What I Want From the Next Government


With a little over 5 months before the next election we can all look forward to being bombarded with manifestos, promises and statements from those vying to rule us. This seems to be to be back to front, so I thought I would tell Dave, Nick, Nigel and (God help us) Ed what I expect from them. They can then contemplate the ways in which they will disappoint me.

I will deal with the topics more or less in order of my priorities and, where possible, share the arguments that lead me to the conclusions. However this is not a manifesto, so in the interests of brevity and clarity I will not necessarily develop them fully. Of course, I am happy to expand and expound upon request.

THE ECONOMY

The simple fact is that the country owes £1,500 Billion, and this is still increasing in spite of the incredible efforts of those working in the UK private sector, who are delivering growth. The implication of this is that the tax take is at about the maximum that it can be, and therefore government spending has to fall, urgently. Five years of austerity and cuts via salami slicing has not delivered sufficient savings and it is unlikely to. We therefore need a plan B, which is a total restructuring of government spending.

The first step is for the government to publish where the money goes and what liabilities exist. This can only be achieved if the government adopts the same accounting policies that all other enterprises are compelled to, i.e. UK GAAP (or its replacement FRS102). The Civil Service will whine that this is not possible or appropriate; my answer is that if they don’t know how to do it they are not fit for purpose. The ONS is a start, but it needs to go much, much further. The accounts (which I think would be best generated by department or agency) should be published annually, possibly bi-annually. Once we have established where all the money is going we will be in a position to spend less of it.

The second step is for it to become unlawful to set a budget that involves a deficit. The blithe assurances of ministers and officials over the past years have dumped a huge burden on the economy and the people who have to service the debt (and at some stage repay it). Most of these people weren’t born at the time the spending was incurred so their consent was not explicitly given. Taxation without representation started the US War of Independence. So far taxation before conception has not triggered social upheaval, but as the consequences become clearer I’m not confident that the peace will hold.

The government’s accounts should be examined by those capable of doing so and free from political affiliations. Rotating it through auditors, including accounting firms other than the big 4, should avoid that potential problem. Each firm gets to do it once, at commercial rates. Smaller firms could form consortia were there a manpower shortage. The audit would have the same objective as any commercial audit, i.e. to produce a true and fair view of the country’s financial position.

In terms of running the economy the government actually has little to do. It must provide a legal framework and provide that infrastructure which cannot be provided by other means. As the government is bankrupt its capacity for major spending programmes is limited. It has no business trying to run companies competing in open markets.

It should instead look in particular at enabling a wider adoption of crowdfunding solutions to allow more investment of wealth into the SMEs that produce growth, rather than chasing the small number of fully listed companies. Investment in real estate should not be encouraged.

In terms of taxation it should take the minimum possible commensurate with delivering the services required, plus a bit to reduce the debt. Where possible taxes should be hypothecated so that, for instance, the income from road tax, fuel taxes etc. should be applied to transport and environment. If there is a surplus then the tax should be cut. Indirect taxation (e.g. income tax) should be used for defence, welfare and the like.

Before looking at the spending departments in detail, we need to address the elephant in the room. Our economy functions differently to the ones in Europe, but too much of our law comes from there, and is therefore beyond correction and development by the UK government in the interests of the UK. Saving the UK is unlikely to be achieved by staying in Europe.

EUROPE

As it stands the EU is not working. Its accounts are a mess and its policy is (understandably) focussed on saving the Euro. Whether this is wise or possible is not relevant.

I expect the next UK government to produce detailed rational arguments for staying, renegotiating (if possible) or leaving as they see fit. After a period of serious public scrutiny I want a referendum (no later than May 2017 and earlier if possible), the results of which to be enacted in the shortest possible time, or one year – whichever is faster.

WELFARE

According to ONS data, the single largest slice of government spending is on Social Protection and Personal Social Services which will consume £253 billion in 2014. That is £9,800 per household. This simply can’t be right and a huge amount of this spend must be tied up in the administration of a complicated system. The only data I can find is for 2011-12, but that gives a total benefit spend (i.e. the money handed over to recipients) as £160 billion. Allowing for a bit of inflation, the inescapable conclusion is that the benefits system is costing over £80 billion to administer. That’s just ridiculous – it’s almost the size of the entire education budget.

The system needs complete reform. I think Iain Duncan-Smith is doing well on this; but with £80bn to save he needs further encouragement. It should not be difficult to establish the income required for an individual to exist at various ages and locations. If his/her income is short of that then the government should top it up. This involves means testing, but that is reasonable and necessary to ensure that money goes to where it is needed, and only where it is needed. As HMRC has all the data that it needs it should be possible to automate much of this process from existing software and data. If Tesco can tell where I shop, what I buy and what I am likely to buy tomorrow (which it can through its Clubcard) it’s not unreasonable to expect the government to know what I earn and what I need. If HMRC management says it can’t be done sack and replace them (which is what would happen in the private sector).

