In a report produced with the Institute of Directors last September, we provided a set of cuts that added up to £50 billion in savings from annual
spending. We updated those recommendations for the new book How to Cut Public Spending (and Still Win an Election). You can get a basic list of the measures here and a more detailed write up explaining them in the book.
Today the Financial Times reports a number of countries around Europe taking action on spending in ways that will be familiar to readers of our work on cutting spending. Here are our proposals, in bold, and then what is actually happening in different European countries:
TPA proposal: pay freeze across the public sector and a 15% cut for richest
ten per cent
- Ireland - Public sector pay cuts ranging from 5% for a council road sweeper to 20% for the Prime Minister
- Spain - Public sector pay cut by an average of 5% from June and salaries will be frozen in 2011
- Portugal - Public sector wages frozen for four years (2010-13)
- Greece - Civil servant wage cut of 12%
TPA proposal: Abolish child benefit and the Child Trust Fund, taper away the family element of the Child Tax Credit at 39 per cent immediately upon exhaustion of the child element of the Child Tax Credit and increase the child element of the Child Tax Credit to address child poverty concerns
- Ireland - Cuts in child benefits between 7.8% and 9.6%
- Spain - The €2,500 'baby cheque' - a grant for each new child - will be abolished
TPA proposal: One-year freeze of the basic state pension and the Minimum Income Guarantee, pensioners still get an above inflation increase
- Germany - State pensions frozen this year and the pension age will rise from 65 to 67
The cuts being made in Europe obviously aren't exactly what we proposed, but they are very similar and in many ways more stringent than the measures in our book.
And these are some of the most difficult cuts we recommended. There are plenty of recommendations in our book like scrapping the Regional Development Agencies, halving spending on government advertising and marketing, abolishing the Bus Service Operators' Grant and closing the Government Equalities Office that most families will notice far less. In some cases, like getting rid of ID cards and council departments that boss schools around, the reforms we proposed would be a good idea even if we didn't need the money.
So when people say that politicians can't make big, bold cuts in spending, that we are asking the politically impossible, point them to other countries that are taking action. Given that Britain had a far bigger increase in spending over the last decade than most of our peers, it is particularly important that spending cuts rather than tax rises are used to bring down our deficit. We don't need new taxes that will hit low and middle income families - VAT - or hurt savers and the economy - CGT. Cuts in spending are the answer to Britain's fiscal woes and other countries are showing what Britain's political class need to deliver.