Monday, March 17, 2008

Tories Should Shift the Debate to Spending & Waste

In my Telegraph column on Friday I wrote this...
The Tories should be radical and get angry on behalf of all sectors of the business community. They must revisit the question of eliminating waste in government and create an extensive list of the needless regulations that could be abolished in the first six months of a Tory government.

So I was delighted to read Nicholas Watt's article in this morning's Guardian saying that is just what David Cameron intends to do.

David Cameron is to salvage a Tory plan to cut government spending by £12bn that formed the centrepiece of Michael Howard's 2005 general election campaign. In a sign of his determination to cut taxes, Cameron has authorised his shadow Treasury team to dust down the so-called James review of 2004-05, which identified £12bn of potential government savings."We are still committed to many aspects of the James review," a senior Tory told the Guardian. "It has some very sound ideas. Savings will go into the pot and will be used for tax cuts or be spent elsewhere."

If the Conservatives are ever to reduce the tax burden, they must first of all reduce the amount of public spending. Indeed, it is spending where the focus of debate should now be, not on tax. There is a huge amount of waste within the system and it needs to be identified and then rooted out. In a budget of £681 billion it must surely be possible to identify savings of upwards of £20 billion. To avoid the usual Labour charges of slashing and burning they need to be identified individually, and costed. So let's have James Mark II. And soon.


Patrick said...

£20 billion is not that ambitious.

Actually spending on front line services could probably go up. It's the vast army of admin, quangos, forms, IT projects and other assorted bullshit that really eats up the dosh. That and the devil called compound interest.
(Let's not put a real stick in the hornet's nest and discuss public sector pensions just yet).

Also the state is active in some places where it just adds no value at all. Why not completely close the DTI? What economic benefit does it deliver?

If you were to close the DTI, abandon the flagship IT projects (starting with ID cards), and have a serious bonfire of the quangos I would expect that £100 billion is quite easily achievable economically. (Much less so politically unless the whole paradigm is shifted).

From the perspective of the private sector where fundamental change in processes and significant change to outputs is normal, the whole incrementalist approach to public sector savings is quite laughably timid.

Liam Murray said...

This is more like it - the point about the James Review is that it was about specific government waste and Tory plans to address it. Tax cuts were a possible consequence of this but not the entire raison d'etre of the report. That's what so few of Cameron's current critics understand.

This story chimes well with something I've posted today on why Cameron should court Brown's old mistress prudence - that would play well with the electorate without opening them up to the 'slash & burn' charge.

Anonymous said...

They could also decide to cut the number of civil servants by insisting on hiring ban for any depts ministries which don't achieve a 2% cut annually (well eithin the limits of natural wastage). In the long term smaller government requires fewer public employees otherwise the pressure of Parkinson's Law will always push up spending. I woul also like to see certain government taxes ring fenced to certain services eg all national insurance plus 1/4 of excise duties almost exactly matches the health budget.

I would really like to see David Cameron issuing a clarification thet his "sharing the fruits of growth" remark didn't actually mean what it sounds like. If all the extra raised by growth went to tax cuts on business & individuals we would have have much more growth, be much better off, & fairly quickly have a state sector no poorer but much less dominant.

I think the public debate has moved on to such an extent that there is more understanding of what running the economy competently can achiev & the Tory vote is stuck more because people are afraid they won't do anything than that they will.

asquith said...

They should cut pointless spending (ID cards, wars, the usual suspects) and use the proceeds to pay off public debt, whilst leaving taxes at the same level for the time being. People want to pay 0% tax and get all public services for free, but they can't have it.

Anonymous said...

I hope he starts with the quangoes. They are unelected, unrepresentative, unqualified sleazebags spending vast sums of our money to no useful purpose.

Anonymous said...

I would be really delighrted if teh Toris adopted a war on government waste and unnecessary spending as a central plank of its policy and of the next GE manifesto. Time after time, on this blog, in the papers, on TV and elsewhere, countless examples of wasteful, unnecessary or just plain extravangant expenditure are revealed. The Tories should pledge to follow these up and do something about them.

Such as cancelling the ridiculous 'inititaive' announced just today to spend £5.5millions to 'encourage young people to take up dancing'. Including 'centres for advanced training' and 'a centralised body to provide leadership and focus'. As if young people need encouragement to dance - they seem to do it all the time. You really couldn't make it up. I know its 'only' £5.5m but, asthe man says, 'every little helps'.

