In recent years tax has risen to astonishing levels to feed the state spending machines. The electorate, bled dry now can yield no more, so the government turn to borrowing and printing money on an epic scale. Servicing national debt even at record low interest rates costs us all 18p in the £. When interest rates rise, as rise they must, servicing debt will become impossible. We politicians owe the electorate some honesty, sadly absent so far."- Godfrey Bloom MEP - UKIP, Economic Affairs.
•The Conservative Party press, running scared of UKIP as always, have resorted to the usual disinformation and spin that turns all right minded people against politics. The electorate has disengaged to an average level of 50%. Few can now even be bothered to vote. ‘What’s the difference? They’re all the same’, is the comment we all hear out canvassing at election time. Of course until recently that would have been true.
The country needs a radical reappraisal of how the economy is run. I would like to break my argument down into three pillars. Principle, strategy and tactics.
The principle is the shortest and easiest to write but the most difficult to explain. We now have the third generation of ‘Keynesian’ politicians who believe the state has a major role to play in every aspect of our lives. Both Labour and Conservatives believe this albeit to varying degrees, in spite, paradoxically of seventy years of abject failure.
There are two kinds of citizen. The wealth creator and the wealth spender. Without the wealth creator there can be no public services, this might seem like a statement of the blindingly obvious but not to politicians and bureaucrats. The state’s primary responsibility is defence of the realm. One could argue maintenance of the Queen’s highways and the Queen’s peace. The relentless encroachment of government since the war has, of course, given an inexorable increase in public spending. As a percentage of GDP in the UK public spending has increased every year with the exception of 1987. It now hovers at nearly 50% of GDP, ‘Tax Freedom Day’ is 30 May.
So let us all understand this fundamental truth and admit it cannot possibly continue. In recent years tax has risen to astonishing levels to feed the state spending machines. The electorate, bled dry now can yield no more, so the government turn to borrowing and printing money on an epic scale. Servicing national debt even at record low interest rates costs us all 18p in the £. When interest rates rise, as rise they must, servicing debt will become impossible. We politicians owe the electorate some honesty, sadly absent so far.
To strategy then. To understand the difference a definition I learned at Sandhurst was from General Patton’s concept. Strategy is how you get a girl into the back row of the cinema. Tactics is what you do when you’ve got her there.
The strategy must therefore be to acknowledge as an instrument of policy public spending takes money out of the economy, it does not put it in. This is enormously difficult for people who have been brought up to believe the contrary. A walk around the town of Beverley in my constituency will reveal my meaning. Almost half the town is brand new. Magnificent buildings, state of the art, which houses public sector employees. The other half is shops, restaurants and pubs, desperately trying to fight ever increasing business rates to pay for all these bureaucrats. Added to their struggle on the high street is 20% VAT. Any wonder one in five high street shops have given up the struggle.
One man’s public sector job is another man’s tax, another child’s future debt, an old age pensioner’s inflation depleted savings. We have as a nation failed to understand this since the late 1940s. (I was born in 1949, I have seen the encroachment of the state year by year.) The strategy therefore must be to drastically cut public spending without which the equally massive tax cuts cannot take place. Like any household in financial trouble we must sit down as a family and list the ‘must haves’, ‘nice to haves’ and ‘waste’. In a family where Dad or Mum are made redundant the prime objective is roof over the head and food on the table. The car, the holiday, the golf club membership, the booze and the new stair carpet must go. Indeed, maybe some pictures, objets d’art, antiques put up for sale. Government is simply no different.
So to tactics. What therefore are the ‘must haves’. Armed Services, police and infrastructure. The things that make the nation state. So dire are our finances as a country it may already be too late. Moody’s got it wrong in my view on debt to GDP peaking at circa 85% in 2016. Public sector pensions and private funding initiatives have swollen our debt ratios of 200%, we are in Greek territory already. Our only way out is growth. Growth with expert housekeeping. None of which we have yet had. If you want some detailed figures on the current position see Stephen Glover’s piece in the Daily Mail. Even newspapers are looking at the numbers. Heaven knows it could be the BBC next. By the by don’t they love their monster public sector salaries and pensions?
Let us start a ‘little list’ in the estimable words of WS Gilbert. In no particular order, away with £1 billion per month on overseas aid, £1 billion per month on EU membership, £1 billion a month on fake charities (Google fake charities, you will be amazed), £4 billion per month on Quangos, yes £4 billion.
The Tax Payer’s Alliance has flagged up £1.5 billion per month in savings with mergers and abolitions. Some of the most expensive quangos are no more than EU regulatory enforcement agencies. Without the necessity for these I believe £3 billion per month could be saved. Notice I have already saved £36 billion per year. But let me go further still. Ring fencing the sacred cow of the NHS is absurd, an organisation of 1.3 million people less than half of whom have any sort of medical qualification. A £200,000 billion organisation can we really save no money? Of course we can. Divide the number of school children into the education budget, £10,000 per child, can we really make no savings? Of course we can. Does the Head of the County Council really need a salary of £200,000? Does the Head of an NHS Trust need £250,000? Does Head of Social Services in Rotherham need £120,000 per annum? Does Barnsley Council need over 9 people on £90,000? Has anyone any idea what these salaries mean in South Yorkshire, you could live like a film star on them. Does the Head of the BBC TV planning need £400,000 per annum to run 21 repeats out of 23 programmes on BBC 2 on Xmas Eve? Even her Majesty was cheesed off! Yet with all this public spending there is still a shortage of mid wives, closure of A&E wings in hospitals, roads a pot holed nightmare worthy of the third world. Have you noticed I have not suggested sacking a single soldier, policeman, doctor, nurse, teacher, road sweeper or dustman. The people who actually do something for a community.
We have a crazed, insane energy policy with both direct and indirect subsidies. Wood chips shipped in from Canada to burn inefficiently at Drax Power Station. Absurd windmills which are more than useless (see Dr Ruth Lea’s Civitas research and others). Solar panels which won’t boil a kettle backed up by a whole government department of self interested ‘renewable’ energy shareholders. An MOD procurement process run by monkeys, see my own Washington Defence University paper of defence procurement and MOD wasters.
I believe UKIP could save £80 billion per year on spending to fund significant exciting tax cuts.
More over when people ask me if the tax cuts have been ‘funded’, it always flags us a potential economic illiterate. The school of thought who believe if 15% VAT raises £10 billion a 25% increase will raise a further £2.5 billion. When income tax and NI reach 50% of income people run for their tax planner. Confiscatory tax raises no money. President Hollande is finding out. People won’t pay. They disappear or set up offshore trusts and companies.
It is my belief low flat tax with high thresholds will either flat line or increase revenue. It worked for the Warren Harding, Calvin Coolidge administrations in the 1920s, Regan in the 1980s and astonishingly when introduced recently by the Czech Republic who raised more in the first 6 months than the entire previous year.
The internationally wealthy would see England as a place to stay, to set up shop. Not squeeze the so called rich on the basis of envy not economic common sense.
Notice I have not yet even mentioned social and corporate welfare. Several £ billion per month there too I fancy for a political party with the balls to front it.
Those who criticise UKIP (always anonymous for some reason) for ‘back of an envelope numbers’ let me argue better numbers that work on the back of an envelope than reams of government statistics which never add up. Incidentally those without the benefit of a formal education might be interested to learn Lord John Russell and Lord Grey drew up the entire British reform policy on the back of an envelope in January 1831.
Let me give you a quotation from St Thomas Aquinas on taxation to consider, “treat it as a more or less extraordinary act of a ruler which is as likely as not to be morally illicit.’