I’ve spent the last few weeks pointing out the worst bits of the three main parties manifestos, and telling you are rubbish they all are. It’s the last weekend of the campaign so here are the policies I would have picked instead, and along the way show how client politics distorts tax and spending decisions
[The costings are based on England, unless specified, with an adjustment at the end for the same budgets to be given to the devolved administrations. Revenue means a recurrent budget, capital means a one off spend. Negative numbers are a saving or a tax increse]
A 2nd referendum with leave and remain on the ballot, with an option to indicate a preference for leave on May’s terms or No Deal. Stop the Leave campaign from cheating again, and stop Russian dark money and on line manipulation. Public Inquiry into illegal activities in the previous referendum, with potential law changes to stop dark campaigns on social media in all elections in future. Basically remain.
Welfare and Benefits
End in work and child poverty £16bn revenue
Restore all post 2010 benefit cuts, and complete New Labour’s programme to end in work poverty and child poverty.
Welfare Reform £5bn capital
Scrap Universal Credits, the disability benefits assessment system, and reduce the sanctions regime to the bare minimum. There would be a capital cost to this – the programme costs of building a new system, but I would also set up a transition fund to compensate benefit claimants who had lost out through previous changes or who would be disrupted by my planned changes. This is an important principle – when HMG costs changes to the welfare system it only counts it’s own costs, not the costs to benefit recipients.
Child and Food Poverty intervention fund . £1bn capital
A one off pot of money to allow Local Authorities to make immediate steps to tackle food and child poverty while my new benefit system is being introduced. The children don’t have a warm coat or shoes buy them. If families don’t have food take them shopping. Buy poor kids Christmas presents.
Scrap DWP £-3bn (recurrent saving)
It costs £6.3bn to run DWP. Some of this is the costs of administering pensions and child maintenance, but the big costs are in JobCentre Plus and administering the sanctions regime.
I would shift pensions back into Treasury, and replace Child Maintenance with a paypal based service. I would get rid of JCP altogether, outsource the job search support for people disadvantaged in the Labour Market to private companies and charities.
I don’t particularly like the current benefit sanctions regime. I recognise that there are a small number of people swinging the lead and they need to be dealt with, but the cost and bureaucracy of the current system is out of proportion to the amount they save, and too often ends up inflicting unnecessary misery on the poor and the vulnerable.
I would give £1bn to Treasury to set up an enhanced Government Revenue Protection Unit that would tackle benefit fraud, sanctions and tax dodging all together – treating tax dodging and benefit fraud as the same thing. There would still be admin costs, but there are huge savings to be had here. A lot fewer Civil Servants, but that’s a price worth paying.
Sell Accumulated Child Maintenance Debt -£4bn (one off saving)
One of the hidden scandals of DWP is there is a historic backlog of child maintenance arrears that cannot be recovered by normal means. This is nearly £4bn in total, and is mostly owed to the Government. I would sell this debt to collection agencies. I anticipate to get only about 10-15p in the pound for the debt, but I also expect that by taking action some of the debt would be repaid immediately to avoid enforcement. This would take nearly £4bn off Government Debt in one go, as well as nearly £1bn in cash payments.
Restore Maintenance Grants for poorer Students £1.5bn revenue
The costs of this policy are hard to measure, because if it works the cost goes up. The costings here are based on the planned savings from scrapping the scheme
25% reduction in Tuition Fees . cost neutral
I don’t feel comfortable scrapping tuition fees right away. It’s massively expensive, and the bulk of the money goes to richer families. It’s highly fiscally regressive. I do however think that the current rate is too high, and because it is too high the costs of administration and default are too high too. I would start by taking 25% off tuition fees and measuring the impact on current and future revenues. I would also stop the sale of student loan debt.
The way in which student debt is accounted for, particularly when it is sold is a scandal waiting to break. We are creating a reduction in Government spending (and deficit) in current years at the expense of higher debt a decade or more down the line.
If my plan goes well, a reduction in fees should be achievable at little or not cost because the default rate would fall, and administration costs would fall with it. I would continue to make cautious reductions in tuition fees over several years, allowing the system to stabilise. This also means that benefit changes for the poorest happen before changes to education funding that benefit middle class people. This is an important principle
Restore Sure Start £1.2bn revenue
This additional funding would restore funding for Sure Start to 2010 levels . Having worked with Sure Start there is a benefit to the NHS and other parts of the state that is hard to quantify, but the benefit to children is huge
Expanded free childcare . £1bn revenue
This is a much less generous policy than any of the main parties because I am proposing to means test the free childcare so that the benefits go to the poorest families. I don’t think we can be giving money to middle class families while poorer families are using food banks.
Additional funding for schools £5bn revenue
Additional funding for FE/HE . £5bn revenue
A general uplift to Schools and HE/FE funding, plus additional access funds for children from poorer backgrounds
Health and Social Care
Recognising Carers . £0.5bn capital
The last 9 years of austerity have placed a terrible burden on carers. The changes to the benefits and care system that I am proposing should help, but we need to recognise their contribution. This is a one off fund to be distributed to carers to recompense them for their contribution. A thank you fund.
NHS funding £6bn revenue
Increasing NHS funding to inflation + 4.5%. This is slightly above the average funding increase historically, and higher than the other parties
End the Internal Market £-3bn (recurrent saving)
I would scrap the internal market, the purchaser provider split. The lot. Measuring the cost of this bureaucracy is hard, but I am assuming that we can take out just over 2% of NHS budget as savings in management and transaction costs. If you look at the way management costs rose during Thatchers period in Government, this is just under half the increase.
I would scrap all the competition elements of the Lansley 2013 Act immediately and remove the NHS from public contract regulations to protect them from future competition. I don’t have a problem with the private sector providing services to the NHS as long as they risk their own capital in return for profit. But sourcing this private capacity doesn’t need a mass internal market and can be done centrally and cheaply.
