Kennedy Sets New Course For Public Spending

11.02.24am GMT Thu 4th Mar 2004

Today, the Liberal Democrats set out the tough choices required on public spending to free money for other priority public services like health, education, pensions and fighting crime, without increased borrowing or higher taxation.

Rt. Hon. Charles Kennedy MP, Liberal Democrat Leader, and Liberal Democrat Shadow Chancellor, Dr. Vincent Cable MP, set out the new thinking to economists and business people at Bloomberg in the City. The Liberal Democrat Proposals include (see notes to editors for details):

· Making significant cuts from specific Government budgets and a limited privatisation programme to put at least £5bn a year extra into front-line public services.

· Restructuring Government, scrapping ministries and ministers, to devolve decision making to the town hall so that taxpayers' money is directed to local priorities.

· Using the Government's Efficiency Review savings to bring public spending broadly in line with growth rate of the economy.

Mr. Kennedy said: "The Liberal Democrats no longer argue that extra spending on our priorities must be met automatically by an increase in the total level of taxation."

"It is time for tough choices to deliver Liberal Democrat priorities."

"This does not mean that we have to enter a new era of modest expectations and anaemic aspirations in politics. Unlike the Conservatives, our public spending plans focus on identifying and reducing specific government expenditure programmes."

Vince Cable MP said: "The Liberal Democrats now reflect the aspirations of the people of Britain."

"We want fairer taxation. We want to see first class public services - through better spending, not just bigger spending. And we want local people to have the power to decide their own needs."

Notes to Editors

Proposals for redirecting resources to the front line include:

· Scrapping of the DTI, drastically cut the budgets for industrial support and bailouts by up to £7.5bn over the life of a parliament.

· Scrapping the Child Trust Fund saving £1.25bn in a parliament.

· Cutting some extravagant and outdated commitments in the defence budget like much of the residual Eurofighter programme saving a minimum of £2bn.

· Up to £1.5bn saved by not introducing ID cards.

· Selling off city centre prison sites where the buildings are old and incapable of supporting constructive regimes for offenders, while commissioning new PFI prisons to replace them, saving up to £500m over a Parliament.

· A privatisation programme including, the Royal Mint, the Defence Export Services Organisation, British Trade International, the remaining Motorway Service Station assets, Queen Elizabeth II Centre, and the Export Credit Guarantees Department.

· Scrapping many of the wasteful, centrally driven, Area Based Initiatives in the Office of the Deputy Prime Minister and DEFRA.

Longer-term savings can also be found, including from:

· The vast and largely uncontrolled cost of procurement, particularly defence, by a move towards 'off the shelf' purchases giving better value for money.

· Innovative systems of road user pricing including congestion charging and charges based on gains in land values to business from infrastructural improvements to invest in our transport system.

Plans for a restructured Government to save money and devolve decision making to local people include:

· Cutting the number of ministries and ministers, scrapping four departments entirely, restructuring and merging others and cutting over 40 ministers.

· A cull of quangos to achieve significant decentralisation.

· Decentralisation by relocation of civil service departments, such as moving the Treasury to Liverpool, saving £2.5bn over the life of a parliament in office rents.

· Saving of £1.4 billion over a parliament in administration and benefits by scrapping council tax.

Priorities for the reinvestment of savings include:

1. Tackling inequalities in the early years of life: At the next General Election we intend to set out a clear programme to challenge inequality at its source.

2. Tackling crime and its causes: We need reform of our prisons, reform of rehabilitation services, and to reform and expand of our police forces.

3. Improving our health services: We would transform our health service into a system that not only treats bad health, but promotes good health as well.

4. Reform of pensions system: Pensions are the time-bomb issue of British politics.

5. Living up to Britain's international obligations on overseas aid: The aid budget is less than half the size of the target the UK has committed to at the UN.

Please see Charles Kennedy's speech (in the speeches section) and the presentation by Vince Cable (also in the speeches section) for further details.