Saturday, October 05, 2013
How to Cut Government Spending 100% And Then Some
1 - Freeze civil service hiring, wages, promotions, benefits and require non-salary budgets to be cut 2% in each department for a year and fire 3%. This would cut, after inflation, salaries by about 11% and including benefits and budgets about 9% overall - £72 billion.
2 - Stop subsidisng fakecharities - save £20 bn.
3 - Fire useless quangos - £50 bn
4 - Fire the child "caring profession"/child buggering services - £20 bn.
5 - Hypothecation of pensions and the NHS i.e. that a set amount of national insurance and tax (probably combined into 1 tax) is automatically set aside for these and run without political interference - OK this doesn't end the cost but it does make it non-governmental -
£144 bn for pensions
£130 bn for health
(In 2008 Income tax and National Insurance was £260 bn making up £95% of these 2014 figures so it must slightly exceed those 2 now. Any change in pensions/NHS spending would depend on a popular referendum to change these rates)
6 - Cut £10 bn from overseas aid - £10bn
7 - Stop subsidising windmills - £25 bn
8 - Government owned factory mass producing nuclear reactor profits - + £50 bn profit
9 - Fire 200,000 elfin safety inspectors (government budgets seem to be at least £100k per employee) - £20 bn
10 - Fire the same again of other useless government inspectors - £20 bn
11 - Allowing shale gas to be produced and pay the current 30% extra tax - est +£30 bn - granted this is a new source of revenue not spending cut but it has the same effect on other taxpaying
12 - Quit the EU and end our direct payments - £16 bn
total so far £607 bn
13 - A second year of #1 (9% less than 1st year as starting for 9% lower base) - £65bn
14 - A 3rd year of #1 (out of a 5 year Parliament) - £58 bn
Total £730 billion. So we come out with a profit of £11 bn.
OK, OK, not entirely serious - I'm going for general effect not accuracy. I have been doing a fair bit of double counting - if you have already closed down quangos and inspectors you can't save more by cutting them another 9%.
But far from non-serious either.
I have taken no account of the greatly increasing growth we would get from cheap nuclear and shale; cutting destructive regulation; and the multiplier effect of this wasted money being released by tax cuts.
AND THEN THERE IS ANOTHER SPECTACULAR EFFECT
A 10% growth rate, which I have repeatedly shown is possible if we go for it, means government can produce 10% more money each year which has to be spent somewhere, without any inflationary effect whatsoever (indeed not doing so would be recessionary by making money scarcer than the goods it represents). UK money supply was £2,200 bn in 2010 (say £2.4bn by 2014) so that means it would be expected to print about £240 bn in the first year and growing proportionately to gdp thereafter . That would pay off the national debt in 4 years, (£240 + 264 + 290 + 319 = £1,113 bn).
Then we would have to actively find ways to spend it!