However, Paul Johnson, director of the IFS, warned that “spending cuts of this scale would be extraordinarily hard to achieve” as “there is not a lot of fat to cut”.
He said: “If you are going to say you are going to balance the books with significant spending cuts, you really do, to be credible, have to be clear what those cuts are going to be. It may require something rather different about the scale and the scope of the state.”
Apparently spending needs to reduce by £60 billion. Somewhere around 6 or 7% of the total.
So, we kill HS2 and that’s the first two years taken care of. What other activities can we dump? ODA gives us 0.7% of GDP, or perhaps one fifth, one quarter even of our target. What other things shall we have government just stop doing?
Or, as Johnson says. The way to kill government spending is to kill areas of government.
Hell, we could liberalise the planning system, drop the price of houosing and save £40 billion a year in housing benefit.
I imagine it will suddenly cost more to cancel HS2 than to complete it (except when it’s completed then it will actually still costs more than to cancel).
Stop housing illegals in 5 star hotels.
Stop financing India’s space project.
Ottokring,
Quite. If you turn up here uninvited you get put in a dire detention center pending deportation.
“Hell, we could liberalise the planning system, drop the price of housing and save £40 billion a year in housing benefit”
Except you’d then crash the banking system, and end up having to bail that out instead. Apart from which you wouldn’t save £40bn in HB either, because most of the people in receipt of it can’t afford any rent at all. So unless houses are going to be rented for nothing, people would still be claiming HB. You’d make some savings, but nowhere near the full HB budget now.
Basically the UK economy is now an interlocking jenga tower that if you pull any one bit out the rest comes tumbling down. No changes to the status quo are possible, because any change precipitates a catastrophe somewhere else. We have gone down a dead end from which there is no return.
– Cap housing benefit at the median house price. So no housing benefit in London and the South East. Save about £9bn/annum.
– Cut ALL rail subsidies. Not just HS2, but the net billions invested every year. I think that’s at least £2bn, as high as £5bn some years. If we want to subsidise “social” travel, use buses which are cheaper.
– Close down DCMS. Any bits around things like TV spectrum and rules, move to the Home Office. At least £2bn/annum.
End Public Health England (or whatever it is called now). That’s around 3B a year.
Change the rules so that, like a British born subject, you can’t claim benefits/Council housing etc until you can prove you’ve lived here for 16 years. Simultaneously, do away with any restrictions on immigration. This way, the only immigrants who come will be self-motivated ones with the skills needed to thrive in our economy. The chancers and the scroungers can try somewhere else.
Even if that were true (and I acknowledge that it may well be), better to start demolishing the Jenga tower yourself before it collapses on top of you. The value in things like housing doesn’t just disappear because house valuations take a 40% cut.
We’ve ways of dealing with this through our existing mechanisms (insolvency, corporate restructuring, bondholder haircuts, redundancies and bankruptcy), exactly the process that we should have used in 2008 instead of bailing out the banks.
Sure, a lot of currently comfortable people would suddenly become somewhat uncomfortable, but it would restore solvency and credibility to areas of the economy that have been zombified since 2008.
Sometimes the only way to clear out the crap is a long, hard flush.
Jim,
“Basically the UK economy is now an interlocking jenga tower that if you pull any one bit out the rest comes tumbling down. No changes to the status quo are possible, because any change precipitates a catastrophe somewhere else. We have gone down a dead end from which there is no return.”
We got here because of an irresponsibility culture. Jamie Whyte once spoke about the 2008 crash, and that a large part of the problem is government underwriting banks, so investors didn’t watch banks. You just put your money in a high-interest Crock account without worrying whether Crock would fail.
But it’s across the board. I absolutely guarantee that the first news item about homeowners struggling with interest rates will include some Deano and his wife with shots of Apple stuff, a nice looking new kitchen and a shiny new Deano car like an Audi Q5.
In thousands of subtle ways, we’ve got a nanny culture. It then becomes a feedback loop. People get used to government looking after them that they never look after themselves. They never look behind the curtain to see if promises are being fulfilled. Then suddenly they find that the degree they were sold is basically worthless.
Didn’t Reagan prove deficits don’t matter?
