Following the Comprehensive Spending Review, the Institute of Economic Affairs and the Taxpayers' Alliance held a joint briefing.
The text of Prof Philip Booth's analysis appears below, or you can watch a video of the presentation here .
“George Osborne has probably done enough to ensure that public finances are back on track and that the national debt will not run out of control. He has though, in my view, only taken the first step on the road to reducing the size of the state. There is much further to go. Whilst we will not see further reductions in spending in this parliament, I do hope that we see other radical reform that will rein in the size of government. It is a sobering fact that the government will spend the same proportion of national income in 2015 as it did in 2007. In other words, the size of the state will be no smaller when David Cameron goes to the country than when Gordon Brown left the Treasury. Of course, the proportion of debt interest within that sum is greater - but that is the price that has to be paid when one generation decides to consume at the expense of another.
“I will begin by making a few remarks specifically about the CSR and then will talk about the longer-term scene.
“Much more could have been done. Low-hanging fruit has been left on the tree. There seems to have been an attempt made to not upset anybody – except married couples with one person on higher rate tax, who will lose child benefit in the Treasury’s reinforced campaign to systemically discriminate against family formation right the way through the tax and benefits system. Married couples with one person on incapacity benefit have also been discriminated against.
“What could have been done? I think that child benefit should have been scrapped for 16-19 year olds. Universal payments to pensioners (winter-fuel allowance, free TV licences and free bus travel) should have been abolished. The aid budget should have been cut but the money used much more efficiently. Aid is a real puzzle. The empirical evidence shows so strongly that aid has a tendency to damage the poor, but the government ploughs on regardless. At the very least, it is the one area where the government should assess spending on a project-by-project basis and not have a target for spending and spend up to that target come what may. The absurd “triple lock” for pensioners, which will lead to their real incomes increasing dramatically if there is deflation, should also have been scrapped. Picking this low hanging fruit could easily have created room for £10bn of tax cuts with all the supply side benefits and second-round effects that would have resulted from this.
“I was also concerned that the promises of increases in spending made by George Osborne were very firm and specific whereas the spending cut pledges were rather vague. There remains the nagging question of whether the cuts will be delivered. There also remains a concern that we will not see the desired increases in efficiency that will be necessary to avoid cuts to the front line. Sir Humphrey will do his best to make the cuts as painful as possible and deliver few of the efficiency savings.
“But let’s look at the long term. What I really wanted to see was radical public service reform. This is both good for the supply side of the economy and also would soften the blow of the cuts. There were few comforting messages here – though there may be more announcements in t