Tuesday, May 20, 2008

Fink 'n' Dale: Seconds Out Round Four

Danny Finkelstein has responded to my response. Here we go for round four. I shall limit myself to reponding to this comment...

I spoke of putting spending on a new path. And this leads Iain to explode:

Put state spending on a new path? Do me a favour. Translated, that ought to mean 'cut public spending'.

Again, I am afraid that won't do. Iain is normally admirably precise, but not here. No Government is going to cut public spending. And, Iain, you aren't actually in favour of them doing so. Trust me.

No, Danny, trust me, I really am in favour of cutting public spending - not necessarily slashing, but cutting. It may not be in fashion to say this but it's not something I feel any hesitation in proclaiming. The main function of government is to decide what it wants to do and how it is going to pay for it - i.e. how much tax to raise and how much to borrow.

The trouble with too many modern day politicians (and commentators) is that they look at government as it is, not how they think it should be. It has become so bloated and thirsty for taxpayers' money that it seems almost impossible to reverse the trend of public spending growth. There are, of course, areas where Conservatives would indeed continue the growth of spending, but equally, there are areas where that savings can be made - either through efficiency savings or outright abolition of wasteful government programmes. In a budget of £617 billion no one could possibly assert that that there are no savings to be made or priorities to be altered.

The political situation is different now. People know that spending, borrowing, debt and taxation are all either out of control or at the limits of public acceptability. This is what David Cameron was pointing out in his speech yesterday. He was right to acknowledge the fact and should now do so over and over again.

What he needs to do now is commission a new James Report and examine every piece of government expenditure for efficiency savings and to determine whether it is actually necessary in the first place.

36 comments:

Elizabeth Truss said...

I would suggest that rather than a James Report style top down "cost saving" programme, we need a bottom up view of what the role of government should actually be. The number of activities that are a government responsibility needs to be reduced, not just the cost of doing them.

Anonymous said...

Even the Lib Dems want to cut taxes and spending according to Nick Clegg's speech today. Fink is to the left of Clegg!

Chris Paul said...

Leave him Fink, he ain't worth it!

Anonymous said...

Why not promise a series of Royal Commissions:

Taxation:

How do we simplify our taxation system?

What is the best way to ensure that people keep more of their hard earned money?

The National Health Service:

Can we honestly expect all services to be free?

Social Services:

Just how do we face the challenges of an ageing society?

Education:

How can we best face the challenges of the years ahead? What is/are the best models to bring respect and citizenship back into schooling.

The Police. Crown Prosecution Service and the Courts.

Local and National Policing how do we meet the challenges? Is the CPS value for money? Why is the judiciary a closed shop?

The Armed Services:

The present state of the services.
Does their remuneration reflect their workload and duties.
The future and how we manage!
Do we need a Navy? An Air Force? and what numbers do we need in the Army? Also consider National Service would this benefit the Country?

The Civil Service:
How do we return our civil service to the effectiveness of pre war?

Local Government:

How do we bring back the pride into local Councils?

The BBC:

Is there still a need for a publicly funded entertainment company with so many channels to choose from. Is their a need for a licence fee and if so how should it be distributed?

That our United Kingdom is now broke and broken in so many area's. Brought about in no small measure by this Labour administration.

Royal Commission's, whilst I accept, are time consuming and hated by politicians. They would enable everyone to get involved in the discussions and then there would be a greater ownership of the deliberations/recommendations.

This would give the Conservative Government greater flexibility to bring about the great many changes needed.

This way would also be a sure fire way of ensuring the Labour Party never gets a look in at Government for at least 100 years!

It would also show the people that the Conservatives are on their side!

Dale's Form Master said...

What grade did you get in Economics A Level Iain?

John said...

Come on lads, you know this is a made row up so that central office can say to the BBC, "look here chaps, we recently saw awff that Dale feller who actually wanted to fire public servants who do nothing useful. I say, can you imagine such a thing? It's not what we will do, no Sir!". We all know it and don't like the very "New Labour" faux internal row.
I hope the Tories ARE planning to fire a couple of hundred thousand useless bodies and use the cash to reduce debt and get the economy going but I truly doubt it.

