne, the master strategist, set himself up for a spectacular failure when he said he should be judged on whether Britain retained its AAA rating. As you will read everywhere else, it was only a matter of time until it happened. France, Italy and Spain teeter on the verge of actual bankruptcy. Britain is not far behind but is saved by the fact that it can print its own money.
The Chancellor should now do what he should have done in 2010, but for some reason did not. He should have a chat with his mate the PM and acknowledge that nothing they can do will win the Tories the next election so now is the time to get it right without caring about the political consequences.
- cut departmental spending in 2013-14 by 10%, including health, defence and international aid
- withdraw troops from everywhere immediately
- a freeze on MPs’ salaries and pensions until the next election
- ministers’ salaries to be cut by 20% immediately
- announce that departmental spending in 2014-15 will be cut by a further 10%
- announce that departmental spending in 2015-16 will be cut by a further 10% if the economy has not returned to greater than 1.5% annual growth
- cut central grants to local authorities by 10% in 2013-14
- cut central grants to local authorities by 10% in 2014-15
- cut central grants to local authorities by 10% in 2015-16
- remove council tax caps bribes and statutory ring-fences (but keep the new rule on local votes where councils want to raise council tax by more than a certain percentage)
- reduce corporation tax to below Ireland’s so that the UK has the lowest rate in the EU
- raise the tax free income tax threshold to £10,000 immediately and promise to uprate it in line with RPI inflation each year
- change the Bank of England’s inflation target to 5% RPI [edit: I meant set a ceiling of 5% RPI]
- launch a new public subscription Infrastructure Bond, with returns linked to inflation and GDP growth, capital to be invested in local and national infrastructure projects
- announce a significant streamlining of the planning rules in areas which are already developed
- allow councils and housing associations to borrow from the Bank of England at ludicrously low rates to buy brownfield land and develop it
Tempting, but I think you’re looking at it from the wrong direction. The spending reductions will just invite yells of “Tory cuts!” from the left and will be seen as arbitrary – which they are. Better to sit and think and identify what government should be doing, and close everything else.
So, kill DCMS, DCLG, DBIS, the Scots office and Welsh office, and close large sections of DEFRA, DoT, DoE, DfID, DECC. Spending cuts can e reversed easily in 2015, but this could actually make a difference in the longer term.
The problem is that that is exactly what the government has been trying to do. It has reduced spending by practically nothing!
Set the baseline at 10% year on year reductions. If certain ministers think their department deserves more then let them argue for it in cabinet.
Put all Council officials and leaders onto the Civil Service payscale. This immediately would prevent the grosser Chief Executive pay abuses for a lot of local councils, and would rein in spending there (most taxpayers don’t care about which tax they’re getting stung for, just total amount).
No council tax increases at all without a referendum because, as we’ve seen recently, whatever threshold you use, the local political scum will increase their theft by just less than the amount needed to have to justify it. So no more cash at all unless the locals agree to it.