Cutting the cost of the state

The government machine expands whenever it is given the opportunity. A dominant public sector adds to inefficiency, bureaucracy and cost as well as damaging private enterprise.

The massive increase in funding for the public services achieved little in return. The number of people employed in the public sector has shot up by 1.2 million since 1997 although only a small proportion of this was in front line staff.

According to research by Civitas, over a third of all households are now dependent on state benefits for at least half their income. This is unsustainable if we are to prosper and avoid impoverishing the next generation.  

A key step: the new Growth Rule

To develop a low tax economy that encourages enterprise and initiative we need to set firm targets to reduce public spending. The New Party would adopt the proposal by Reform in which the trend growth rate of departmental spending should be at least 2 per cent lower than the trend growth rate of GDP. On current terms would still allow growth in spending in real terms of 0.75 per cent a year but would reduce the overall share of the public sector in our economy.

Our long term goal would be to reduce the size of the public sector from over 40% to below 30% of GDP. For the most part this would be achieved by eliminating unnecessary and overly-expensive government programmes.

  • “Public sector waste is endemic. It burdens the taxpayer and undermines the economy. Any Government worth its salt would tackle it as its first priority.” Ruth Lea, Director of Centre for Policy Studies and Advisory Council member of the Taxpayers’ Alliance

Accountability and audit

Over an initial five year period, we would reduce the size of the government’s central administration to below 1997 levels. This will be made possible by the reduced administration required by a simplified tax and benefit system. In addition, we would require all government departments and local authorities to undergo external audits to maximise efficiency and guarantee best practice.

Local authorities would be required to undertake more rigorous competitive tendering to prevent the many abuses of recent years. Education funding as well as other services would be taken out of the hands of local authorities.

Evidence from the Gershon Report suggested that the government could make savings of £20 billion by cutting out waste and efficiency. However, this was based on the premise that existing government policies would remain. By contrast, the New Party would physically reduce the scope of government and we would treat the James Report (which proposed savings of £35 billion “without breaking sweat”) as a minimum rather than a maximum.

Reform in the public services

Alongside controls on spending we propose far reaching reform in the public services to provide a more effective, people-friendly approach. Individuals and families alike would benefit from much greater choice and tailored solutions. The welfare state needs radical reform, not window dressing. Our proposals for welfare would address this issue.