Budget Day 50


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?


50 thoughts on “Budget Day

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  • Anonymous

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

  • craig

    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

  • amk

    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.

  • MJ

    “…as there aren’t any potential invaders”

    You can’t trust the French y’know.

  • Clark

    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.

  • The Judge

    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…

  • craig

    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.

  • Anonymous

    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.

  • Mark Golding - Children of Iraq

    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.

  • sandcrab

    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.

  • Brennig

    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.

  • amk

    “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?

  • Ishmael

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

  • Anonymous

    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.

  • Neil

    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.

  • paul

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

  • Albert

    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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