Liberal Democrat Manifesto 2010 Your Money Dealing With The Deficit

The health of the economy depends on the health of the country’s finances. Public borrowing has reached unsustainable levels, and needs to be brought under control to protect the country’s economic future.

A Liberal Democrat government will be straight with people about the tough choices ahead. Not only must waste be eliminated, but we must also be bold about finding big areas of spending that can be cut completely. That way we can control borrowing, protect the services people rely on most and still find some money to invest in building a fair future for everyone.

We have already identified over £15 billion of savings in government spending per year, vastly in excess of the £5 billion per year that we have set aside for additional spending commitments. All our spending commitments will be funded from this pool of identified savings, with all remaining savings used to reduce the deficit.

We must ensure the timing is right. If spending is cut too soon, it would undermine the much-needed recovery and cost jobs. We will base the timing of cuts on an objective assessment of economic conditions, not political dogma. Our working assumption is that the economy will be in a stable enough condition to bear cuts from the beginning of 2011–12.

Through making tough choices, as well as increasing efficiency and reducing bureaucracy across government, our savings will include:

• Setting a £400 pay rise cap for all public sector workers, initially for two years, ensuring that the lowest paid are eligible for the biggest percentage rise.
• Restricting tax credits.
• Ending government payments into Child Trust Funds.
• Introducing a Banking Levy so that banks pay for the financial support they have received, until such time as they can be split up in order to insulate retail banking from investment risks.
• Scrapping ID cards and the next generation of biometric passports.
• Cancelling Eurofighter Tranche 3b.
• Scaling back HomeBuy schemes.
• Reforming prisons, including through reducing the number of short sentences.
• Cutting back burdensome regulation of local authorities. Further details of our savings, including a number of smaller savings items, can be found in the tables annexed to the chapter on Credible and Responsible Finances on page 96.

In the longer term, as part of a Comprehensive Spending Review (CSR) involving wide consultation, we will seek to identify additional savings which can be used to pay down the deficit further. These will include:

• Saying no to the like-for-like replacement of the Trident nuclear weapons system, which could cost £100 billion. We will hold a full defence review to establish the best alternative for Britain’s future security.
• Reforming public sector pensions to ensure that they are sustainable and affordable for the long term, with an independent review to agree a settlement that is fair for all taxpayers as well as for public servants.
• Better government IT procurement, investigating the potential of different approaches such as cloud computing and open-source software.
• A wholesale review of value for money in the public sector based on the findings of the National Audit Office and the House of Commons Public Accounts Committee. We will establish a Council on Financial Stability, involving representatives of all parties, the Governor of the Bank of England and the Chair of the Financial Services Authority. This group would agree the timeframe and scale of a deficit reduction plan to set the framework (not the detail) for the CSR and seek to promote it externally and domestically. Any agreement would be without prejudice to parties retaining and advocating distinctive views on a wide range of issues (such as fair taxes and spending priorities).

Liberal Democrat Manifesto 2010

Liberal Democrat Manifesto 2010 : 4 Steps to a Fairer Britain

Liberal Democrat Manifesto 2010 : Introduction Our Values

Liberal Democrat Manifesto 2010 : Your Money Fair Taxes And Fair Benefits

Liberal Democrat Manifesto 2010 : Your Money Dealing With The Deficit

Liberal Democrat Manifesto 2010 : Your Money Fairness in Pensions, Savings and Benefits

Liberal Democrat Manifesto 2010 : Your Job

Liberal Democrat Manifesto 2010 : Your Life

Liberal Democrat Manifesto 2010 : Your Family

Liberal Democrat Manifesto 2010 : Your World

Liberal Democrat Manifesto 2010 : Your Community

Liberal Democrat Manifesto 2010 : Your Say

Liberal Democrat Manifesto 2010 : Credible And Responsible Finances

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