40% cuts?


So now the talk is of government departments being told to look at cuts of 40%. Naturally, every public-sector trade unionist in the land is in high dudgeon about front-line services being butchered. What rot.

In the first place, the only definite thing, as outlined in the Budget, is that most departments will have to face budget cuts of 25%. And that, of course, is over five years. As I explained in the Guardian last week, that's pretty small bear, easily absorbed out of natural turnover as people leave or retire.

The command for ministers to look at 40% cuts is no more than exploring the options. Philip Hammond, who nearly became the man in charge of public spending, said he doesn't expect 40% cuts anywhere. The idea is simply to look at the effect of cuts that size if the worst came to the worst. That's perfectly sensible: let's see what the impact of a 40% cut would be, and if it is tiny...well, why are we spending all that money in the first place.

Of course, promises have been made to protect the health budget and to keep cuts in education and defence modest. Which means the potential elsewhere – culture, business, justice, transport – have to be that much more. Why is this needed at all? Because the national debt has doubled in ten years and will double in the next five, and quadruple by 2040. Debt interest alone on that amount would absorb a third of government spending...money you couldn't then spend on public services. The choice is not make cuts or carry on, but make cuts now or even bigger cuts in the future.

Is there enough 'fat in the system' to achieve this. Yes, but if you think you will make savings by making the public sector more efficient, forget it. The only solution is to get the government out of things it doesn't have to do at all. Like paying tax credits to families on £66,000 a year, or subsidising middle-class students or art lovers, paying gold-plated pensions to civil servants, or employing an army of tax inspectors because our tax system is far too cumbersome. We really do need a complete re-think of what government is there for. And that means exploring what would happen if several things were just cut out entirely.