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Saturday, April 25, 2009


Last night BBC Newsnight informed us that suddenly politicians are falling over themselves to make specific suggestions of necessary cuts. Can't say I have noticed & think it is just that the Newsnight party line has changed, probably because 2 days after the budget growth figures have been produced showing things are worse than admitted even that recently. Anyway in my normal helpful way I have posted up these suggestions. I hope they actually publish this comment - my name on the site is neilninepercent. Whadduknow they did - post 60

1) Stop hirings of new public employees (turnover 5% a year), freeze on pay & benefits, allow firings of public employees for incompetence - Saves 5% of total budget £35 billion.

2) End Health & Safety Executive & related agencies - perhaps a small part of their function can be subsumed in other depts. Suspend then repeal 90% of all such regulations. 200,000 inspectors gone saves £20 bn.

3) Cut building regulators & planners by 90%+ ending almost all building restrictions outside national parks - similar to #2 saves £20 bn.

4) Replace part of Atomic Energy Inspectorate that spends years determining whether French nuclear designs that have worked for decades there will work on this side of the Channel - this will allow building to start immediately. Cut all parts of nuclear regulations that aren't even 1/4 as worthwhile, by cost benefit analysis, as regulations in other industries. Require all public enquiries on public projects to take no longer than a fortnight. Estimated saving £10 bn.

5) Cut unnecessary quangos (eg Race Relations Commission costs £71 million). Also all the diversity inspectors. Est total £10 bn.

6) Cut advertising by quangos (eg all those adverts and leaflets from the Carbon trust). Est total £10 billion

7) End donations to fakecharities which then use the money to advertise & lobby for more government spending, regulation & bureaucracy (eg the millions given to ASH to lobby for the smoking ban). Est £10 bn

8) Stop subsidising windmills & other "renewable" energy sources that real investors know isn't worth it. Estimated total £10 bn

9) Don't pass this budget - the increased revenue from the 50p tax rate will not surpass the costs of subsidising cars & "green" jobs. Net change zero.

10) End the VAT cut. Saves £15 bn.

11) Leave the EU. Direct saving approx £15 bn

Total savings here = £155 billion without significantly impinging on anybody in productive work & barely so on welfare.

The Taxpayer's alliance has also identified £100 bn of savings that could be made simply by getting rid of quangos. While there is a crossover with my proposals the combined saving would clearly be above £200 bn taking the country from moving towards bankruptcy to strongly solvent. Where investment would improve our economy we should do so. Since we would still cut borrowing it would clearly be possible to do so & we could achieve Chinese levels of growth & theoretically a level equivalent to the faster growing Chinese provinces:

A) Cut corporation tax to Ireland's 12.5% level. Cost £25 bn.

B) Cut business rates by the same amount.

C) Regulations cost, according to economists, 20 times as much from the economy as they cost government to enforce. Points 2,3 & 4 would thus improve the economy, over time by 20 x £50bn = £1 trillion.

D) EU regulation costs, according to the "Enterprise" Commissioner, £70 bn - quitting improves the economy that much.

E) Road, airport, tunnel & port building programme - est £15 billion pa

F) Fully automated experimental rail & monorail programme - est £5 billion pa

G) X-prize Foundation for space & high technology prizes - £5 bn pa.

H) Building a mass production system for turnkey operation nuclear power stations to be used in Britain & sold across the world - Est £30 bn pa - probably take about 4 years before it is in production but then immensely profitable.

I) Assorted training & experimental investments, some port & electricity facilities on Ascension Island Space Port & some minor guarantes to kickstart mass produced modular housing - £10 bn

Total cost £115 bn

I think if the BBC put this to any economist they will agree that this would work, even if some of them might doubt if it would be completely as effective as I suggest. I think if you put it to most politicians they will explain that it cannot be done - and that the reason is because it is unthinkable that is why.

You would make a much better chancellor than Darling. Though of course he was manipulated I'm sure. Cutting all Quangos saves £180 billion. But there are too many Labour cronies ensconced for any of this rabble to even consider this.
The thing that worries me is that Osborne may be little improvement. Despite the economic abyss political discussion is barely above the playground level.

Being optimistic Ireland's economic transformation came about because in 1989, during an economic collapse, their politicians, who had been no more responsible than ours, did something similar to this & it worked.
NC, as ever, I agree on the cuts in waste, but I don't agree on the tax side.

If we want to move to a flat tax/land value tax system, the taxes to cut first are VAT and Employer's NIC. Business Rates is the last tax to be cut, as it could be replaced wholesale with LVT.
To maximise employment NIC would be most effective & I grant that is often understandably the prime government aim but I think growth is more important in the long term & for that corporation tax, which most rewards the most successful businesses, is better. More imporant than theory is the fact that this was the tax cut which stimulated the Irish economy.

Business rates is not necesarily one to get rid of long term, though there is no justification for it being higher than equal land used as housing, which it certainly is now. I agree with you that Land Value Tax looks like an optimum tax long term, along with fees for using airwaves etc, but to get out of the current mess we need to use the tools to hand & replace them with new ones later.
I'm going from memory here, but France licensed The Westinghouse reactor design during the 1970's instead of designing its own reactor. As such France's reactor design has almost 60 years of development behind it, staring with the first American research into nuclear power after the end of WW2.
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