Public Finances

Based on the Government’s current plans, we will reduce overall public expenditure by 25% and cut taxes by 20%. 

Public Finances  
Existing plansOur plans
Expenditure£bn£bn
Education144290
Health277310
Law and order4320
Welfare and pensions251100
Defence626
Transport4050
Local70100
Other21319
Total1100895
Taxation£bn£bn
Income tax249
National insurance178
Education tax0290
Health tax0157
Health VAT0143
VAT16017
Corporation tax83
Fuel and tobacco4740
Rates6755
Other236193
Total1020895
Figures are based on 2023-24

Notes

  1. A key problem with public finances is getting accurate figures. It should not be difficult but it is. Every effort has been used to get the most reliable figures from official sources.
  2. As far as possible, COVID-19 expenditure has been extracted from figures to aid comparison. Again this has proved very difficult and the scope for error is large.

Honesty in public finances is essential. We cannot go on as we are. The United Kingdom’s public debt and unfunded liabilities are unsustainable, getting in the way of good government, economic development, and future prosperity.

Put simply Government is spending far more than we earn. In the last 15 years borrowing has ballooned, massively increasing public debts and interest payments. Irresponsible government, poor and often sloppy accounting, weak fiscal control and management, expecting our children to pay for our failure to grasp the nettle is no way to run a country.

Current UK government liabilities, including public sector pensions and debt, are over £5 trillion or around £80,000 each for every man, woman and child. Realisable assets are virtually zero. It is our duty to deal with the problem once and for all.

Public sector deficits and borrowing go hand in hand with bad government, poor value for money and the scourge of inflation. People should pay for what they get, judge the quality of the services and vote accordingly.

Economic growth rather than extra taxes or borrowing should finance increases in public spending. A key aspect of the proposals in this book is that they do not involve any public sector borrowing or interest payments on existing debt.

The solution needs to be managed to avoid the consequences of default. We must put arrangements in place for holders of gilts to sell them at face value to the Bank of England. The Bank would then write off these purchases and the existing debt it holds. We must not support “unfunded” public sector pensions schemes. The fantastically generous, unrealistic pension promises are not underwritten with any actual pension fund and cannot be afforded by current and future generations.

In recognition that governments have betrayed public employees, we must introduce hardship arrangements to ensure that every public sector pensioner whose scheme is unfunded receives a pension equivalent to the average private sector pension. We must also stop routine early retirements. In future, we must ensure that public sector employees’ pension contributions are invested to create proper pension funds with real investments.

As a principle, we must not burden the young through taxes and borrowing to pay for the old.