Budget needs to set out urgent plan to reduce deficit by £100bn

Radical overhaul of welfare state required

Ahead of today’s Budget, the free-market think tank, the Institute of Economic Affairs (IEA), is calling for radical measures to set the British economy on the course to recovery:

An urgent plan to cut the deficit

Britain needs an urgent plan to reduce our deficit substantially. Cutting around £100 bn within the next few years must be achievable, especially given that public spending has approximately doubled since 1997.

A radical overhaul of the welfare system and other public services

To increase savings in the medium term, a radical rethink of the structures of public service finance across areas including health, education and welfare is needed.

A reversal of previously announced tax rises

The planned increases to National Insurance and income tax should be reversed, along with the reduction in pensions’ tax relief. Zero-rate VAT should be abolished and the money used exclusively to raise personal income tax allowances.

Mark Littlewood, Director General of the Institute of Economic Affairs said:

"Politicians are not talking seriously about the need for dramatic and speedy cuts in public expenditure. A few billion here and a few billion there is nowhere near enough to restore market confidence. We can’t be expected to make sufficient savings from so-called efficiency gains, there will need to be major cuts to a whole raft of public services. We also need a radical overhaul of our welfare, education and health systems, to ensure that we don’t suffer as easily in future from the sort of reckless and out-of-control spending that has characterised the last few years."

To arrange an interview with Mark Littlewood, IEA Director General or Professor Philip Booth, IEA Editorial and Programme Director, please contact Ruth Porter, Communications Manager, 07751 717781, 020 7799 8900, rporter@iea.org.uk.