We can all of us name other examples that appear in the press almost daily. We must recognise that govt expenditure can be reined in without being accused of cuts to 'frontline' services which are so electorally damaging. There must be clear information to make this point hit home.

The James report took very little time to identify BILLIONS of wasteful expenditure. Its high time that it was updated and its implementation made a central feature of the next Tory manifesto.

Anonymous said...

Asquith said:

People want to pay 0% tax and get all public services for free, but they can't have it.

Unfortunately, millions do.

Anonymous said...

Jettison ID cards and the NHS computer project. There's at least £20 billion for a start. Fortune favours the bold.

Patrick said...

As an additional thought:

Has Brown, the archetypal tax and waste socialist, actually served to kill tax and waste socialism in this country?

It looks to me alot like the Labour party would actually be quite well served by a lengthy spell on the opposition benches. They surely need to find an ideology and some thoughtful and competent MPs. Any country needs at least two intellectually coherent alternatives to vote for. If tax and waste is now in its death throes what is 'the left' going to offer in the future?
(The cynic in my says probably more tax and waste!).

For clever and ambitious young ministers like Milliband, I'd have thought that he should focus on being PM in 15 years time and to think up a real world sensible formula for delivering value for money in the public sector. I'm pretty sure the future holds nothing for sycophantic apparatchiks like Balls.

Anonymous said...

I thought there was going to be a bonfire of the Quangos, with their responsibilities be passed to local governement? Surely that would be a whopper of a saving.

Mr Brown's tax credits scheme was reported to cost 1.5 Billion GBP a year to administer. Surely binning the whole thing, and raising the personal allowance to make it revenue neutral, would liberate most of that administration cost?

Anonymous said...

David Cameron is to salvage a Tory plan to cut government spending by £12bn that formed the centrepiece of Michael Howard's 2005 general election campaign



Could we have more details, ie which pulic servants in schools hospitals etc etc you intend to put on the dole

Anonymous said...

There needs to be a complete review of public sector purchasing and the current tendering regulations. Supply2Gov should go.

Anonymous said...

This is mostly fantasy island stuff put about largely by people who've never worked for (and certainly never run) large organisations and who don't really understand complexity.

We hear it from the Tories all the time when they’re in opposition. But when they get into power they find it’s not that simple. So Tory run local authorities end up cutting marginal services (the effects of which they hope don’t show up too obviously) and claiming the amounts saved as “efficiency savings”.

Of course there's bound to be some waste in any organisation but to imply that every administrator is an unnecessary overhead or that every public servant is an idle malingerer is nonsense.

Anonymous said...

Trumpeter Lanfried said...

Jettison the NHS computer project. There's at least £20 billion for a start. Fortune favours the bold.

The NHS IT project for your information ( I work for it ) is nearly completed. And is a great success. So you will need to find this cash elsewhere.

GPs can now book hospital appointments instantly over the NHS network ( no paper chain ) Your X-rays are all now digital, all gps and hospitals are linked to national database, all GPs admin is online, all prescriptions are digital and bar coded to avoid errors. If you have an accident while away from home you records can be seen by the clinician treating you instantly.

So Trumpeter Lanfried you should be praising the project not slagging it off

Anonymous said...

Yes it’s a good idea to dust of The James Review but the whole thing originally was mishandled – like most areas of finance and politics.

Politicos, Journos and the public just do not speak the same language as each other when it comes to spending.

The Tories should frame the debate by announcing a ‘Public Benefit’ test for every pound of taxpayers money spent – from local councils, the NHS to Whitehall. A simple standard 3 page template attached to all spending plans (like a basic balance sheet) breaking down the proportion of the cash that goes on frontline staff & costs, administration, IT, consultants and capital infrastructure. With strict rules as to how items are catagorised and reported.

A simple standard test like that will make clear to the public, and journalists who report events, where the money really goes – and lay bare the Labour lie that a £100 Million NHS ‘investment’ in a project is really only a £10M front line investment, £25M capital infrastructure and the rest is wasted on massive inter departmental charges, consultants and administration.

Once real people –including front line pubic sector workers – understand how little gets through to them and how much is waste on every project THEN you can offer a choice: The latest NHS Drugs were told we cannot afford or 10 ‘Enabling Change Capacity Building Outreach Teams’ etc. No tax until you earn £10,000 or Tax from £5,000 and pay hundreds of millions in admin to nanny state, who will decide if your worthy of having some of your money back as tax credits.

