Question:

Our debt interest has increased by one-third in one year to 3% of GDP, and, at the rate that our main parties plan to continue to accumulate debt, will probably be over 5% by 2014. Last time Britain had to go to the IMF for help with its debts, the interest had just crept over 5% of GDP (on a much lower level of debt than planned for 2014). What specific cuts or taxes would you apply to stop Britain from going bust?

Answer:

The main parties agree that tax rises will have to play a part in their inadequate deficit reductions, though of course they refuse to be honest about which and how much. We believe that our economy is already over-taxed, and that we need not only to cut the deficit more aggressively than planned to avoid big increases in interest rates, but also to cut taxes, not increase them, if we are to start to rebuild our economy.

Unlike the single-issue parties, we don't pretend that there is some magic bullet that will allow us to do that without much pain. We are frank that tough choices will be needed, and the axe will have to fall on many things that are “nice to have” but we just can't afford at the moment.

The “nice to haves” include public spending on culture, media, sport, religion, environment, community amenities, international development, industrial policy and transport subsidies. If we cut the budgets of the relevant departments back to the level of the late 90s (in real terms), we can save almost £50bn.¹

If we reduce spending on Scotland and Wales to the average UK spending per capita we would save another £9.4bn.

Rather than surrender our rebate, we need to negotiate an extended rebate and derogations from the EU or get out, saving us another £3-6bn a year (and boosting the economy further down the line as we scrap their red tape).

Those will be hard enough, but they are still not enough to avoid trouble. We believe defence and law & order are the first duties of government, not soft targets for cuts, and in any case, current spending on them is so low that there is not much scope for significant cuts. Consequently, there is no way to get the deficit under control quickly enough without impacting the three big spending areas of welfare, health and education, which between them account for 60% of government expenditure.

Most welfare goes to the inadequate provision for the elderly and disabled. We have a programme to get those who can work back to work, but in an environment where we are slashing public spending, reducing disincentives to work and making more adequate provision for the elderly and disabled, the honest politician should admit that welfare spending is likely to go up, not down in the short-term.

That means that, however unpopular, we will have to find ways to cut public spending on health and education. If the government doesn't have the money and we don't want to cut services, we will have to bring in private investment. And if you want to attract private investment, you have to allow them to make profits. We would privatise primary healthcare (GPs) and most educational services. Instead of the government providing the services, the government would provide the means to pay for reasonable use of the services. That would introduce competition and private-sector efficiency, abolish layers of bureaucracy, and remove from government the need to fund the capital investment. We believe that, with some restraint on wages and pensions, we could find over £40bn of additional savings.

With a few smaller changes, we believe that government spending could be reduced by £109bn in short order. We would use that saving to cut the deficit by £84bn and cut taxes by £25bn, redistributing the burden of taxation to reduce taxes particularly on employment and road-users, to get Britain working and moving again.

Notice that I have not placed any convenient reliance on fictional “efficiency savings”, “reduced tax avoidance”, or improbable rates of economic growth. Nor have I relied on exaggerated savings from magic bullets. I may be punished at the ballot box for my honesty, but my whole purpose in entering this election was to provide at least one voice that was telling the truth about the tough choices we have to make.