@Why not just keep printing faster?
No, he proved that you can’t trust Democrats to honor their agreements.
1. With Reagan it was more a matter of priorities being elsewhere than whether deficits mattered or not, Reagan was focussed on defeating Communism which he thought more important than whether the books were balanced in year, but that was a very different era to today.
2. You get a lot more flexibility when you are the worlds preferred reserve currency and get a natural short from the Petrodollar. So what is true for the US, doesn’t necessarily apply elsewhere.
3. Given that the US Dollar hasn’t collapsed despite money printing on a vast scale (with >80% of US dollars in circulation – both paper and electronic having been “printed” in the last 20 years), the US Dollar has proven surprisingly resilient and comparatively strong against other countries which have printed far less by %-age of their own currencies (GBP, EUR primarily). Again, what is true for the US, doesn’t necessarily apply elsewhere and even for the US that sentiment could change negative rapidly.
As with bankruptcies, currency collapse tends to happen slowly then all at once. “But this time is different” is only true until it suddenly isn’t any more.
“better to start demolishing the Jenga tower yourself before it collapses on top of you.”
Thats the thing, I think any attempt at reform (or controlled demolition in our analogy) precipitates as bad if not worse a catastrophe than just letting things meander on to an inevitable crisis. Not least because of what BoM4 says, this is not an economic only crisis, its a social one too. Our society is not resilient enough to deal with any serious hardship now. There is no fat, no backbone. Everything is pared to the wire, no-one has a plan B if the SHTF. Add in to the mix our ‘diversity’ which will prove to be a problem – ethnically diverse societies do not deal well with societal level problems, there is no cohesion. You are never going to get the degree of unanimity across society as to the task ahead and what is required to be endured. It would all just splinter into competing groups very rapidly.
As I see it, anything that precipitates a serious economic crisis (a proper one, ie 10-20% fall in GDP) would then trigger an even greater social crisis, which would then trigger massive demands for ‘the government to do something’ (as in the rise in energy prices) and that is turn means more and more authoritarian and socialist type ‘solutions’ which in turn ultimately make things ever worse again.
Controlled demolition and reset is possible, but not in a democracy I fear.
Abolish the Barnett Formula.
I’m not all that worried about the size of the savings, just do it.
Sack every one in any govt department, the NHS, councils etc with the words ‘diversity’ or ‘climate’ in their title. And all the people who report to them.
Simple.
Oh and what @ John said…
“Abolish the Barnett Formula.
I’m not all that worried about the size of the savings, just do it.”
Gawd, today I’ve just recreated a user account for a “Regional Diversity, Inclusion and Participation Manager”.
Not somebody who implements Regional Diversity, Inclusion and Participation, but somebody who manages them. That’s how far the rot has set.
Lions!
@Jim
Yes the economy is like a tower of Jenga blocks. And yet it is usually possible to gently remove the ‘easy’ blocks if you have steady hands *and* pay no attention to the crowd around you – who want to see you fail.
Perhaps Truss has the right idea about changing the Jenga stack. Maybe yes, maybe no. But the naysayers come out in force when anybody tries something that might make a difference.
“Yes the economy is like a tower of Jenga blocks. And yet it is usually possible to gently remove the ‘easy’ blocks if you have steady hands *and* pay no attention to the crowd around you – who want to see you fail.”
The easy bricks are long gone. We have a pile teetering on the edge of disaster. And touching any of them will precipitate a cascade that may bring the entire edifice down.
There are ways out, but there is no political will to take then, nor any democratic will to demand them. Everyone wants the easy option, which of course is why we are where we are.
“Reagan was focussed on defeating Communism”: a few years ago I came across an account that said he wasn’t. What he wanted to do was end the Cold War and get rid of MAD which he thought was a dangerous and wicked doctrine.
As it turned out he actually did win the Cold War. Good for him. But his original aim was more modest and must have seemed more practical.
Give the blob 20 billion, it disappears without trace at no benefit to the taxpayer whatsoever. Ask them for it back and that will trigger the end of civilization as we know it. Are we really expected to swallow this bollocks every single time? Unwinding a decades increase will stop the system from functioning? Then how come it functioned ten years ago?