I think the basic premise of the Institute of Directors/Taxpayers Alliance report, How to save £50bn, is virtually impossible to argue with. As the authors observe: ‘We are facing a fiscal crisis of historic proportions’, and there will have to be a substantial reduction in public expenditure over a period of several years. There is now a cross-party consensus about the need for cuts, even if there is disagreement and lack of clarity about their scale and timing and where they should fall.
However, the list is inevitably something of a rag bag. Almost everyone will find something to love and something to hate. The ideas range from the highly contentious (freeze the basic state pension for one year) to the arbitrary (cut 10% from the budgets of all non-ministerial departments except UKTI and the UK Statistics Authority). They include some thought-provoking proposals, such as the targeting of benefits at those who genuinely need them (which does, however, raise the issue of means testing). And they are mainly short term in nature: they should save money for a single year, but would not solve the problems of the medium and long term.
KPMG’s Public Sector Prospectus sets out a three-stage approach to tackling the debt burden: first an aggressive programme to eliminate waste (which overlaps to some degree with the IoD/TA proposals); secondly, and in parallel, a reassessment of spending priorities, which will require real political will and some very tough decisions (agai,n this overlaps to an extent with the proposals of the report); and thirdly, a programme to radically overhaul the way public services are provided, in line with best practice in the private sector. It is this final area that offers the greatest scope for long-term savings.
The authors of the report don't claim that all their suggestions are ‘above criticism’. If you take that at face value, then you can see the list as a series of points for discussion, rather than a definitive set of proposals that have been fully thought through. Overall, The IoD and TA should be applauded for having the courage to produce a lengthy list of targets, rather than hiding behind generalities. We can't have a sensible public debate about expenditure cuts unless we have some solid proposals to chew on.
Alan Downey is head of public sector at KPMG
