Budget Day

by craig on June 22, 2010 11:34 am in UK Policy

We all wait to see what the budget has in store. This is less fun than it used to be, as it has been heavily trailed that the personal tax allowance will be raised by £1,000 as a first stage towards lifting a very significant number of people out of tax altogether, and improving the work/benefit incentive. That is a good thing.

The banking levy will be another good thing, but far better would be a transaction tax that penalises continual speculative trades. Capital Gains Tax increases are likely to be watered down to protect wealthy tories with second homes. I fear we will see punitive duty increases on alcohol; only the wealthy are to be allowed to get drunk. But I am uncertain where the tax rise required is going to come from, if neither the basic rate of income tax nor the rate of VAT is to be increased.

I fear we may not get a great deal of detail on the cuts until the public spending round in the autumn, though we should get headline figures today, which will be helpful.

I very much favour public spending cuts. I am unabashedly ideologically committed to a major reduction in a role of the state. So I am more than happy to see an early hack at it. Of course the things I would immediately cut are not going to be cut. My main concern is that the legitimate redistributive role of the state is not weakened.

Some ideas of what I would do:

Cut Trident, aricraft carriers, nuclear submarines, end the Afghan War immediately.

Cut all local government salaries over £28,000 by 15%, with a phase in mechanism at the margin.

Make everybody in local government earning over £50,000 immediately redundant.

Freeze all civil service incremental pay scales.

Set an automatic civil service pay mechanism: annual salary increase = rate of economic growth plus inflation minus 0.25%. Backdate the formula to January 2007 and adjust salaries accordingly.

Cancel all PFI projects immediately without compensation. Pay only assessed construction cost to date.

Cancel all operating PFI schemes without compensation. Pay assessed construction costs plus interest minus PFI payments made.

End all government arts spending and close the British Council.

Replace incapacity benefit with a single needs assessed welfare payment to all unemployed people, regardless of why they are unemployed.

End all internal market procedures within the NHS and the rest of the public sector.

Institute a civil service and local authority recruitment freeze for three years.

Means test all state payments including basic old age pensions and child benefit.

Sadly the budget won’t be nearly this exciting. What would you like to see?

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50 Comments

  1. “End all government arts spending and close the British Council.”

    Why close the British Council? Does it not provide jobs? Does it not bring in revenue? Does it not present a benign and friendly face of Britain?

  2. And doesn’t the government also subsidize museums that allow us to see masterworks of art FOR FREE? Does it not also help struggling artists? Does it not provide a small fund for writers? And doesn’t the LRB also get a small grant to help with its running costs?

  3. I would axe income tax alltogether.

    Only have tax on wealth and profit.

    I would get rid of all the banks and have just one bank.

  4. This post sounds like a rehash of Cleggover’s message to the LD troops. ‘You won’t like it but it is necessary stuff and other such rot.’

  5. Things are not going to change for the rich tories,lib dems,nulab.

    http://www.dailypost.co.uk/news/uk-world-news/2010/06/19/government-spends-18-000-on-wine-55578-26684777/

    NO suffering for the above, suffering, thats just for the poor.

  6. I agree with angrysoba. We benefit in many ways from the tiny arts budget.

    I agree with most of Craig’s other proposals. I would however be much more robust regarding banks. Nationalise them, default on the notional toxic debts, merge the BoE with the Treasury and stop borrowing money when, as a sovereign nation we can just print our own.

    End unemployment benefit and replace it with a job guarantee scheme paying the minimum wage.

  7. Abolishing government art funding would mean abolishing a lot of high quality artists.

    We need more art not less.

    To send light into the darkness of men’s hearts – such is the duty of the artist. ~Schumann

  8. “End all government arts spending and close the British Council”

    Good God! I thought only old-fashioned Thatcherites like me could contemplate such an excellent, common sense move! I am impressed.

    What are PFI projects?

  9. “Why close the British Council? Does it not provide jobs? Does it not bring in revenue? Does it not present a benign and friendly face of Britain?”

    It’s about as benign as the parasitic NGOs that wreck so many developing countries – you have to be there to see it happening.

