Douglas Carswell's Blog

Alternative budget; How to curb public spending

Public spending is too high. It's not a matter of opinion, but a mathematical fact.

For every £5 the UK government takes in tax, it spends £6. After thirteen years of Gordon Brown, British officialdom is living beyond the means of the rest of us to pay for it.

The Coalition had a strategy to deal with this. The idea was to rein back spending – without necessarily cutting it - so that the economy grew faster than public spending increased. This would, it was hoped, gradually - and relatively painlessly - get some sanity back to public finances.

The trouble is there's been no growth. The state continues to live far beyond our means - so much so that public finances have continued to deteriorate. It's time for something different; real cuts in the cost of officialdom.

First, the budget needs to see an end to the "ring fencing" of various departmental budgets. Ring fencing not only makes no sense in macro spending terms – it prevents the kind of more-for-less reforms that are needed throughout Whitehall. If there's no pressure to do things better, things don't get done better.

Next, I can think of entire government departments that we could do without; Department for Business, Innovation and Skills; International Development; Energy and Climate Change; Culture, Media and Sport; Communities and Local Government.

Not all the £60 Billion that those five departments cost each year would be saved – but up to a third could be. Some of these departments' functions would be merged into other departments. Communities and Local Government's functions could be passed to town halls. Much that departmental officials do would quite simply no longer be done.

These changes alone could reduce spending by over £20 billion each year. End ring fencing, too, and it is possible to envisage spending reductions of over £25 billion.

Britain has a structural spending deficit because we have a structural political deficit; government just isn't very good at curbing the spending habits of government.  As even Margaret Thatcher discovered, ministers who stand for election saying they believe in less government end up arguing for more money for "their" department once sitting round the Cabinet table.

If we want to sort out of our structural deficit, we need to give the legislature controls over public finances that the Commons surrendered in the 1930s. Instead of rubber stamping spending totals formulated in the Treasury, Commons select committees need to be given the power to annually approve their department's (and associated quangos) spending. Unable to increase spending, they should have the power to veto items of spending and entire programmes.

The pity is that this idea has been repeatedly suggested and found favour – but nothing has been done to make it happen.

So another year, another budget where we look to ministers to curb ministerial spending habits.  Yet again, we are left wondering why there is never enough money for unfunded tax cuts, but always more room for more unfunded spending increases.

Next in this Alternative Budget series, having identified £25 billion plus of public spending cuts, I will focus on the fun part: £25 billion plus of tax cuts.

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