It will kill the link that the British media have that all ‘cuts’ are bad; all ‘cuts’ will affect frontline services and all expenditure is an ‘investment’

Once everybody can understand the extent of the waste, selling reform would be easier. Then cut the more complex Quango fat and IT projects

Anonymous said...

What makes my blood boil is when you hear of local tax spending taking place on totally useless projects because the money has been allocated and if they don't spend this year it then their budget will get reduced next year.
I bet that this similar type of mentality exists further up the political chain and who gets lumbered with higher taxes as a result?
You and Me
I know this might sound a bit too radical but why are budgets done on a yearly basis?
Why not on an ongoing project to project basis?
OK so the cash flow can continue to be monitered on an annual basis but the end result should be that we only start projects as and when the cash is there or we can afford it.
That should get rid of ID cards for a start.

Newmania said...

the Conservatives are ever to reduce the tax burden, they must first of all reduce the amount of public spending

Iain, that works for you and I at a business level or in the household budget but not really on the macro scale .If you tax initiative employment and risk talking you are inhibiting growth and that if you do this you will increase the thinly disguised unemployment for which we pay handsomely as well as radically reducing the receipts from existing levels of taxation. A disaster which dwarfs any notional cost savings.
As we approach recession tax cuts become more and more essential not less and less practical. I think if you speak anyone with any sort of background in economics they would admit the truth at this to some extent and our level of borrowing only makes the necessity more urgent .
Nick Boles and others of the Cameron tendency have produced the level of borrowing like a white rabbit to explain what is really a political necessity and you have bought the white lie .This is a political calculation about retaining support and not being dumped in the first term with all the pain only for Brown to spend the pot again.
The waste argumentis propoganda with little reality either for Conservatives or Liberals like Norman Baker unless it is allied to reducing the size of the state itself.If you make "savings " a condition precedent to tax cuts you have the cart before the horse. One Party is not better than the other at running the same wasteful system. One Party must replace that system with a smaller state reduce taxes and thereby keep receipts and expenditure healthy.

Cameron knows this full well so while I sympathise with what he is actually up to it does insult your intelligence somewhat to be told tax cuts cannot be afforded. They can and they must be ..... With 8000,000 in the public sector however the potlics are tricky. Approaching the subject is a bit like approaching a bra strap on your first date ........ your hand must appear aimless , your intentions opaque , and Mr. Trouser snake will just have to be a little patient until the right climate has been produced .......

“ Another double vodka Miss Public sector .......(heh heh) ?”

Anonymous said...

Abolish invalidity benefit. The economy will never be really successful until we stop giving millions of people financial incentives to do nothing.

Anonymous said...

This is much more like it. The Conservative faithful should stop going on and on about tax cuts that we can't afford and start talking about cutting government waste instead.

Anonymous said...

The taxPayers Alliance should be running the country. Sad thing is most Brits are instinctively State Dependent. The government would not dare improve the education system as otherwise who would vote for socialism? The only thing the pigs at the political trough give a damn about is their own fat pensions and money. Your figure of 20 billion is nothing. You could cut 100 billion within a month and no one would notice. Cameron is a socialist and has zero business experience. He wouldn't know where to begin.

Yak40 said...

Excellent and it'd have the added benefit of getting the government out of its ever increasing intrusion into day to day life.

Ideally we need "Tolpuddle part deux", transport (in the old meaning) the entire PLP, with a few exceptions, to a 21st century Van Diemen's Land ! Hmm, Mars is the "Red Planet" .. at a decent distance too.

Anonymous said...

Anonymous 12.53 pm

The new NHS computer system sounds fantastic....unless you're a GP who is trying to use it to "choose and book" hospital appointments, since it crashes all the time.

Anonymous said...

"Could we have more details, ie which pulic servants in schools hospitals etc etc you intend to put on the dole"

The whole of the civil service doesn't work in schools and hospitals. The DWP has about 115,000 staff. I expect a fair few of them can be cut as the DWP is over-manned.

As has been mentioned before, the DTI (or whatever it's called now) could probably be wound up entirely. Raise the personal allowance on Income tax and scrap the Tax Credits System. Re-merge Justice with the Home Office and reduce its remit. Scrap the Department for Culture, Media and Sport. Combine the Department for Children, Schools and Families with the Department for Innovation, Universities and Skills.

The Government Departments seem to have been splintered just for the sake of it.

Anonymous said...