Roger Thornhill said...

I am in favour of slashing. It needs it. Big time.

Patrick said...

Bravo Iain.

Take a spin over to the shocking quango report just out from the Taxpayers Alliance.

Every shadow minister should be poring over it in detail and looking for the low hanging fruit.

We can easily - easily - shave 2 or 3 percent off the total spend. That's £20 billion or so per year.

Scrap the DTI as a body and place the few valuable bits to be retained in other ministries. Kill ID cards. Limit entitlement to certain benefits. Simplify the tax credits system (by stopping it and just not taxing the poor in the first place). etc, etc.

We need a whole new look at what the state should be there to do and, crucially, where it just has no business.

Anonymous said...

So what did Mr P tell you last night?

Come on. Cough up.

John Pickworth said...

"No Government is going to cut public spending."

Oh that's sooooo 2007

I'm with Iain (well not with him, we've never actually met) but I agree with him absolutely on this.

If it were the case that no Government was ever going to even attempt to trim the size of the State then we might as well just all give up now.

SSOF said...

People know that spending, borrowing, debt and taxation are all either out of control or at the limits of public acceptability.

Not only that, they know that some of the spending achieves little and that some of it actually makes things worse.

Anonymous said...

I think you are both basically on the same page. What Fink is saying (in a slightly patronising way) is that no Government will ever be able to cut spending in absolute terms (eg an incoming Conservative Government in 2010 wouldn't spend less than a Labour Government in 2009 - inflation alone makes this impossible).

However - both of you agree that in certain specific areas spending needs to be cut and overall the growth of spending should be less than growth in GDP to reduce national debt.

Gavin Kennedy said...

Ian

On Radio 5 this morning they were discussing congestion charges and how numerous local autorities are saying 'no'. But what was striking was they were also reporting that the government was about to spend, or willing to spend, £200 million (I think!) on instigating such schemes, and that Manchester was in the 'yes' camp.

Question: where to they get such notions to spend £200 million on experimenting with transport?

The immediate reaction of government ministers when called to account for this or that problem is to spit out statistics on how much they have spent, will spend, on these problems, as if spend, spend, spend was the answer.

I am sure a question on the habit of spending being the first resort of government is a productive line to follow, linked to the 10p fiasco by people campaigning about how they 'understand' the plight of the poorest. Presumably, Mrs Dunwoody senior voted for the 2007 budget that contained the 10 p proposal.

Matthew Pain said...

Have you thought that maybe you are at cross purposes here?
What one means by cutting spending the other means cutting waste. There are plenty of ways of trimming the tax bill to far healthier levels without affecting spending where spending should go. There is no need to get all heat up about it.

Philip W said...

How about starting with, to coin a phrase famously used once by someone known in this parish, a "bonfire of the quangos"?

The TPA's latest report on the issue identifies 1.162 quangos with much duplication of effort and contradictory works and aims, at a cost of ca £64bn (although the Sunday Times quoted £101bn). At the lower estimate that still represents over 10% of government spending. Whilst not all of that could be eliminated totally or very quickly but even a 20% reduction, which surely could be achievable over one parliamentary term, would raise almost £13bn. That could give us back the 10p starting rate of tax (if anybody wanted to do that) and still leave a sizeable chunk of loose change for other areas.

Oh, and then there's the ID card scheme which if scrapped would free up a good portion of the £5bn+ (Gov't estimates) to £19bn (LSE Estimate).

Where there's a will there's a way, which would no doubt be a troublesome road but after all these years of Labour profligacy must be done.

Anonymous said...

What he needs to do now is commission a new James Report and examine every piece of government expenditure for efficiency savings and to determine whether it is actually necessary in the first place.

Nuts!

Just start cutting. A new report just means Sir Humphrey can do what he does best. Obsfucate.

You don't even have to start with government. Start with Quangos.

The NGO is non-governmental organisation. You can cut those without cutting government. Pure spin of course, but perfect spin. Labour can't complain either.

