This, That and The Other: a recipe for cutting state spending

We are seeing some very interesting suggestions about how government spending can be reduced but far too many of them fail to address what I consider to be the central point. The position appears to be that three main factors must be catered for. First there are substantial additional costs to the Exchequer caused by increased benefit payments to those who lose their jobs. Secondly, the money the government has borrowed, is borrowing now and intends to borrow over the next few years must be repaid with interest. And, thirdly, tax revenues are being squeezed by reduced payments in income and corporation taxes as well as Stamp Duty. The other day we read that Treasury officials are preparing briefing papers in which reductions of up to 20% in government spending will be examined. The current government is slowly abandoning its absurd suggestion that spending can be maintained or even expanded beyond current, unaffordable, levels and the opposition are trying to find ways of cutting up to 10% from departmental budgets other than health, education and (I know not why) overseas aid.

This week appears to be Quango week, with both main parties suggesting how they will reduce the cost of committees that undertake tasks delegated by government. So far the approach adopted appears to have been to find cheaper ways of doing what Quangoes do now. There is the same chance of this delivering serious savings as I have of becoming the next Chief Rabbi, and I'd fail the medical. In the next few weeks and months we can expect the debate to move on to other administrative issues with all eyes being focussed on finding better ways to procure paperclips and increasing staff contributions to the tea, coffee and biscuit fund from 25p a day to 27p.

There is no escaping the fact that, if a job is to be done, it must be paid for. Anyone brave enough to take on the public sector unions might try to reduce costs by imposing the sort of wages freezes / wage cuts that many in the private sector must endure if their job is to have any long-term prospect of survival. Such measures could undoubtedly save a nice chunk of cash but it will be a drop in the bucket of overall expenditure. The size of the problem needs something far more radical. The real question is not how government can undertake its present tasks more cheaply, it is whether the country can afford to have the government undertaking all its present tasks. I think there is an easy way to answer this question, which is to see what the current government considered affordable in previous years.

At every budget since Gordon Brown departed from the previous government's spending targets, he announced that things were going jolly well and the country could now afford to spend money on things it could not afford before. Previously it could not afford an extra £X million for This, £Y million for That and £Z million for The Other. Because, and only because, the Treasury was receiving more cash could these sums be spent. Prior to receipt of the additional tax revenues This, That and The Other were not essential they were optional extras. For so long as the money was there (or, to be more exact, appeared to be there) This, That and The Other were affordable luxuries, now that the money isn't there they are non-affordable luxuries. All we have to do is go back through past budgets to see the items Gordon Brown himself identified as being newly affordable. Had they been essential all along they would have been paid for all along and other matters would not have been funded, as it is they were known not to be essential. They remain non-essential today.

It is not enough to look at budgets alone because they don't define exhaustively what government does, they concentrate on how much will be allocated to each area. It is also necessary to ask whether tasks undertaken by government now (a great many of which were not undertaken ten, twenty or fifty years ago) need to be undertaken at all. My hobby horse in this regard is the army of people employed to tell us what not to eat, drink and smoke but there are many more. Why are taxpayers subsidising the cost of staging ballets, playing music to paying audiences and making motion pictures? Why are they paying artists to ply their trade? Why does the government contribute to charities? Why does the government pay for expensive television advertisements for its policies? Why is the government involved in domestic marketing of milk, meat and potatoes? Why is the government spending our money subsidising trade associations rather than leaving it to those who seek to make a profit from trading in a particular product to pay for their own "professional" body? The list can go on and on.

Would ballet disappear from the UK in the absence of taxpayer subsidy? You can bet your pointe shoes it wouldn't. It would go out and find additional sponsors like any other branch of entertainment. Maybe fewer ballets would be staged, maybe more, no one knows, but the number staged would be the number that can be afforded without Mr & Mrs Ordinary who struggle to fund their weekly evening in the pub having to pay for them.

These are all activities which cost not just the money they hand out to third parties but also the on-going expense of the bureaucratic infrastructure necessary to decide who should be the lucky recipients. Inevitably there are also costs involved in following-up to see how the money has been spent. One consequence of deciding that all of these areas of expenditure, and many more, are unaffordable luxuries is that the Quangoes involved will go; but if we just look at the Quango without also addressing the involvement of government in the field at all we can never achieve more than a gentle trim of costs at the edges.

Some Quangoes are capable of being beneficial, such as those that advise on how to address special problems like the current spread of swine flu and those that advise on prospective changes in the civil or criminal law. In relation to these there is one very obvious way to reduce the cost; albeit one that is mere trimming. I have never understood why their members are paid out of taxes to attend meetings. Membership of an ostensibly authoritative national advisory body is a feather in the cap of every person invited to form the panel. They can (and often do) use their membership to further their own careers and/or to secure private-sector consultancy positions. I doubt that many, if any, of them would decline membership if fees for attending were discontinued, not least because the world of academe is highly competitive and Professor Previously-Snubbed would readily step in to fill the breach when Professor Superannuated throws a hissy fit. Cover their out of pocket expenses (receipts required for every penny please), bung them an OBE after five years' service, a CBE for a decade, a chance to kneel at Buckingham Palace in return for chairing the thing for two or more years and Robert is your parent's sibling. It would also reintroduce the concept of public service to membership of these bodies. If no one is prepared to serve without being paid a fee the response should be to ask why, not to offer money. The answer will, I suspect, be that membership carries no prestige because the committee is pointless; all the proof you need that it should simply be scrapped.

On the more general point, reducing the scope of governmental activity will require politicians to give-up powers they currently have. This will require a public mood for getting government out of various aspects of our lives. With any luck the combination of the increasingly unacceptable surveillance state, excessive pointless nannying and the need to cut costs severely will provide that atmosphere. Oh well, you can't stop a fat boy dreaming.