    And no-one should take hard-earned wages from hard-working, low-paid working class people, against their will, to fund operas and ballets and plays that these guys have no chance of seeing, ever.

    Of course all benefits should be means tested. How can anyone possibly justify them otherwise?

  10. How about areas where the government might save money by employing *more* people not less?

    I’d set up an expert group of I.T. and communications people to review all government spending on I.T. projects. Their findings should be published widely and publicly. They should be government employees and in no way associated with any company bidding for I.T. work.

    The last government launched implausible, vastly under-costed projects of debatable benefit, with apparently no reference to reality at all. These projects were parasitic on the public purse driven by overpaid ‘yes men’ consultants.

    This needs not to be repeated by the coalition, either now, or later when the squeeze on funding is less tight.

  11. Why is Gideon’s voice so high pitched?

  12. —————- SCREWED —————-

    Poor people

    Disabled people

    Young families

    Single mothers

    Liberal Democrats

    ————- 70,000,000,000 ———–

    of your money to rescue the greedy banks

    ————- 1,300,000,000 ————

    of your money to pay for bad management

  13. Craig.

    Means testing is not only (like performance-related pay) a pretext for cuts. It also undermines the dignity and incentives for the poor to get out of poverty. It increases public sector admin costs and creates poverty traps. Always has done. Always will.

    And what do you think this government is going to do with all that financial asset data it gathers through means testing? Can you count on this government not to put it to other uses not remotely connected with social security?

    If your only justification for means testing is that you havent the stomach for income tax, VAT or other tax rises then maybe you need to look for other options.

    All the rest of your ideas look okay, especially on PFI.

  14. “It’s about as benign as the parasitic NGOs that wreck so many developing countries – you have to be there to see it happening.”

    Pfffft!

    “And no-one should take hard-earned wages from hard-working, low-paid working class people, against their will, to fund operas and ballets and plays that these guys have no chance of seeing, ever.”

    Oh, and don’t close down the libraries with or without which Neil Berker can’t even read a book.

  15. “Neil Berker”

    Y’know, that was a typo. But it seems so apt.

  16. Brilliant manifesto Craig, I didn’t notice any detail on public sector pensions, maybe I dropped off for a minute, but I’d end final salary pension schemes in the public sector and limit contributions to a level similar to that typically received in the private sector.

  17. “Of course all benefits should be means tested. How can anyone possibly justify them otherwise?”

    If we had a universal benefit given to every person covering minimal living allowance (every person does deserve the means to live on?)…

    , Work would then not need done to means test for living allowances.

    , There would be no need to enforce a minimum wage (lots of new business could become viable from this)

    , There would be less motivation for criminal endevours.

    The current testing for the means to live, is expensive, innacurate can be abused and mistaken. It has an effect of marginalising people, some of whom remain so, in a strong cultural/psychological trap.

    So to just give the safety net to everyone and reclaim it with taxation would be more efficient, fair and culturaly and psychologicaly effective.

    It would take a few years to phase in.

    There is a theoretical value of the work and invention done throughout history by people who did not recieve payements and ongoing patent royalties, which could be used to establish the capital origins of a universal benefit fund.

    The greatest fear is that if everyone only did the work they felt like, telemarketing and such would become uneconomic. I dont actualy subscribe to the idea that people left to their own motivations which choose idleness and squalor over action and creativity.

  18. Craig,

    I like your budget. I’m not sure about the arts / British Council bit. Suhayl?

    Paul,

    Yes! Hire programmers to implement our IT. Stop buying insecure proprietary software that requires depressingly frequent replacement of hardware. Implement our own public sector IT systems based upon community developed software. Sell the resulting systems and support expertise in competition to the big software companies instead of constantly paying out to them.

  19. Sandcrab,

    your arguments for a standard Citizen’s Income are compelling.

  20. Craig is spot on when he tells us his ideas – Bravo!

    ————— TRIDENT ——————

    Trident replacement will cost Britain:

    ———–£150,000,000,000 ————

    – over 25 years –

  21. Ending non-domiciled status.

    Ending all offshore tax avoidance schemes for companies and individuals.

