Cut public spending by a third


Sir John Major, former Chancellor (and ex-PM) said at the weekend that public spending should be reduced by a third, including cutting the number of civil servants and ministers.

That would mean reducing government spending from nearly £700 billion to around £450 billion. Since the Treasury expects to collect just under £500 billion of tax this year, it would turn the monstrous £175 billion borrowing into a surplus of about £45 billion.

I’ll let you play fantasy Budgets, but that surplus would be more than enough to abolish council tax, fuel duty, or corporation tax, or increase the tax-free personal allowance to £15,000.

So Major’s proposed cut would mean significant tax cuts as well as a balanced Budget instead of record debt.

That sounds like an incredibly radical measure, even though a necessary and desirable one. But is it really (as I am sure the public sector unions will scream) a savage cut that would cripple public services, or is it a feasible, moderate policy?

Let’s look back a few years, to before the recent government profligacy.

In 2000, three years into the Labour government and with “Prudence" Brown as Chancellor, total government spending was just under £350 billion. Increase that by inflation, and it would be about £450 billion next year.

So the radical-sounding cut of one third of public spending just means that the government does what it did in 2000, with its costs increased by inflation. Is that really so difficult?

Just think of all the wonderful things that the government does now, that it didn’t do in 2000 (go on, try). Are they worth beggaring the country for?

As Tom blogged here last week, “all that extra cash has achieved more or less nothing." Well – except for a crippling public debt!