All you do is sign one of those ministerial dictates introduced by Labour. End of funding for the Quango. End of cost

Prodicus said...

Yes, and the first question they should ask everywhere they go is: 'Why is government doing this... and this... and this... at all?'
When the sainted Nick Ridley got into the DOI as it then was, his first questions was: 'Why does this ministry exist?' (It was a rhetorical question, in case you're wondering.)
We did a survey some years ago among sci-tech-med SMEs and there was an open question along the lines of 'What can the government do for you?' Every single respondent said 'Abolish the bloody DOI and get the wasters off my back'. I have omitted words unsuitable for a family blog.

Anonymous said...

Quite simple really.

More money for DELIVERY of essential services. Less money for co-ordinating, regulating, promoting, planning and miscellaneous flim flammery that become the excuses for by delivery can't be done. Unfortunately most of this expenditure is protected by legislation which provided the standard Sir Humphrey defense. You legislated to do it so now we must spend the money. The only option is to start a new government with a jumbo de-regulatory act that abolished vast swaths of these quangos, regulations and reports. Drafting this should be the centrepiece of the tories preparation for government.

stuart said...

It's simple. If you want smaller government and tax cuts, vote Liberal Democrat.

anonymong at work said...

I agree, cut public spending. However, what areas would you cut, Iain? It is easy to say efficiency savings, or setup a review, but you must have an inclination where the government is spending too much money. Also, it is a shame that on so many occasions the argument from the opposition in response or government failures in to criticise govt spending cuts, rather than organisation and how something is actually run.

Whilst, politically, Cameron is playing it safe, not being bold in announcing that he would make any firm cuts etc, it would be nice if the tories were bold and stated clearly that taxes are too high, and be clear that the burden would come down a great deal under a tory government.

Did you see panorama last night, any thoughts? Personally, it is disheartening to know that someone ‘on the sick’ gets paid so much. Of-course there are those that are unable to work, but some radical steps need to be taken for those who can work.

yarnesfromhorsham said...

Iain. What ever happened to that David James investigation into potential Government savings undertaken about two/three yrs ago.

We need an updated version and fleshed out - implementation programme etc.

In weeks ahead DC must put some substance into various Tory policies - with view to stimulating public imagination and practicalites needed to effect change. Public must have hook on which to hang their support - real and workable policies is the answer.

paranoidman said...

I think it's pointless looking for waste or instituting small cuts across the board - little ends up actually being saved compared to the effort spent finding it and the services that are wanted are damaged by the death of a thousand cuts. anyway - the govt is trying to do this following the gershon review and it's not working

entire programmes need cutting with spending reprioritised. This govt has been great at commissioning new stuff but doesn't understand the need to decommission the obsolete stuff.

just on economic development: get rid of Regional Development Agencies - slash regeneration spending, which has little real affect on deprived communities, just moving them around. With the savings spend half on education and half on targetted tax cuts that help people get into work or start small businesses

cutting 2% across the board would never have the same impact the above would have

Anonymous said...

You win Iain...It's a no brainer..I used to quite like the Fink...I think he is losing the plot...I always suspected he was a closet NuLab. Martin

captain cupcake said...

We are heading for a severe economic downturn and possibly a recession.

That is not the time to cut public spending.

Trust me.

BOF2BS said...

http://en.wikipedia.org/wiki/Zero_Based_Budgeting

Could be a good start!!

Springheel said...

I work for a quango and I've spent far too long in various public sector organisations. And I am absolutely certain that even if you did not want to reduce the scope and scale of government spending on outcomes by a penny, you could reduce the administrative and support costs of that spend dramatically. But I am also certain that the Government spends an incredible amount of money on things which the majority of taxpayers wouldn't approve of and which should be cut. I agree that it is time for a zero-based review of Government.

On the other hand, I'd probably spend any savings on the Navy and the Air Force so you maybe shouldn't listen to me.

Anonymous said...

Iain - let's be really, really clear. Do you advocate an absolute cut in public spending or do you mean you would contain its future growth more rigorously than others might?