Anonymous 12:53

"The NHS IT project for your information ( I work for it ) is nearly completed. And is a great success. "

The NHS IT project is a text book case of how not to plan/implement an IT project. If you work for it, you know that.

Julian the Wonderhorse said...

They should get more personal with this message, they need to accuse the Labour Government of mis-spending all this tax money on quangoes and schemes and non-jobs staffed by party activists.

It is jerrymandering, nothing less.

Actually mention the figures raised, not just the tax rates. All this expenditure on nonsense. That is what really annoys people, seeing a bunch of middle class lefties thinking they should be earning over 50 grand a year to monitor someone's race or sex.

Anonymous said...

My point is simple.

You ALL quote the NHS IT Project as an opportunity to save money, and base bonkers tax cut arithmetic on the scrapping of the project.

The project is near its end and the cash is spent, so how can you base tax cuts on 10bn that actually doesn’t exist.

The IT project has it problems, but has been a great success, It cannot be undone, or scrapped, so stop making daft tax pledges on none existent money. You will need the 10bn from elsewhere, good luck selling cuts to the public

Anonymous said...

cancel the olympics

Anonymous said...

Anonymous 2.56

My doctor tried to book a hearing test for me and gave up in frustration. He could not get into the system and said that this was a regular occurence!
A friend of mine was offered the opportunity to work on the development of the NHS system and declined because it was poorly conceived and specified. He used to work for IBM and should know what he is talking about.

M. Hristov said...

Dozzy, perhaps you need a little education. Invalidity Benefit does not exist. It is Incapacity Benefit. There might well be an argument for abolishing that and saying that all persons on it should apply for Disability Living Allowance, which could be increased in value. That would get rid of the malingerers, at a stroke.

We could be entering a very dark tunnel indeed, as far as the economy is concerned. Things are happening which have not happened since the 1930s. The next big event may be the unravelling of the carry trade, which propped up the U.S. economy in the nineties and noughties. This could be a major crisis for capitalism and no one seems to understand it because very few people who were functioning adults, in the 1930s, are still around. I am sure that the Great Bill Deedes would have had something cogent to say but, alas, he has gone the way of all flesh.

Never mind, you can all go and take advantage of the E.U. by going and living in France. You can then have the benefit of all those things that have been abolished in this country e.g. functioning public transport; middle class professionals who haven’t been impoverished by greedy corporations, jealous governments and moronic newspapers and their readers and sensible planning laws. Remember, however, that you must constantly attack the E.U. and worship right wing capitalism in your posts on this blog. Isn’t that right, Verity? It is unwise to bite the hand that feeds you in any circumstances. Particularly if that hand is French. What happens if M. Sarkozy decides to follow you ideas and send you home? You can hardly complain if he does, after your postings about immigrants in this country.

Anonymous said...

M.Hristov, if your suggestion would stop all the malingerers claiming, then I'm in favour, whatever the benefit currently happens to be called. But we really need a shift in culture away from the idea that if someone faces difficulties in their life of whatever kind, it's the role of the state to throw money at them. If that's what you do, then of course the numbers of people who need help will rise inexorably.

Anonymous said...

Sorry for reposting this from yesterday but I think its an important reaction shown by Labour voters. I would further suggest that all of the lab>con switchers would agree with this statement.

Question From the Poll:

The government wastes large amounts of taxpayers' money and is not trying seriously to reduce the level of waste.

Answers from those with Labour voting intentions:

53% agree with that statement
35% Disagree
13% Don't Know.

I suspect the large numbers of Labour voters working in the public sector have first hand knowledge of the mismanagement of public funds by the govt.

Pogo said...

Anonymous 12:53

"The NHS IT project for your information ( I work for it ) is nearly completed. And is a great success. "

Dave B said... The NHS IT project is a text book case of how not to plan/implement an IT project. If you work for it, you know that.

Having seen the general standard and quality of the staff on this project, it's much more likely, that he/she doesn't.!

Roger Thornhill said...

Anonymous 12.53 pm

Since when are all records online and accessible from the GP?

My GP has not uploaded his records to the Spine and does not think it will happen any time soon and is in no rush to do it. I have informed him that I do not wish my details to be accessed by 1m strangers. And don't kid yourself that you think it will not happen.

Anonymous said...

Given that the economy is about to go into meltdown, due almost entirely to the stupidity of (no doubt Tory voting) merchant bankers (never has the rhyming slang seemed more appropriate), it really is the case that public spending cuts are the last thing we need.