Three Whitehall departments should be abolished during the next parliament so the government can balance the books, a report recommends.
The Department for Business, Innovation and Skills, the Department of Energy and Climate Change and the Department for Culture, Media and Sport, along with most of their agencies should be scrapped, says the TaxPayers’ Alliance.
The think-tank and pressure group, which campaigns for a low tax society, published its spending plan for 2015-20 yesterday. It said scrapping the departments would save £7.5 billion over five years, and that all their functions could be reassigned elsewhere in Whitehall.
It is one of a set of proposals that would slash public spending to 35.2 per cent of GDP by 2020, which is the level needed to balance the books, according to a forecast in December by the Office for Budget Responsibility, the independent fiscal watchdog.
To reach that level, savings of £50 billion a year by the end of the next parliament must be found, the alliance claims, adding that this year the government is projected to spend £90 billion more than it raises in revenue.
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Abolishing the pensions “triple lock”, which guarantees an increase to the state pension each year by whichever is higher of inflation, average earnings or a minimum of 2.5 per cent and instead linking state pensions to the consumer prices index (CPI) would save £6.8 billion, the alliance believes.
The think-tank also calls for greater tax powers for local authorities, arguing that fiscal devolution would encourage innovation and efficiency.
The grant to Scotland should be slashed by £4.4 billion to reflect the nation’s relative prosperity compared with Wales.
It suggests freezing all benefits for two years, then upgrading them in line with the CPI to reduce government spending by almost £2 billion.
The report adds: “The government should minimise fiscal churn by scrapping benefits such as bus passes, winter fuel payments and child benefit for those who don’t need them.” It estimates that means-testing the winter fuel allowance would save £1.4 billion, and restricting free bus passes would save £560 million. It also suggests scrapping national pay bargaining in the public sector to save £5.8 billion.
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In the wake of its own spending manifesto, the TPA has issued a demand that all parties lay out in detail where they would make cuts over the next parliament. So far the parties have announced only limited ways, with Labour and the Lib Dems promising to scrap winter fuel payments for the wealthiest pensioners and the Conservatives pledging to reduce the welfare cap.
The think-tank said that these declarations were welcome, but added: “For every cut any of the parties is proposing, there seem to be far more promises of higher spending and protecting certain favoured budgets.”
Jonathan Isaby, the alliance’s chief executive, said: “The politicians owe it to all taxpayers to come clean about what spending the country can and cannot afford. This candour has been noticeably absent in the election campaign.”