Anonymous said...

And what would happen if we properly culled government spending?

My rather naive brother has an 'engineering business' offering 'environmental services'.

Thus far, the business has mainly made its money from interpreting the massive amount of EU regulations rolling in that has forced chemical companies to re-examine every ingredient they use. They actually used to trip down to Whitehall to pick up the (no doubt gold-plated) new regulations.

Anyway, I heard the other day that his business has been delt a massive blow because DEFRA had run out money (because it has to pay EU fines for cocking up payments to farmers from its own budget).

DEFRA's spending cuts had removed 60 percent of my brother's business overnight. Which proves to me that he didn't actually have a viable business in the first place.

It seems to me that NuLab have seeded tens of thousands of mini British Leylands all over the country. It'll be like 1980 all over again. The Conservatives will clean up spending and 'unemployment' will jump.

Still, there's no alternative. I'm sure 365 Guardian writers will write a letter a arguing otherwise on 2 May 2010...

Ian Thorpe said...

Well as long as the cuts are made by sacking suits in the over administered under provisioned public services I'm all for it.

Back when I was a systems consultant it was always the case that one of my projects in the private sector paid for itself by cutting numbers of paper shufflers.

On government projects though, streamlining the system always vresulted in the creation of more paerwork and the hiring of more admin. staff.

Anonymous said...

The argument will be won by default. The economy is a shambles, a complete shambles and tax revenue will fall like a stone over the next 24 months.

If the government decidees to increase the budget deficiit, the market will insist they pay more for the privilige. Interest rates will rise, more economic woes and less tax income.

The markets will insist that government spending is slashed - ZaNu Labour can think what it likes!

Anonymous said...

The argument will be won by default. The economy is a shambles, a complete shambles and tax revenue will fall like a stone over the next 24 months.

If the government decidees to increase the budget deficiit, the market will insist they pay more for the privilige. Interest rates will rise, more economic woes and less tax income.

The markets will insist that government spending is slashed - ZaNu Labour can think what it likes!

DiscoveredJoys said...

What needs doing as a first step is not flailing around making injudicious cuts, but having an 'expenditure amnesty' for a year. During this first year there are no formal cuts but a ban on civil service recruitment, a ban on filling quango places, an end to business consultancy contracts, and a (temporary?) freeze on preparation for major new expenditure (such as ID cards or replacing our nuclear arsenal).

As a separate exercise in this first year some senior civil servants and/or secondees from private businesses are given the task of redefining the scope of central and local government. It would be a tough year for those involved, but they could be rewarded with a knighthood if they deliver. They might only come up with some short term easy wins and a plan for the tougher stuff later, but I think we have got to the point where we can't keep fiddling with little bits in isolation.

We probably don't need 5 a day coordinators, or litter wardens, or even the Arts Council. Much better to cut the scope of government, reduce the tax take, and tell people that they can choose how best to spend their own money.

Colin said...

iain,

Your comment: "The trouble with too many modern day politicians (and commentators) is that they look at government as it is, not how they think it should be"., is spot on.

For inspiration, check out the following link:
http://www.cato.org/pub_display.php?pub_id=8378

Stephen Yeo said...

At the 2005 Election the James Review allowed us to identify £12 billion of savings in public expenditure. This would only be about half the amount necessary to permit cuts in money terms, which is what Iain says is possible, and Fink says is not.
What makes Iain think a new James Review would find the extra savings necessary?
Moreover two thirds of the savings (£8bn) were allocated to repaying debt so the amount left for tax cuts was very small indeed.

monoi said...

This kind of argument just shows that there is no difference apart from the cosmetic, between Labour and Tories.

"We have this monster and it needs feeding. So we'll feed it a bit less."

When the real question is whether this monster need feeding at all, and why it is there in the 1st place.

Until Cameron understands that and grows the courage to actually talk about it, things will not change.

Anonymous said...

Anonymous said...

"What Fink is saying (in a slightly patronising way)"

The Fink is never slightly patronising though always impressed by his own self-importance.