The FT has reported that “the new government [must] make £30bn-£40bn of cuts in real terms to halve the deficit”.
It then adds:
An online simulator, developed by the FT using government figures, suggests a saving of that scale would require all of the following:
- a 5 per cent cut in public sector pay;
- freezing benefits for a year;
- means-testing child benefit;
- abolishing winter fuel payments and free television licences;
- reducing prison numbers by a quarter;
- axing the two planned aircraft carriers;
- withdrawing free bus passes for pensioners;
- delaying Crossrail for three years;
- halving roads maintenance;
- stopping school building;
- halving the spend on teaching assistants and NHS dentistry;
- cutting funding to Scotland and Wales by 10 per cent.
NB I’ve bullet pointed the list to make clearer what it says.
Note why it says this must happen though:
Packages of measures such as these are already under consideration in the Treasury and will be needed if further big tax rises are to be avoided as the next chancellor seeks, at a minimum, to halve the deficit by 2014 — a goal to which all the main parties are signed up.
I have added the tow highlights, for good reason.
First it is clear that this package is designed with one aim in mind: to prevent tax increases. But notes who it hits most: the elderly and the young in state education. The former are the poorest sector in society, the latter are our future.
Who else does it hit? All on benefits. And pubic sector workers — who despite all the misinformation from the Tory press are underpaid for their level of qualification.
So, to avoid tax increases the FT wants to massively increase injustice in society.
Note the second condition: that we must halve the deficit. This package will completely fail to do that. The deficit is of course a ratio of government spending to national income. It is not spending that has gone wrong. It is national income that has done wrong. And as Keynes proved, and which anyone with an iota of sense must agree, you can’t improve national income by making what will, in effect, be millions of people redundant and cutting the spending power of tens of millions more. You can only reduce national income by doing that. In that case the deficit does not reduce as a proportion — indeed, there is every chance you’ll increase the deficit whilst making every one worse off in the process, which makes this a massive economic suicide note for everyone bar the bankers who, like Goldman Sachs appear to do daily, exploit these situations for their own gain.
For this reason I utterly dispute the FT claim that:
The public is braced for this looming era of fiscal austerity, but the case for spending cuts is yet to win over the public sector workers likely to be among the worst affected.
I do not think there is a person in the country braced for this. None of them think it will happen.
And it need not happen. The alternative exists.
There is £25 billion of tax avoidance to tackle in this country.
There is a £28 billion pile of unpaid tax.
There is £70 billion of tax evasion.
None are being effectively tackled despite the FT report today that:
Probes into the tax affairs of large companies generated £12.6bn of additional tax in the last four years, making big business the most profitable target for the Revenue's compliance effort, according to figures that will fuel the debate over the Liberal Democrats' promise to raise big sums from cracking down on avoidance.
They’re not being tackled because the revenue insist on sacking their staff who can recover this tax .
This is the real economic madness in this country. The madness that can be reversed. And if it was a significant part of the deficit could be closed.
And as I and my colleagues showed here, the rest could be closed by tax increases on those with the capacity to pay.
This is the only viable option we have. The reality is we have never made cuts of the sort noted. Thatcher did not do it. No one has. I dispute that anyone can.
This is why the FT are wrong. There are three ways out of this crisis:
1) Spend to create growth
2) Then increase tax rates
3) Throughout this period invest heavily in tax collection
This is our way out of crisis.
What the FT wants is a depression.
Put that way, there really is no choice.
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“And pubic <—– 😀 sector workers — who despite all the misinformation from the Tory press are underpaid for their level of qualification.”
You have never been so spot on Richard. Our PUBIC sector workers deserve a much fairer deal.
@Ted G
Cannot agree – there are levels of public sector workers who may well be underpaid for the work they do. However there are also those who are frankly overpaid and guaranteed pensions beyond what the state can afford.
Perhaps you would care to be more specific regarding which public sector workers are underpaid relevant to their qualifications?
Justin, check the spelling!
“There is £25 billion of tax avoidance to tackle in this country.
There is a £28 billion pile of unpaid tax.
There is £70 billion of tax evasion”
These are all numbers that you have plucked out of very thin air without any backing. They happen to be well in excess of the UK IRS’ own estimates. To repeat them incessantly does not make them any less fabricated.
Justin
Joke apart, I have absolutely no idea what category of government (at whichever level) is over- or under-paid. But I would say that the best way of finding out is to immediately start opening to competition from private providers all services where there is no obvious advantage to retain a system of public provision, while at the same time creating (where applicable) a system of vouchers or subsidies for the consumers of these services. This definitely should apply to education, healthcare, vast areas of local administration, correctional services and even possibly some areas of defense and security.
The natural competition between providers will tell us straight away which categories deserve more or less compensation.
@Ted G
Very politely – bunkum
Solidly researched data
The £28 billion agreed by parliament and HMRC in fact
Wishful thinking on your part
the best possible evidence available on mine