CUTTING entire government departments, freezing public sector pay and benefits, and allowing some cuts to NHS spending are the only ways to put state spending on a more sustainable long-term footing, Conservative MPs warned yesterday.
It came as Arbuthnot Bank’s economic adviser Ruth Lea warned the government will not balance its budget until 2017, and will also miss its target to have debt as a percentage of GDP on the way down by 2015.
The Free Enterprise Group of MPs called for another £22bn in spending cuts. Kwasi Kwarteng MP called for benefits to be frozen in cash terms, arguing it is unfair that wages rise by just 2.7 per cent per year while benefits, linked to inflation, rise at closer to five per cent. He believes that would save the taxpayer up to £7bn over the rest of this parliament. Similarly he believes a public sector pay freeze – which has not been implemented so far despite the chancellor’s efforts – will save another £7bn.
David Ruffley MP called for the Department for Business, Innovation and Skills, as well as the Department for Culture, Media and Sport to be abolished, saving at least £2bn a year.
Both carry out work already done by other departments, or which could be done better elsewhere, he said.
Ruffley agreed with PwC economist Andrew Sentance that this should just be the beginning. The former monetary policy committee member said there are currently 46 departments, which could usefully be cut to 10.
Meanwhile practicing GP, Philip Lee MP, called for the ringfence around the NHS to be dropped. He suggested starting with the drugs budget, transferring more responsibility to patients, particularly for lifestyle-induced conditions, saving more than £400m a year.