The need to balance the government’s books in the wake of the coronavirus pandemic can only mean one of two fiscal policies: spending restraint or tax rises. A significantly weakened economy and the fact that recent increases in the tax burden have already created the highest burden in over 50 years means that tax rises cannot be an option. Instead, any fiscal tightening must come from spending restraint.
The Comprehensive Spending Review 2020 presents an opportunity to limit extraneous items of spending. Far higher planned levels of gross capital investment during the course of the parliament – and the government’s ‘levelling-up’ agenda – add further urgency to the task of identifying savings. These can be put to better use in more effective spending or providing targeted tax cuts aimed at recovering lost employment and enhancing productivity.
Now is probably too soon to tighten fiscal policy because of the pandemic and the economic weakness it has brought about. But that is no reason to tolerate unnecessary spending because tax cuts – especially those targeted at investment and jobs – are sorely needed and can be made possible by spending restraint. In addition, now is the time to be planning ahead for when action on spending will be required to eliminate the deficit and bring debt levels back down
The Comprehensive Spending Review must identify savings now to unlock future opportunities for sensible spending commitments and much-needed tax cuts.
Fifteen policy changes could deliver total annual savings of £43 billion next year, rising to an estimated £73 billion by 2025-26. Estimated savings are in the table below.
 For more details, see TaxPayers’ Alliance, Tax reforms to secure a recovery from coronavirus, June 2020, www.taxpayersalliance.com/tax_reforms_to_secure_a_recovery_from_coronavirus, (accessed 18 October 2020).