    And when ‘high wealth individuals’ start bleating about leaving the country, offer them free one-way flight to the Cayman isles in return for their British passport.

  22. sandcrab, this universal benefiot is a green party policy. Every one gets just enough to live on, for their extra pleasures and extravagancies, that little extra luxuary, one has to go to work and pay taxes.

    Such universal basic wage would scrap all other benefits, nobody bar those with special needs and disabilities would get multiple benefits.

    Savings in administartion would be immense.

    I like your budget Craig, how about spicing it up by saving some of our reps as well. 400 MP’s should sufice, equally, less services for us should mean less civil servants looking after those services.

    Norfolk still has 51 double dipping district councillors who also get expenses as county councillors and have a job and a family life, apparently.

    Should we not be concerned with their stress levels? too many jobs to do? should council chiefs be concerned with overworking councillors?

  23. The Nimrods are much more ripe for scrapping than carriers. They’re based on an air frame that first flew in 1949. All the planes are old, obsolete and no-one else uses them so there are no economies of scale for maintenance.

    http://www.theregister.co.uk/2009/09/14/nimrod_mra4_prod_variant_first_flight/

    The biggest part of the cost of carriers are the aircraft. By saving a few quid not installing catapults and arrester wires STOVL aircraft are needed that are inevitably more expensive to purchase and maintain, and would cause serious problems with launching airborne radar.

    There was a story in the Telegraph that the MOD was considering navalising the Typhoon and redirecting some of the excessive numbers on order to carrier duty. This would both reduce the number of aircraft needed and give one fewer system to maintain, thereby helping maintenance costs. The Rafale and the Super Hornet are viable off-the-peg options, as is the conventional F35.

    Note that the French are building a carrier of the same type with catapults from which they will operate Rafales.

    The A400M transport is pretty dubious too. Many years late, massively over budget.

  24. amk

    But who do we have to fight which requires state of the art aircraft? Is there any potential enemy of the UK out of home area that the old harrier couldn’t deal with?

  25. “But who do we have to fight which requires state of the art aircraft? Is there any potential enemy of the UK out of home area that the old harrier couldn’t deal with?”

    Besides, Lee Enfield rifles should see off any potential invader.

  26. Chancellor George Osborne has said he “reserved the right to come back at any time to adjust this budget”, he will. The global financial crisis is just starting and he knows that, it is on the brink of total collapse.

  27. Richard Robinson

    22 Jun, 2010 - 3:02 pm

    sandcrab – “I dont actualy subscribe to the idea that people left to their own motivations which choose idleness and squalor over action and creativity”

    Ditto. But there would need to be some kind of mechanism by which people could find their way into organisations, though; not everything can be done by individuals on their own. Much rearrangement.

    re: aircraft carriers. The “War Nerd” is, er, amusing on the subject – http://exiledonline.com/the-war-nerd-this-is-how-the-carriers-will-die/

  28. Absolutely right Craig, Who in the 21st century would bother to attack the UK with thermo nuclear weaponry without attacking themselves?

    Especially in Europe, who are our enemies in a Europe that has lived peacefully for decades, well largeley?

    During the cold war the Force de Frappe was pointing eastwards, targetting east german surface to air batteries and the Fulda gap, what are they positioned on today one might ask?

    We could easily loose one of the aircraft carriers on order. Trident was obsolete a long time ago and can be easily dispensed with.

    Looking at the development of indiscriminate drones and the country that invented and used it first, I predict that much smaller, adjustable nuclear charges will soon be operational for this weapon system and be used by them.

  29. I’d implement a proper whistleblower protections and also an equivalent to the Tax Payers Against fraud http://www.taf.org as in America.

    Get rid of all bonuses in Civil Service

    Amalgamate pay barganing, HRS function to one coherent policy

    May pay scales in line with PM salary.

  30. lets gid rid of all the army bases in the world, bring the forces home (should save a penny)

  31. angrysoba

    well, as there aren’t any potential invaders I suppose the old Lee Enfield would indeed do it. On top of which I can shoot one without spraying bullets everywhere

  32. Craig:

    The Sea Harrier was killed off as it couldn’t land still carrying two air to air missiles outside of near-arctic conditions thereby making patrols impractical. Fortunately the Falklands are sufficiently cold to allow it to do this.

