Cuts will be extending into the next Parliament because the current administration does not have the appetite to cut deeper and at a modest accelerated rate. Current economic data, including this mornings PMI Service number contradicts the media narrative of a failing economy; in fact, the United Kingdom fundamentals are not that bad. However, the government is desperate to exploit low bond yields (which is due to the Bank of England underwriting the market) and push for a Plan A+ or B.
The current alternative includes a package to use the taxpayer to guarantee mortgages and building projects-translation: subprime 2.0-which will, apparently, stimulate real growth and not create a giant credit bubble. But there is no reason why the budget could not be balanced within this Parliament; government, mainly the Liberal Democrats, are unwilling to take the tough measures to do it.
The deficit has to dealt with. It’s not a ‘myth’, which some of the left like to deny. Whilst the cuts are occurring the government needs to rebalance the economy and reform the tax system. Danny and George’s approach should be simple: if it expensive, lacks the required funding and doesn’t work – cut it. If the services will be more cost effective to the taxpayer and more productive – privatise it.
For £20 billion we can drop the basic rate of income tax down to 16p, which is more productive for the economy instead of randomly building roads to nowhere. Expanding the disposable income of low and middle earners should be a requirement for any government. And, whilst on the subject of income tax, the 50p rate should be abolished; it is anti-aspirational, damaging for growth and depicts Britain being against success. It is one of the most illiberal factors within our economy.
The most successful and wealthiest should cease to receive any benefits from the taxpayer. Why should a shelf stacker, on the minimum wage, pay for free TV license and bus pass for a millionaire pensioner? Welfare is for the most poorest and vulnerable, it should not be a universal system which middle and upper classes can access. If you’re in the 40% tax bracket, and need state benefits, then you’re living beyond your means. Which is not the duty of government to correct.
But these are only a few random ideas of mine; I have not even begun to discuss public spending and public sector reforms. That shall be included in my next blog post.