The Conservative party conference is underway this week, and in keeping with their minimal government ideology, the talk is all about the spending cuts they’re planning if when they win the next general election. David Cameron yesterday announced plans to cut incapacity benefits, and use the savings to fund back-to-work schemes. It’s meant to be a ‘tough and tender’ approach, although it’s in danger of treating people as scroungers until proven otherwise. Boris Johnson wants streamline spending on public transport.
A couple of weeks ago The Taxpayers Alliance and Institute of Director’s joint wish-list generated a lot of media attention. You can read a summary of it on their website. It includes items such as abolishing Sure Start, the government’s programme to provide childcare to underprivileged families. Plans to rebuild or renovate schools are scrapped. The Department for Communities and Local Government gets cut down to size (who needs communities?), and the Department for International Development budget is frozen for a year.
Now, there’s no question that the budget deficit is pretty horiffic, that the Labour government has been living beyond its means for quite some time. Cuts are necessary and urgent. By all means let’s drop the ill-advised and contentious ID card, and cut government advertising budgets. I agree that we should scrap the Eurofighter upgrades, but why not the Trident nuclear weapons plan and the new aircraft carriers too?
But, we shouldn’t be cutting anything that is aimed at alleviating poverty. We can make efficiencies, but we can’t go backwards on health or education, and we should keep our promises on international aid. Taxes may need to rise to do all of that, or there are some things we haven’t tried yet. In order to keep our spending socially progressive, here are some ways of making our money go further:
- The Tobin Tax – there’s still no tax on currency transfers. Given the unimaginable sums that cross the globe every day, even a tax of just 0.005% would raise $33 billion a year. This needs to be negotiated globally, so the funds should be used for international development and climate change adaptation.
- Tax havens – Apparently the US currently loses $345 billion a year from tax avoidance. I don’t know what the UK figure is, but it’s somewhere between £3.7 and £13.7 billion. How about we take the money that’s owed to us before we start closing nurseries?
- Windfall taxes – When oil prices soared in 2008, many agencies suggested applying a windfall tax on the oil companies, who were making huge profits out of the shortages. Nobody dared in the end, but it remains a good idea. You could go one step further with it too, and introduce a sliding scale, so that those who benefit from energy bubbles pay to help out those who suffer from them – poorer households who can’t afford to pay their bills.
- Cancel Trident – Gordon Brown has considered dropping his submarine order from four to three, but really we should abandon the whole idea. How can we hector Iran on proliferation while we upgrade our own nuclear weapons? They have no place in today’s world. Wars are no longer fought between nations, but between ideologies, and the deterrent factor no longer no applies in the age of the suicide bomber.
Other ideas include subsidy reform, a small increase in the business tax for companies that have received public bailout money, a tax on aviation fuel or on plane seats, or road pricing. Another suggestion would be to allow local councils to issue their own bonds, which US states do to raise cash, but is forbidden here. There’s no one solution, but lots of options for increasing the public purse in ways that ensure justice and protect the vulnerable.