    AFAIK the Sea Harrier aircraft themselves were getting rather old anyway.

    The lack of fixed wing early warning aircraft was a major problem in the Falklands war.

    The SAAB Gripen is I believe relatively cheap and versatile, although that would need to be navalised too before it could be operated from a carrier.

  33. “…as there aren’t any potential invaders”

    You can’t trust the French y’know.

  34. I feel so sorry for the disabled. I think by the time the tories, lib dems have finished with them and their carers many will have taken the easy way out. Nulab have just got a lot of disabled out of benefits already and now the tories, lib dems want to start again.

    http://breakingnews.heraldscotland.com/breaking-news/?mode=article&site=hs&id=N0016811274893369952A

  35. Yes, I’m sorry for the disabled, and the lone parents, too. We’ve millions unemployed. What good does it do to force lone parents to look for work that isn’t there? Parenting is one of the greatest contributions that anyone makes to society, but these idiots think parents time would be better spent filling in job application forms.

    Craig,

    the government’s budget is boring and uninspired, the work of dullards with no creativity. They should sling it out and use yours.

  36. Quote:

    “Freeze all civil service incremental pay scales.

    Set an automatic civil service pay mechanism: annual salary increase = rate of economic growth plus inflation minus 0.25%. Backdate the formula to January 2007 and adjust salaries accordingly.”

    Craig,

    Does that include those of us in the CS (the vast majority of its workforce) who are on less than £20K p.a., having to deal with inflation running at 3.5% and upwards and even greater increases in the cost of transport, housing and utilities? And facing imminent slash-and-burn on our departments (and, believe me, it won’t be the vast swathes of useless managers who will be cut)?

    Because if it does, then you’re much nearer the Orange Book betrayers of your party than I would have thought. Sad…

  37. the judge,

    in the long term, civil servants would do better from my pay formula than they have in the past. You can easily imagine 2.5% inflation plus 2.7% economic growth, minus 0.5% equalling a 4.7% pay rise as being a pretty normal kind of level.

    I would not have spent a penny of public money bailing out the banks myself, and I don’t believe disaster for ordinary people would have ensued, or that we would now need these hard measures. But “I wouldn’t have started from here” is never very helpful.

    But in general I am unabashedly in favour of small state solutions. Ultimately I would like man less, but better paid except at the higher levels, civil servants.

  38. Clark: Yes, you are right. The disabled, lone parents have no one to protect them. They are easy targets.

    Government sending a clear message to everyone, don’t get sick or disabled. They are going to push health insurance in the coming months, health insurance that won’t be paid when you go to collect it, because you failed to tell the insurance company that your condition was hereditary. You didn’t tell them that a member of your family suffered from it 150 years ago, they have a full database going way back. They look for everyway not to pay you. Such is the state of our society, it is based on fraud and criminality.

  39. A massive increase in VAT (up 2.5%) hits the poorest hardest in the high street while housing, disability and child benefit squeezed and plans to slash corporation tax year after year has rubbished the young inexperienced Chancellers quote “we’re all in this together”.

    For all the language of fairness and shared pain the ghost towns, derelict houses and huddled communities of the struggling human remnants of a once Great British manufacturing export have taken the greatest hit. The North holds the humanity of Britain in it’s hand with caring workers striving unpaid to ease the pain of poverty.

    Now even the surviving service industries – advertising, design and management consultancy, financial services and public relations are set to follow manufacturing in a terminal decline.

    Do I blame a global recession – Pfff! – I don’t!! I blame £billions of tax payers money spent on useless wars in Iraq and Afghanistan. Do we witness China and Japan in such wars? No! Instead these countries are aggressively increasing exports and creating wealth from projects in Africa, central and far Asia while Britain, rich in innovative and manufacturing expertise sits on it’s back-side while the elite play the great game of war-mongering and hegemony while our jobs head for an inevitable black hole.

