Conservatives! Hold the line on cuts.

UK Chancellor, Philip Hammond, is shortly due to present his Autumn Statement, outlining spending and taxation plans.  As with his predecessor, it is a good opportunity to offer advice on what his priorities should be.

There has been much prognosticating by the so called experts about the state of the UK’s finances, post-Brexit.  The latest indicates that there is a £25 billion funding gap which will arise as a result of depressed growth by 2020.  Couple this with Hammond’s Tory conference talk of loosening the reins and we can maybe expect that the much needed fiscal discipline – a policy which very much differentiated the Conservatives from the Labour opposition during the 2015 General Election – will be ditched.

This certainly shouldn’t be so.  

The UK, for the benefit of future generations – your children and grandchildren – needs to urgently reduce public spending.  At the same time, we need a simplification of the UK tax code.  I would contend that one of the major contributors to the industry that has sprung-up around tax avoidance, is the current complexity of tax law.  Indeed, I would suggest that there are parts of it that no one really understands!

The Tax Payers Alliance undertook an extremely well-researched and fully costed analysis of the UK’s public finances and came up with proposals to reduce taxpayer spending.  This blog highlights what I see as the most cost effective and politically acceptable cuts.  The figures shown are based on the TPA’s cumulative total for the years 2017-2020 (3 tax years).  The amounts combine what the TPA call both Programme One measures – required to get public spending down to 35.2% of GDP by 2019-2020 – and Programme Two measures – designed to drive public spending down further, to 31.7% of GDP by 2020-2021.

So to my recommendations:

·      Increase the extent of charges in the NHS.  Saving 2017 to 2020  £26 billion. 

This includes charging people that travel to the UK, for so called ‘health tourism’ for the services that they receive from the NHS.  Frankly can’t believe that this would be opposed by any sane UK politician.

·      Abolish the Department for Culture, Media and Sport  Saving £8.3 Billion

·      Abolish the Department for International Development and scrap Development Aid Saving  £41.8 Billion

·      Abolish the Department for Environment and Climate Change  Saving £1 Billion

·      Abolish the Department for Business, Innovation and Skills  Saving £12.9 Billion

Government itself must be reduced.  The focus of the UK must be on productive workers not on parasitical bureaucrats.  Where there is a perceived (but much reduced) need for some of  the services currently provided by these ministries, then the tasks to be reassigned to other ministries.  In terms of International Aid, the UK is in debt.  It cannot make any sense, other than in the lala land of Westminster to be borrowing money and placing a burden on the UK tax payer, only so that we can give that money to overseas countries.  Especially so, when many of the recipients are either corrupt or don’t need the money.

·      Abolish the H2S programme  Saving £9 Billion

This is a white elephant in the making.  And a very expensive one, at that!  The economic case for this has been doctored more than a randy tom-cat.  Other than the economists who pull together the fictional projections, I doubt there is anyone that believes this project will be delivered for the £50, 60, 70 Billion price tag.  The saving shown could be reduced if the government decided instead to spend some of that money, on improving communication networks across the whole country.   Imagine the benefits for the country if 4G or even 5G coverage was nationwide.  Think of all those saved carbon footprints!

·      Scrap National Pay bargaining  Saving £13.1 Billion

I have written here before about this.  How can it make sense that people – almost exclusively public sector employees – get the same salary increase regardless of where they live.  The ‘cost of living’ for a  public sector employee living in London  or maybe Edinburgh are very, very different for one living in Durham or Cornwall. 

·      Reduce grants to Scotland, Northern Ireland and Wales  to be in line with England and Scotland’s to match its relative prosperity compared to Wales.  Saving £21.1 Billion

Okay, I have a ‘bee in my bonnet’ about this.  To me it is iniquitous that English tax payers must subsidise residents of other parts of the UK (and, to declare an interest, yes I do live in England)  In Scotland this is particularly galling, where Scottish born university students are provided with free tuition (as are students from other EU countries) while English students are charged fees.   It is time that these members of the Union pay a fair share for the services they enjoy.  Who knows, maybe then they would elect fiscally responsible assemblies and parliaments!  Currently it is easy to elect ‘rent a gob’ politicians in Scotland or Wales or Northern Ireland who spout off on all sorts of issues – even those for which they have no competence – and then spend and spend and send the bill to Westminster.

·      Freeze Benefits for two years and then uprate with CPI  Saving £5.7 Billion

·      Means Test winter fuel payments  Saving £4.3 Billion

·      Reduce the Welfare cap to £20,000  Saving £2.3 Billion

·      Scrap Childcare subsidy  Saving £2.6 Billion

·      Cut Child Tax Credits to their 2003-4 levels, in real terms  Saving £16.8 Billion

·      Target free bus passes, for the elderly, for those who genuinely need them  Saving £1.7 Billion

·      Flatten housing benefit rates across expensive areas to cut 10% off bills  Saving £7.9 Billion

Looking at the savings, it is easy to see the extent that the welfare programme is still a very significant part of the UK’s spending.  I have no doubt that implementing such cuts as proposed, would unleash a howl of protest from Labour and the rest of the Left.  The same could be expected from the soft Left in the Conservative Party.  This I find highly ironic.  At the moment, the tax payer is subsidising vast numbers of employers of people who are in work or people who do not need the benefits that they receive (rich old age pensioners, for example).  How can anyone justify companies paying low wages to people and people only being able to afford to take these jobs because they receive supplementary handouts from the tax payer, via the State?  The State and the tax payer need to get out of the business of subsidising private enterprise. 

These are just my selection from the TPA’s Spending Plan.  Now let’s turn to income taxes.

Raise the Income Tax threshold to £15,000 from next year and to £20,000 by tax year 2019-2020.

Reduce the basic rate of income tax to 15% for all income between £15,000 and £50,000.  For income over Sterling £50,000 reduce rate to 35%

Abolish National Insurance contributions, for both employee and employer for all employees under the age of 25 years.

Abolish all of the so called Green Taxes.

Increase Inheritance Tax thresholds to £600,000 and then increment to £750,000 by 2019-2020.

Finally, another ‘bee in my bonnet’.  Tax MPs expenses.  If the average tax payer is reimbursed for home to work travel or accommodation, then this is considered a taxable benefit.  Brexit has shown that the people are taking back control from the elites.  Those who think that they should be treated differently than the rest of us.  

If you’ve read this far, I apologise for the length of the piece.  I am under no illusion that these progressive policies will be implemented – I think it will take some kind of tax payers revolt for common sense to come to Britain’s public finances – that or a financial crisis, however, who knows, maybe one day a UK government will pay more attention to the tax payer that funds all this and less to the recipients of the tax payer’s largesse.  Then they might also think about our children and grandchildren.

Don’t hold your breath, though!

Massive, Massive hat-tip to the Tax Payers Alliance!