PENSIONS

I want an explicit admission from the government that the state pension scheme is in fact a Ponzi scheme and, unsurprisingly, is in huge trouble. Moreover, those who will be paying for the pensions were not consulted. The pension system should be subsumed into the welfare system (i.e. means tested).

Private pensions should be liberated further from state control. It’s the pension owner’s money and he can do what he likes with it. It is unlikely that the public pension will be so generous as to encourage the feckless.

Public sector employees should be required to fund their own pensions rather than impose a burden on future taxpayers. They won’t like this, and will probably strike. But my children were not created to pay the unfunded pension of someone in the public sector.

The retirement age should continue to increase, although of course those with sufficient wealth in their pension pots can retire whenever they like. Those senior citizens unable to work will be covered by other welfare payments.

HEALTHCARE

The NHS should be broken up into manageable parts, which should transferred to a range of ownerships, predominantly in the private sector. Any funds generated from the sale should be applied to reducing the national debt.

The government should pay insurance premiums for those on welfare and consider making private health premiums tax deductible. Given that health care cost £4,000 per household it should be possible to provide a pretty good insurance solution, with individuals able to buy more extravagant cover if they like.

Diabetes is a problem caused primarily by sugar. So tax sugar and apply the revenue to the health service budget.

Coordination of the availability of suitable heath facilities (if necessary) should be led by county councils. The role of the Department of Health should be trimmed to one of supervision and inspection.

EDUCATION

The state education model should mimic the private education one; each school should be owned in trust and run by a board of governors who appoint the headmaster, secure funding and set salaries etc. The governors are mostly elected. They are unpaid, but insured.

The role of the government is simply to collect and distribute fees, following the pupil. Pupils should be free to attend whichever school they like. The level of fee will be set by the governing body on the basis of the operating and maintenance costs. Their accounts will be subject to inspection and challenge by the charities commission and/or the Department of Education and/or Local Education Authorities (if the latter remain necessary).

Teaching hours shall be extended to match the working day. Access to and participation in sport shall be increased.

Technical colleges shall be re-introduced to produce an alternative to academic education, the transition being made at 16 (i.e. post GCSE). The number of places at university shall be reduced as a proportion of the school leaving population to reflect the number that actually graduate, as opposed to the number that enrol.

DEFENCE

I want a government that is able to acknowledge that something has gone terribly wrong in the MOD, as evidenced by our near-disastrous performance in the Iraq and Afghan wars. That is going to require a Defence Secretary (or his nominee) who commands sufficient respect to demand answers and impose solutions, a latter day Cardwell. Either Senior Officers advised Cabinet to proceed as they did, or the advice they gave was ignored. In the former case the Senior Officers were incompetent, in the latter case spineless. In either case they were massively over-promoted. The system that enabled this needs addressing, urgently.

We need far greater integration with reserves and a structure that reintegrates the armed forces with the communities that they serve. The super-garrison may or may not be the best structure.

The Armed Forces are almost certainly too small. A plan needs to be put in place for their expansion. This is likely to be particularly challenging for the Navy given their addiction to aircraft carriers and the exorbitant cost of new destroyers and submarines. But more ships are necessary, particularly if we are to leave Europe. A review of the need for the carriers, including cost benefit analysis, should be conducted and made available to the public.

The funding of the nuclear deterrent to be made part of a separate service (albeit one with manpower on secondment from the Navy).

TRANSPORT

Given that there is no money, HS2 & 3 are to be scrapped unless the private sector is prepared to take it on.

Runways to be authorised at both Heathrow and Gatwick, and regional airports and internal flights to be further facilitated. If this requires an Act of Parliament, so be it. But the runways are to be built with private money.

FOREIGN POLICY

Irrespective of the decision on Europe, the aim of foreign policy will be to turn the Commonwealth into a free trade area in as short a time as possible.

ENERGY

Build nuclear power stations. Stop subsidising absurd offshore wind.

POLITICAL REFORM

The right of recall should be enacted, and the sanctions available against miscreant MPs should be increased.

The Boundary Commission should become independent and its decisions binding.

Political parties should have their budgets capped, and the amount allowed to be spent on elections also capped. Under no circumstances will parties be funded from taxation, so the cap will set on the basis of the total raised by the poorest party (on a per candidate basis).

The House of Lords to be restructured by a body that includes no-one who has ever been an MP. Until a solution is found, and approved by referendum, there should be no further appointments to the House of Lords.

CONCLUSION

That’s it. I hope that adoption of this agenda, or similar ones, will prevent this country being bankrupted again by misguided politicians. It should also shake the executive branch into reforms that suit it to the 21st Century, without losing the long traditions of probity and service.