Friday, July 30, 2010

Three ideas to reduce the deficit

Three ideas for how the government could save money without affecting frontline services or raising taxes:

1. Hire more tax inspectors.

A government report in 2008 calculated that cutting 600 staff saved £74 million in lower staff costs, but led to a loss of £204 million in tax. On average, each member of compliance staff has a tax yield of £640,000 after employment costs each year. There is over £20 billion in uncollected tax and £25 billion in tax evasion which tax inspectors could help to collect.

2. Introduce rent controls.

The government spends more than £20 billion on housing benefit payments, much of which goes to private landlords. If they reduced the rents that landlords were allowed to charge their tenants, then the housing benefit bill would be cut.

3. Stop paying private companies to harass cancer patients and wounded ex-soldiers.

The government pays a company called Atos healthcare to carry out medical assessments to see whether people are able to work. The more people that Atos healthcare assess as capable of work, the more money they get from the government.

However, up to 70% of their decisions get overturned at appeal, and every appeal costs the government extra money. If the government only paid Atos healthcare money when they got their assessments right, it would reduce the amount they paid the company, and save money on having fewer appeals.


Each of these policies also has other benefits. Hiring more tax inspectors would reduce unemployment and ensure that there are fewer tax dodgers. Rent controls would save tenants in the private rented sector money and help make sure people are better off in work than on benefits. And paying Atos healthcare money to do their job properly and assess people accurately would make life a lot less stressful for many sick and disabled people who have wrongly seen their benefits cut.


At 3:04 am , Blogger james said...

I totally agree with these ideas, and hope they will be floated in one of the better think tanks. But I cannot resist playing devil's advocate:

1. The argument will be that enforcing the tax laws is wrong because taxes are too high. Enforcing the law will thus have the same effect as raising taxes - though the rich might not up sticks and leave, their capital might take flight - and perhaps inward investment will be risked.

So, to make the argument stronger there could either be an assesment of probably impacts, or else hypothecation (collected taxation will be dedicated to private sector job-creation, etc.)

2. The argument will be that perhaps this landlord-subsidy has a multiplier effect - the profits of landlords being re-invested in the construction or renovation of new properties for rent.

Rent controls could then be tied into the promotion of more sustainable and equitable structures for the private rented sector - increased number of housing associations / co-ops, etc.

3. The argument here would be around how it would be possible for public authorities to know if the judgement of Atos was correct, given that they are supposedly contracting Atos on grounds of expertise. A tricky one...


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