We need a 'Saving Plan' not a Spending Plan

By Mungo Fenwick, Volunteer 

The Brexit drama in Westminster over the last few weeks has overshadowed an otherwise very important moment for taxpayers.

The Spending Plan was a major statement made by the Chancellor, who declared that the Conservative government were ‘turning the page on austerity’. Sajid Javid outlined his plans for 2020-21 which will see an extra £13.8 billion added onto day-to-day spending with extra investment in almost all government departments.

Naturally, this will be perceived as an attempt to secure more votes as another general election looms. But nonetheless, it reflects a massive lost opportunity for real change in the way that this new government approaches public spending.

Instead of simply splashing the cash, the Chancellor could have jumped at the chance to reorganise government departments, by making the state more efficient as well as saving billions of pounds. 

The number of government departments in the UK today stands at 25, in comparison with the United States which only has 15 departments, despite having a population five times greater and an economy almost £14 trillion bigger than the UK. This difference in the number of departments has led even senior politicians to question why the UK needs so many in order to function effectively. The Chancellor has the chance to cut and merge government departments, potentially saving British taxpayers billions and possibly winning more votes in an election. Here are some areas ministers could look at to reshape government. Note, these don’t necessarily reflect TaxPayers' Alliance recommendations – but are a good place to start the conversation about cutting the cost of government.

Firstly, we could integrate the Department for International Development (DfID) into the Foreign Office. Already considered by many as a waste of taxpayers money, DfID has been given an extra 1.5 per cent increase to its £14 billion budget for 2020-21. By merging the department into the Foreign Office, it could refocus spending priorities and ensure that taxpayers’ money is not wasted on vanity projects or lost to corruption, as often reported in the media. Our friends at the Henry Jackson Society have made this case in a recent paper. In our landmark report, First Aid: Fixing International Development, we caution against merger because of the implications for transparency and oversight of spending.

At the same time, the Department for International Trade as well as the Department for Exiting the European Union could both be merged into the Foreign Office. Tom Tugendhat, the Conservative MP and Chairman of the Foreign Affairs Select Committee, has argued that this would centralise power within the Foreign Office and lead to a more unified strategy on Britain’s foreign policy. 

Closer to domestic policy, we could scrap the Department for Business, Energy and Industrial Strategy (BEIS) and reassign some of its key functions. BEIS is an example of government being too eager to involve itself where it is not needed. Functions such as the Local Enterprise Partnerships are irrelevant when the CBI already represents numerous businesses across the country. According to the TaxPayers Alliance’s spending plan, abolishing BEIS would save over £4 billion annually with some of its useful functions being relocated into other departments. For example, the Turing Institute and Crick Institute should be relocated into the Department for Education, whilst helpful business support services could be transferred to external organisations such as the British Chambers of Commerce. Key functions that focus on energy and climate change should be returned back to the Department for Environment, Food and Rural Affairs (DEFRA) where it was originally based pre-2008.

On top of that, we could scrap the Department for Culture, Media and Sport (DCMS) and transfer key functions such as the Royal Parks to other departments. DCMS will see its budget increase by 4.1 per cent for next year but the Treasury should consider abolishing the department, especially as a report in 2015 highlighted how the Department rarely funds local and more niche projects. The report, published by the Institute of Economic Affairs, also found that 50 per cent of the Arts Council Funding was spent in London. Many local artists already use technology such as crowdfunding websites to pay for their artistic projects. The arts can easily be funded through private donations and ticket sales without relying on Arts Council Funding. Whilst protecting functions such as the Royal Parks and retaining an allocation of £30 million for heritage bodies, we have estimated that £2.7 billion could be saved if DCMS was to be scrapped.  

With a general election around the corner, Sajid Javid and the Conservative Party have the chance to show how the reorganisation of government departments can save taxpayers billions of pounds. In addition, it will create a more efficient and effective government as power is centralised into key government departments. This would be such good news for taxpayers, it may even push Brexit out of the headlines.