The Final Cut; why it’s time to bite the hand that feeds us
Lots of charities condemn government spending cuts. The list of things that charities say are threatened by spending cuts is almost endless and in many cases they are right. While charities are doing that, many politicians call for, or promote, tax cuts. If both of these wishes were granted, the government would spend more and earn less. However, spending more and taxing less is no way to plug the hole in the nation’s finances. The government already spends far more than it earns and that’s why we have a deficit.
And the deficit is serious. Anybody who doubts this only needs to look at the figures. The predicted deficit for 2015 is £83 billion, around 13% of government income. In case you are interested, the UK government’s predicted income for 2015 is £648 billion (all figures from http://www.ukpublicspending.co.uk) and expenditure is estimated at £731 billion.
And for those people who think that the Coalition has been brutally cutting spending to keep national debt under control since 2010 should think again. Despite all these spending cuts, it seems debt has still increased by 80% during the lifetime of this government. The national debt was £760 billion in 2010 and by the end of 2015 it is predicted to be £1360 billion (£1.36 trillion).
Stopping environmental destruction has been a passion of mine since I was a teenager, not least because I cared about the kind of world that future generations would inherit. And the more I think about it, the more the deficit is the same kind of problem. How can I justify a government spending more than it earns and building up debt and interest payments that will be a burden, an economic ball and chain, for future generations?
In just five years, our interest payments on national debt have gone from £30 billion in 2010 to a predicted £50 billion in 2015. If we were a family, we would be the client of a debt advice charity. If we were a company, we would be close to bankruptcy or the target of a takeover.
So my problem is this. I think it’s just unacceptable to condemn spending cutbacks without having some idea of how we balance our books as a nation. If we want the government to spend more, or not cutback in an area, I think we need to say where they should spend less instead. Charities should have solutions as well as identifying problems.
The tackling of the deficit has been made even more difficult by politicians telling voters what they think they want to hear. By some accounts, at least half of government expenditure is all but immune to spending cuts under current policies (e.g. the NHS, welfare payments, interest payments and so on). This only means that the rest of government spending needs to be cut even further.
So how should we cut the deficit? Here are my suggestions:
We should end universal benefits such as pensions, child benefit, free TV licences and so on. The first two in particular cost the government a huge amount and go to many people who don’t need them. Benefits should be a safety net, not a universal hand-out
We should end universal tax cuts. The rise in the personal tax-free allowance to over £10,000 per annum has taken many out of the income tax bracket altogether. This is good for people on low wages, but it is very poor targeting when every other taxpayer also gets the same benefit, irrespective of their wealth. Millionaires don’t need tax cuts
We should stop ring-fencing government expenditure. It is absurd that the NHS is increasing its budget while social care and a host of other areas of government expenditure are cut. The NHS will only ever make us healthy as individuals, never wealthy as a nation. Indeed, people are being conned if they think we can just go on getting all types of healthcare for free without the ‘cost’ of that care being felt elsewhere
As a principle, we need to look at any situations where wealthy people get a government benefit and ask how we can target it more effectively. It’s absurd to claim that we cannot target government expenditure or taxation effectively. The solution is not to ‘spray and pray’ with the increasingly precious resources of government. I am well aware that these are the very people that many charities depend on for their donated income.
I am sure there is an argument against every single suggestion I have made. Indeed, whatever we do to raise more tax or spend less money there will be somebody who does not like it. However, for me the reality is that if we don’t make these difficult choices now, in 20 years’ time we could hand over a debt to the next generation that is five or 10 times bigger than today’s, with interest payments to match.
Nobody that cares about the world our children will inherit can be proud of what we have done if a mountain of crippling debt is the economic world we leave them.
Joe Saxton
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