These funds would go back into NHS patient care, allowing a real terms increase in funds of over 6% per year, nearly as much as New Labour.
If this sounds like sacking loads of managers and administrators and handing over leadership of the NHS to senior clinicians you’re right. That’s exactly what this is. But it’s more than just sacking smart suits. I am getting rid of transaction costs of moving money around the system, the costs of boards and audit committees, solicitors, procurement specialists. The lot. Each region would have 1 NHS body, rather than dozens, and national Arms-Length-Bodies would be slashed too.
PFI buy out fund £25bn capital
Borrow money at low interest rates and buyout PFI deals which are strategically important and are at high historic interest rates
NHS Pensions . Cost neutral
Reform the Doctors pension scheme to remove the disincentive for highly productive senior Doctors to take on more work
Establish a State Pharmaceutical Company -£1bn revenue
The NHS is the largest purchaser of pharmaceuticals in the world, and HMG is the largest funder of pharmaceutical research in the UK (through NHS, Universities and other funding). I propose establishing a state owned pharmaceutical company to compete with the private sector to reduce drugs costs, and bring a return to public purse from R&D. Savings to go back into patient care.
Restore Nursing Bursaries £0.5bn revenue
Increase LA Social Care funding £3bn revenue
I am opposed to free social care for over 65s. Removing the means test on social care is a transfer of more wealth to those already better off. It is fair that those with accumulated property wealth should use that wealth to pay for their social care in old age. I do however recognise that current Local Authority funding for residential care is too low, and the market needs an injection of additional funds.
Nationalise failing care home chains . £0.5bn capital
Care home chains are burdened by high levels of debt. As these chains fall into financial problems the Government should nationalise them, buying out their debt, to create a state owned care home chain to compete with the private sector
Homelessness Fund £1bn revenue
Increase LA funding . £3bn revenue
Scrap Corporation Tax Cuts . £23bn recurring saving
This is a straight forward reversal of George Osborne’s corporation tax cuts
Raise Income Tax £5bn recurring saving
Based on 45p rate above £80,000 50p rate above £125,000
Changes to taxation of multinationals . £6bn recurring saving
Improve the way that we tax multinational corporations so that they pay more tax on their activities in the UK.
Anti-Avoidance £8bn recurring saving
All political parties are claiming that they can generate more money from anti-avoidance measures. I am the only one putting large scale resources in (see DWP)
Reverse VAT increases £13bn revenue
VAT is a regressive tax which hits the poorest the hardest and damages the cash flow of small businesses. If you want to give the economy a boost through tax cuts this is the best way to do it. Give the retail sector a boost.
Extend Small Business Rate Relief . £1bn revenue
Small businesses are the backbone of the UK economy, particularly small shopkeepers. High streets are dying, small shops going out of business. A cut in rates for small high street shops will help struggling small retailers, and combined with cuts in VAT should give a real boost to struggling towns and cities, help them fight back against Amazon.
Brexit benefit . £20bn revenue
This is the improvement in Government Finances due to scrapping Brexit. This is at the lower end of IFS estimates.
Multiplier effect . £5bn revenue
This is the improvement in Government finances due to increased Government spending targeting the poorest and creating economic growth. If you give money to well off people they spend it on foreign holidays, French wine and German cars, taking money out of the economy. When you give money to poor people they spend it in local shops, buy bread, go to the pub, all of which are better ways to grown the economy than tax cuts for rich people.
Scotland and Wales . £3bn revenue
This is the impact of England spending plans on Scotland, Wales and NI. They would be free to choose how they spent it
Tech company levy . -£25bn one off saving
A one off levy on Amazon, Google, etc., to reflect historic under taxation
Other Governance Issues
Referendum on changing the voting system to proportional representation
Consultation (not vote) on shifting decision making out of Whitehall to the English Regions.
Based on the above I have increased taxes by loads more than I have increased spending. This is because I have taken pragmatic steps to increase the tax base and grow the economy while limiting spending increases to health, education and anti-poverty measures. It’s also because what I am proposing is different to all the other parties – small Government.
|Policy||Cost (bn) rev||Cost (cap)|
|Sell CM Debt||0||-4|
|LA Social Care||3||0|
|Social Care nationalisation||0||0.5|
|End pensions triple lock||-4||0|
|Small business rate relief||1||0|
|Tech company tax levy||0||-30|
|Scotland and Wales||3||0|
In reality there are loads of things I have forgotten that I should be spending money on; transport, the environment. You can add your own policies in to fill in the gaps up to to a value of £17.8bn (over £30bn if you don’t cut VAT). You really need to do this because I am assuming that this budget is expansionary not contractionary (that’s why there is a fiscal multiplier)
So what is behind this big gap? Modern politics is based on clientism – each party have their own favoured client groups who they reward and prefer through tax and spending. Thy tailor their spending plans to win elections by promising spending and tax stuff.
Older people (and richer people) vote more than young people and poor people do. Which is why all main parties policies are regressive – they favour older and richer voters at the expense of the poor. Even Labour’s supposed radical budget is regressive – their big spending commitments such as free tuition fees, and ending the social care means test, benefit the wealthy and the old. Stripping out these electoral bribes and making sensible steps to broaden the tax base makes a massive difference to Government budgets.
So all you need to do is think of who you want to bribe the most. OAPs, craft gin drinkers, hipsters on unicycles. Plant trees, cut taxes on beer or cloaks. Build new railways, nationalise cheese makers, save the penguin. An Olympic bid, a new National Stadium for Rugby League.
But at least be honest about it what you are doing. Don’t dress up regressive politics with progressive slogans to make your clients feel better about their own selfishness.
Sensible policies for a happier nation!