Saving money – How to cut Government expenditure without damaging essential services

In my S&A of Funds Strategy I targeted £100bn of savings within 5 years and an additional £100bn within 10. Where exactly is that to come from? The following six headings will I believe achieve it.

Equivalent to Elon Musk’s DOGE in the US).  Musk himself estimates he saved the American taxpayer 0.5% GDP, though there is still much dispute about that. 0.5% UK GDP would be about £15bn, so let’s just pencil in £10bn here on a once off basis

The OBR’s rule of thumb is that every 1% reduction in unemployment releases about £15bn in a combination of increased tax revenues and reduced benefits expenditure. We have seen 3% unemployment in the past but that was before mass immigration, which leaves British workers progressively under-skilled, and Covid, which leaves them depressed and frustrated – or so we are told – but I blame mass immigration for that also as it creates an open labour market in which full employment is impossible; in fact a contradiction in terms. With open borders it becomes impossible for workers to press for higher wages and better terms and conditions. Employers prefer immigrants for a whole host of reasons (age, energy, flexibility, cheapness etc.) so British workers are thrown onto the scrap heap. That undermines confidence and ambition and results in high levels of depression and PIP claims. Consequently we have higher levels of structural unemployment – by both location and skill – than in the past. To turn this around we need to:

• scrap the points-based bureaucratic system for legal immigration and replace it with a reducing quota system where a sponsor has to buy a place in a monthly quota (together will all the insurances). As the quota is reduced each month so the price rises and it becomes comparatively cheaper to hire and train a British person. Rather like import tariffs. A free market economy allocates resources through the price mechanism and the labour market should do the same.
• introduce a new regional policy based on tax discounts post code by post code across the whole of he UK. They would apply to income tax, business rates and employers NI leading eventually to an even level of percentage employment across the land and holding the UK together as a single sovereignty. It must make sense to focus stimulation to where unemployment is highest to get the maximum effect.
• promote education, training and apprenticeships. The existing scheme is generous but we have not seen any significant increase in take-up since it was introduced in 2017. However reducing immigration is likely to change that and we must therefore budget for the increase.

There is a very simple explanation why our public services are so inefficient and wasteful and don’t introduce necessary reforms such as to NHS maternity units despite umpteen reports gathering dust on shelves. There is no top management!  They are all just running around in circles like headless chickens unaccountable to anyone and with no chain of command. Very easy to fix, but see also my paper entitled “Reforming the Civil Service – A Conversation with my AI Bot”. Difficult to estimate savings but I think these figures are probably safe.

 The current capital expenditure budget is £130bn, with a recent increase of 13%. Not all of it can be shifted onto users via the City of course but much of it can and IMO should be. Here’s how.

• Fund our Utilities on a Cap and Collar profit regulation basis, including water companies, railways and buses, power generation and distribution, social housing and much more. These are all monopolies so must be regulated, but the Regulators’ brief must be changed to setting prices so that the utility produces enough profit to attract City funds without profiteering. Each year the utility would issue sufficient new shares and mortgage bonds to fund next year’s capital expenditure programme, pre-approved by the regulator who would also determine dividend payments and audit output quality.

      We currently spend over £400bn on health and education. If 50% used the private sector paying themselves 50% of the cost that would save the taxpayer £100bn. Easily done by issuing a National Credit Card. The users’ percentage would be set by HMRC in complete confidence, and any non-payment added to their PAYE code. It is the purchase decision which drives value, quality and availability in a competitive market all simultaneously – something you never see in the public sector. The NHS quality of service for example is generally high, but availability and efficiency hopeless! It will of course take many years for private sector supply to rise to equal demand so it will be a slow process.

The OBR predicts PIP cost reaching £30bn by 30/31. Why on earth are we paying out financial compensation for a medical condition? A self-assessed entitlement to boot, which is just asking for abuse. Put these conditions onto the National Credit Card so that the purchase decision imposes self-moderation. Even for someone on UCs with a 1% share of the cost would still have to pay out £10 a month on services costing perhaps £1000  which to them is significant but affordable if really needed.