Vince Cable proposes cuts worth £14bn15 September 2009
Vincent Cable, the Liberal Democrat Treasury spokesman, today declared that the "time for generalities is over" as he outlined plans to slash public spending by at least £14bn a year.
On a day when all three main parties are making statements about public spending, Cable said that politicians should be "upfront" with the voters about where the cuts would fall.
Cable proposed freezing public sector pay, cutting public sector spending and abandoning the replacement of Trident, in a package that went way beyond anything the other parties have proposed in relation to cutting public spending.
The Tories have called for government spending to be slashed, but said relatively little about how this could be achieved. Labour has also acknowledged the need to control spending, but it has also stressed its belief that ministers should not impose cuts that could jeopardise the economic recovery.
With Labour and the Tories locked in a linguistic battle around "tough choices", Cable said it was time to debate "when, how and where" reductions in public spending should come.
Cable set out his detailed plans in a 60-page pamphlet published by the thinktank Reform.
Launching it this morning, Cable said: "The time for generalities is over. Instead, we need serious proposals for cutting public spending and tackling the UK's budget deficit.
"The priority is to move the economy out of recession, but there is also a need to restore fiscal credibility and to allow government to focus its resources where are they are most needed.
"We need to debate when, how and where the cuts will come.
"Undoubtedly more are required to meet the exacting fiscal disciplines but asking the British public for their vote at the next election means being upfront from the outset about what government should and should not be spending its money on."
Warning that the process will be "painful and difficult", Cable said a fiscal tightening worth 8% of GDP per year might be needed - higher than the government's plans for a 6.4% correction.
This would involve real cuts in many areas, he said, with no budgets "ring-fenced".
"Existing spending has to be justified, not simply assumed to be necessary and trimmed at the edges," Cable added.
Cable identified nine specific areas for savings:
- Freezing the amount spent on public sector pay, cutting the staff bill for those earning more than £100,000 by 25% and ending civil service bonuses, saving £2.6bn a year
- Tapering the family element of the tax credit, saving £1.3bn
- Cutting public sector pensions. Cable did not put a figure on the amount to be saved, but he said that unfunded public sector pensions receive a £28bn subsidy and that there should be higher employee contributions and later retirement ages
- Scrapping various major IT projects, such as the ID card scheme and the NHS IT scheme. Cable said that scrapping the ID card project alone would save £5bn over 10 years, or the equivalent of £500m a year
- Curbing industrial policy. Cable said that abolishing regional development agencies, cutting export credit guarantee department subsidies and halving the Train to Gain and Skills Councils budgets would save £2.9bn a year
- Reforming the NHS. Cable said that cutting the fees paid to hospitals and scrapping strategic health authorities would save £2.2bn a year
- Curbing centralisation in education. Cable said this would save £600m a year
- Reducing waste in defence procurement. Cable proposed scrapping the Trident replacement and other MoD projects that would save at least £4bn a year
- Selling assets. Cable did not say how much this would raise a year, but he said the Highways Agency owned land valued at £80bn, some of which could be sold
Cable said his ideas were not an "exclusive or exhaustive list" and argued more would be needed to meet the "exacting fiscal disciplines" required by the economy.
And he added: "Politicians must not shy away from explaining in detail how they will tackle the problem of deficits and debt."