Sunday, 4 July 2010

The forty per cent row

The Coalition Government has been accused of 'scare tactics' for asking departments to model 40 per cent cuts. A more sophisticated critique is that this is expectations management: when the cuts turn out to be less than 40 per cent, everyone would be relieved.

The Government's position, as explained by Phil Hammond (who would have been chief secretary to the Treasury if there wasn't a coalition) is as follows: two budgets (NHS and overseas development) have been ring fenced. Education and defence have been limited to cuts of 10 per cent and 20 per cent. That means that some departments will have to experience cuts of more than 25 per cent. The exercise of asking them to model 40 per cent cuts is a way of finding out what departments think is really essential.

A survey referred to on Radio 5 this morning found that those interviewed favoured cuts in overseas development and 'quangos'. Overseas development is only 0.7 per cent of the total budget and as for the 'charity begins at home' argument it would be interesting to see how some British people would cope with living on one dollar or two dollars a day.

The 'quangos' argument is a bit of a red herring. There is no evidence that quangos are any more or less efficient than central government departments. Indeed, they can be cheaper to run as many of them (probably most) are located outside London. What one does need to ask is whether the tasks they perform are essential or desirable and it is probably the case that quangos tend to do more tasks in the 'desirable' category. For example, it is apparent that some of them have advocacy roles and it is open to question whether that is a role of government at all.

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