What Government Departments would you axe to save money

You need to axe an entire Government department to get a grip on spending


Some Budgets are more memorable than others.








There are now two budgets a year or, as in the first year of the Coalition government, very occasionally three Photo: AP






By Jeremy Warner

7:28PM GMT 06 Dec 2012


229 Comments




OK, so this week’s update on the public finances wasn’t technically a budget at all, but an autumn statement. But since it looked, walked and talked much like a Budget, it seems that we can these days think of the two as indistinguishable. There are now two budgets a year or, as in the first year of the Coalition government, very occasionally three.


This week’s dollop of bad news very much falls into the memorable category, but not for the measures it contained, which in the round were broadly neutral and will therefore have very little macro-economic impact. They also do nothing to further the Government’s goal of balanced budgets.


Rather, it was for the daunting size of the challenge the accompanying documents laid bare. The austerity we have seen to date is just the beginning, we are now told; there are still lorry loads of the stuff to come, with some exceptionally tough choices to be made both by this Government and its successor.


In this sense, it was somehow vaguely reminiscent of the Alistair Darling Budget in which the full horror of the damage done to the public finances by the banking crisis and Great Recession finally became apparent. The latest outpouring of data and forecasts is equally shocking in its implications.


Analysis by the Institute for Fiscal Studies paints an extraordinarily bleak prospect of continued public spending cuts and or tax increases stretching out at least until the middle of next parliament and possibly longer. There seems to be no end to the pain.



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Try this out for size. Let’s assume that the Government sticks by its commitment to protect certain forms of public spending – health, education, pensions and overseas aid – and it imposes no further welfare cuts on top of those announced this week.

In such circumstances, according to the IFS, unprotected areas of spending such as defence, transport, local government and the police, face cumulative additional real-terms cuts in the three years to 2017/18 of 16pc if the UK is ever to reach the goal of balanced budgets. This would bring to roughly a third the real-terms cuts made to these services since the Coalition came to power in 2010.

Rather than attempt to salami slice, an easier and possibly more effective way of achieving the same thing would be simply to abolish an entire department, such as, say, defence. That would certainly do the trick, but it would also leave the nation powerless against its enemies. Or how about the police?

To state the options in this manner is only to demonstrate that cuts of this size cannot and will not be made. To do so would be to abandon large parts of Britain’s claim on advanced economy status. An alternative would be to raise the money through tax rises, but the scale of additional taxes needed to fill the hole – £27bn a year by the end of the period according to the IFS – is so big that it would destroy any chance of economic revival, and therefore be entirely counter-productive.

Even if the Government were to stick to the rule so far applied to the fiscal consolidation, which is 80pc spending cuts and 20pc tax rises, there still needs to be tax rises equivalent to, say, 1p on the basic rate of income tax.

No, either protected spending has to suffer, or further surgery has to be performed on welfare. Since the bulk of such spending is on pensions, eventually this taboo is going to have to be breached too. In any case, the UK finds itself dragged, apparently helplessly, towards the same bonfire of public services and entitlements we are seeing in the crisis-hit eurozone periphery. We may not have the yoke of the single currency, but in other respects we seem to be in much the same boat.

All this, of course, is predicated on the assumption that the Office for Budget Responsibility’s somewhat optimistic forecasts are met. If they are not, then the task of getting to grips with the nation’s debts is going to be bigger still. Personally, I don’t doubt the OBR’s independence from Government, but, looking at the numbers, you could be forgiven for thinking it had rolled over and let its tummy be tickled. To ensure that the Government continues to meet its fiscal mandate, the OBR has had to do three quite controversial things.

First, it has had to include monies not yet raised from the sale of 4G mobile phone licences.

Second, it has assumed that the present underspend by government departments will continue, or in other words that they will continue to spend less than they are budgeted to. This will indeed be a first if it happens.

And third, the OBR assumes a slightly larger “output gap”, which eases the Government’s task in closing the structural deficit. These are all perfectly reasonable judgments in themselves, but they are also very convenient for the Government, and possibly what you would expect from a forecasting body which is, in essence, just the old Treasury forecasting unit dressed up as somehow separate from the original mothership. Old loyalties die hard. If the OBR had truly wanted to demonstrate its independence it would have been harsher.

All this raises anew the old question of whether the country might have fared better with a different economic strategy. Judged on its own terms, the present one has plainly failed. The economy has not recovered as hoped, the debt target has been missed, and the triple-A credit rating is toast.

This latter loss wouldn’t matter very much were it not for the store which the Chancellor himself used to set by it. He wore the triple-A like a badge of honour as a kind of external validation of his deficit reduction strategy. Nicolas Sarkozy did the same thing, so much so in his case that when he lost the triple-A you knew that, economically irrelevant though it was, his chances of re-election had gone up in smoke as well.

Again somewhat generously, the OBR takes the view that economic stagnation has very little to do with the Government’s fiscal policies, and that it is essentially all down to external factors. Would we have been better off today if we had done what the former prime minister, Gordon Brown, was proposing two-and-a-half years ago, and gone for broke?

The counter-factual is always impossible to know for sure, but it is hard to think of any precedent for an economy already running such a humongous deficit in peacetime successfully spending its way back to fiscal sustainability. Most can expect to go bust in the process.

Counter-cyclical spending is a fine idea in theory, and even in practice for economies that have managed to build up big surpluses in the good times. Unfortunately, foresight of this sort takes a degree of fiscal discipline which the UK has altogether lacked throughout much of the post-war period.

It is only when forced to by the bad times that governments summon the resolve necessary to reduce the state to a sustainable size. Brown thought he had abolished boom and bust. In fact, he was instrumental in stoking one of the biggest of all time.

The first Government Dept I would axe would be the Office of Fair Trading who has cost us millions and made more money for Branson because of their bungling of the Bidding for West Coast Trains.

The Border Agency for making such horrendous mistakes. I would replace it with Soldiers from Regiments due to be axed , I'm sure they would make a better job of vetting after a period of tuition.

The BBC. Shower of nepotists, inbreds and wasters.

Iris wrote:The BBC. Shower of nepotists, inbreds and wasters.

So your'e not very keen on the BBC I take it.

Panda wrote:

Iris wrote:The BBC. Shower of nepotists, inbreds and wasters.

So your'e not very keen on the BBC I take it.

They've not exactly covered themselves in glory recently!

No, I agree, the cosy "Aunty Beeb " image is gone .

I would axe the existing Education Dept and replace it with a Minister who overhauls the system and like the Headmaster who has banned mobile phones in his school make it a Countrywide prohibition. Also, someone who will stop the dumbing down of exams , ensure Teachers are dedicated to improving Britain's 18th Place in Europe for basic education.

Just thought of the another one, the Inland Revenue for the complicated Tax system and the lack of will to change the Law to stop these tax avoiders. there is even a Government Tax advisor believe it not who has an offshore Company in Guernsey which only pays Corporation Tax.!!!