Wednesday, January 21, 2009

The first cut is the hardest

A nation is not unlike a household and governing a nation is not unlike managing a home - which is why you shouldn't let politicians and political commentators tell you how difficult and what a mammoth task it is - it isn't. The only significant difference is scale.

You've got income and expenditure, things you can sell and things you need to buy and pay for. You've got things to maintain, things to improve and new things that could save you time and money. You've got to deal with those who break the rules and punish them when necessary and you've got to educate those who are going to one day take over from you. You've got to deal with your neighbours and settle your disputes where necessary. Perhaps most importantly, you've got to manage your budget.

With the national debt spiralling out of control as Gordon Brown tries to save the world (at the expense of British taxpayers) my mind wanders to the question of how we are going to pay this massive debt off. As a homeowner, virtually the first thing I think of when I acquire any debt (after the missus has decided how to spend it in the first place) is how am I going to pay it off? How much, how often and for how long?

To be honest, I don't think Brown has even considered this - probably because he realises that he will be long gone before the sheer enormity of the problem is realised - and I don't really believe Cameron has considered it much either, even though he is quite possibly the one who is going to be most exposed to the crap left behind by the NuLabour years.

If Cameron is really serious about gaining power and doing something positive in that time he needs to think about that now. I believe there are troubled times ahead for whoever wins power at the next election and that it is quite likely that whoever does get in isn't going to be around for more than the five years maximum between elections - so if Cameron wins at the next time of asking he isn't going to have much time.

And as any householder knows, when your debt is so large it is causing you difficulties in your everyday life the first thing you need to do is reduce that debt. Cameron can try and spin that anyway he likes, but the simple fact remains that to do that he has two choices - either put up taxes or reduce public spending.

That's the way it works in a household - you either increase your income (put up taxes) or decrease your expenditure (cut spending). My bet, at the moment, is that Cameron is planning tax hikes in the short term - another reason why he isn't likely to serve beyond one term - but with rising unemployment and rapidly declining productivity any increase in taxation is unlikely to raise the overall tax take significantly (if at all). Try and push it higher to increase the national income and you'll drive businesses away and it will fall further.

That's why I believe the only real option is to cut spending - public sector cuts. There are, of course, essential services that shouldn't be cut - the schools and hospitals that the left always whinge will be the first to go. They won't, but only the most entrenched leftie would argue that we really can't do without all those quangos, agencies and jobsworth five-a-day coordinators, street scene directors and anti-smoking patrols.

The NHS accounts for less than 20% of public spending, education even less and defence around 10% (if that). So you can leave schools, hospitals and soldiers untouched and still have scope to look at cutting a proportion of the 50% that isn't covered by those areas. A simple, across the board reduction of 20% cut in quango spending will save us some £25 billion a year - yep, really that much - without any increase in taxation or any noticeable cut in public services. You'd probably notice a significant improvement if anything!

A 20% cut now followed by a year on year reduction of 5% would contribute billions towards paying off the huge debt that Gordon Brown has saddled us with. You just tell every quango that their budget is to be reduced by 20% next year and let them work out how that pans out. If its budget is £5 million that means that next year it will be £4 million - if their budget is £500 million then next year it will be £400 million. Surely they can work that out?

It really isn't rocket science and isn't even that painful - unless you are a quangocrat - and it certainly isn't hard. So why won't they do it? Could it be that quangos have become the retirement home for has-been ministers and their cronies?


Blognor Regis said...

"unless you are a quangocrat"

Screw them. Wouldn't it be great if someone from the Conservatives said in the face of public sector union whinging, "Look I'm playing the world's smallest violin here. You decided to become a parasite. We didn't want you. You have a good feast at our expense, now sling your hook and do something useful for once."

Surely an instant electoral boost that.

North Northwester said...

And to harp on my personal bugbear, stop paying child-related benefits after a mother's third child.
See the Karen Matthews of this world disappear in a single generation...
As distinct from her list of 'partners' who seem to have come from at least two generations.