New Office for National Statistics figures published this week have shown that the Government is on course to fail to meet its deficit reduction target again. Indeed, so far, the deficit is higher now than it was this time last year. Excluding financial markets interventions, public sector borrowing hit £11.8 billion in September alone, £1.6 billion more than last year. That has been the pattern so far this year, the Government has borrowed £58 billion in the first half of the fiscal year, 10 per cent higher than in 2013-14. So much for the Office for Budget Responsibility forecast of a 12 per cent fall.
Unfortunately, plans to deal with the deficit flatter to deceive. That goes for fiscal policy plans more generally, too. What to do about the problem? What we don’t need to drag us out fiscal stupor we don’t need hair of the dog, but rather strong dose of spending restraint and strategic tax reform.
Plenty of tough decisions are going to have to be made. Luckily, good fiscal management need not always be painful and unpopular. In fact, in some privatisation measures it can raises money as well as trim spending. The Met Office, the Royal Mint or Channel 4 are good examples of where there is potential to turn companies into globally successful enterprises.
The Ordnance Survey is another organisation that should be considered for sale. There’s no need for a government agency to retain mapping information when you see just how innovative people can be given the opportunity to use open data. The agency made a £32.3 million profit last year. But as with all publicly-owned agencies turning a profit, this is misleading. It sits on piles of valuable data – indeed the surge in revenue was driven by contracts with developers and urban planners for hi-res digital mapping. The only thing which stops it from contracting for similar work all over the world is the fact it’s a government agency.
The £32.3 million revenues it earns while taxpayers’ money remains stuck in keeping it in politicians’ hands might sound good. But that number could be dwarfed by the tax revenues from a much more successful global business that might arise from it. There are other options to consider, too, such as those outlined by the Adam Smith Institute. It’s time for the Government to look again at whether it really needs to hang on to our money so that politicians can hang on to their empires.