    Watch out! In two years I predict taxpayers will once again be called upon to bail out the sinking aircraft carrier called Great Britain.

  40. Thanks Clark and Ingo, you know my knowledge is so patchy i didn’t even know the greens support universal benefit!

    About the aircraft carriers i was an enthuast in my youth and some perverse intrest in mega expensiv weaponry still survives, i think scrap the f35/typhoon carrier plans now. They will need to be scrapped in a decade due to computer controlled drones & missiles with superhuman situational awareness and reflexes anyway (aaargh)

    Craigs budget and economic designs are too contemporary and conservative for my support.

  41. What is happening about this?. Are we still paying?.

    “No more UK aid to India”

    http://conservativehome.blogs.com/starchamber/2009/04/7-no-more-uk-aid-to-india.html

  42. Make everybody in local government earning over £50,000 immediately redundant.

    Agreed, but I would apply the logic to everybody in central government too. Central government should not be seen as exceptional.

  43. “They will need to be scrapped in a decade due to computer controlled drones & missiles with superhuman situational awareness and reflexes anyway”

    Intelligent robotics has historically had a tendency to not meet expectations.

    The recent NATO aircraft aren’t the last manned fighters though: the Russian PAK-FA is on the way, and I think is a bit of an unknown quantity.

    Richard Robinson –

    Interesting link, and I may dig up the US Naval College review it cites.

    The efficacy of anti ship missiles not only means surface fleets are of limited use but also that British island ODTs such as the Falklands can be relatively cheaply defended: silos for anti-ship missiles plus a interceptors to protect them.

    On the topic of military overkill: the MBDA Meteor beyond visual range air to air missile is the most advanced in the world, beyond even what the US Air Force will have in the next few years. The development I think is nearing completion though, and as we’re stuck with the development costs it may not be much more expensive to buy them rather than the AMRAAMs the US uses.

    Unit costs in defence procurement always are quoted as the sum of the cost of manufacture plus a proportion the development costs. As initial orders are cut back the proportion of development cost per unit is increased leading to a large increase in the apparent cost per unit (there may also be economies of scale with larger production runs that are lost). This may lead people to demand further cuts (or complete cancellations) to save money without realising that we’re stuck with development costs anyway.

    Wouldn’t it be much clearer to have development and per-unit manufacturing costs quoted separately?

  44. “close the British Council” That guy knows his stuff. What do they do then? Cause trouble..thats what.

  45. Our politicians should be protecting services to the sick, old, disabled, children and the unemployed not cutting them to pay for the mistakes of millionaire bankers. At a time when Britain’s 100 richest individuals have a combined personal wealth of over £250 billion and just over a third of this, £90 billion, could end Britain’s so-called “structural deficit”, there is no justification for the cuts planned.

  46. ‘The Meaning of “Austerity”‘

    http://www.youtube.com/watch?v=jUmQbf1AyA8

  47. Very good, Craig, with a few exceptions:

    1. Means-testing is odious, expensive and bureaucratic. Vulnerable to fraud. Usually leads to low-income people being subject to much higher effective marginal rates of tax (tax+withdrawal of benefit). Absolutely not, not under any circumstances.

    2. If you want fewer civil servants, then you can start by eliminating the means-tested benefits we do have. I like the Green Party idea of a basic income for everybody.

    3. I like the British Council – it once rescued me from a difficult situation in Italy, many years ago.

    4. Defence needs to be cut much harder than you are suggesting.

    5. Basic state pension needs to be increased, not means-tested. However the starting age could be gradually increased in line with improving life expectancy.

    6. The recent budget changes on child benefit are wrong. It’s the single most effective measure for reducing child poverty. One of the reasons it’s so effective is that there’s no means-testing.

  48. Means testing disincentivises saving which is a bad thing given the deteriorating state of the pensions system.

  49. Not sure i understand the pay formula you suggest. the top of pay scale for most grades in most central government depts have gone up by at most 1% in each of the last 4 or so years.

    A lot less than you suggest. You appear to be suggesting a much more generous pay rise than civil servants have been getting recently.

    You back dating would mean a pay rise of around 10% for those at the top of their pay grade scales.

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