The Center for Policy Studies (CPS), a right-of-centre think tank with close ties to Downing Street, has laid out a nine-point proposal for £30 billion worth of spending cuts that would serve as an alternative to increasing public taxes in the post-COVID economy.
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The UK is on course to borrow more than £300 billion this year to cover the mounting cost of financial aid to support businesses and individuals affected by the pandemic. Though the economy has slowly begun to recover following its recession in the first two quarters of the year, it is still a long way from returning to normal. Experts believe that the deficit caused by the recession is likely to endure well into the coming years.
To dissuade the government from further increasing taxes, the CPS has identified some critical areas in which either spending cuts can be made, or additional value generated, which would help the government recover at least £30 billion of debt. The nine-point plan, it says, will ensure that the government is getting value for money while continuing to protect frontline services in this phase of recovery.
One of the critical aspects of this plan proposes replacing the pension triple lock with a double lock, which could save as much as £2 billion per year. Under this system, pensions would increase each year by the higher of earnings or inflation.
Another proposal is to cut the proportion of national income that is spent each year on overseas aid. A reduction from 0.7% to 0.5% spent on overseas aid could save the government an additional £3.5 billion annually.
Other provisions of the plan that would result in savings include:
- The sale and leaseback of public sector land (estimated to save around £30 billion)
- Improvement of e-procurement and data sharing (£4.5 billion)
- A public sector administrative staff cut of 160,000 (£3.5 billion)
- Streamlining the number of quasi-autonomous non-governmental organisations (£3 billion)
- The sale of high-value council homes and replacing them with cheaper properties (£1.5bn).
- Streamlining local government and its administrative costs (£1bn).
- Making child benefit part of the child tax credit system and tightening eligibility (£1bn).
While many of the above estimates seem fairly radical or are based on certain approximations, the CPS is confident they would still deliver a significant amount of savings to the government.
The CPS’ Head of Policy, Alex Morton said, “Taxes are already at historic highs, and any further increases risk choking off any post-Covid recovery. The government must re-examine its existing spending and ensure it is getting good value before considering raising tax further still. We strongly encourage the chancellor and his team to explore our suggestions ahead of the spending review and budget, and to identify any further savings that can be made.”