Child benefits in Tory lobbyists' £50bn spending-cut plan

Rightwing groups insist the proposals are practical and will not hurt vital services

Pressure on parties to spell out specific spending cuts will grow tomorrow when two rightwing pressure groups set out plans for £50bn in cuts, insisting the proposals are practical and will not hurt vital services.

The Taxpayers' Alliance and the Institute of Directors propose abolishing Surestart and child benefit, and imposing a one-year freeze on the basic state pension and on all public-sector pay except for the army.

Both groups hold sway inside the Conservative party and the proposals will be welcomed by shadow ministers eager to have outriders creating a climate of respectability around big cuts.

The Tory party did not endorse any proposals in the joint report, and the Tory-led Local Government Association responded by saying it was already slashing jobs and costs. The authors concede that some of their proposals are controversial.

The Tories and Labour both this week said they would cut the public-sector deficit.

The joint report proposes £42.5bn of annual savings for 2010-11 and £7.5bn savings in the years thereafter. "Unless fiscal tightening efforts are sufficiently credible, interest rates on government debt could increase to unsustainable levels and sterling could undergo further dramatic falls," it says, also claiming that Britain will have a structural deficit of between 10% and 12% of GDP in the next financial year. The authors say the government cannot afford simply to wait for public service reforms to increase efficiency; the deficit has to be cut now through immediate spending reductions.

The report proposes withdrawal from areas where "the government should not be involved". The plan is for £5.4bn in cuts on schemes labelled "not working" – such as Surestart (a cut of £1.4bn) school building (£2.3bn) and the Eurofighter upgrade (£740m). A freeze in the basic state pension would save £1.4bn and a one-year freeze in the pay of all public-sector workers £6.2bn. Savings of £8.4bn could come from taking welfare from the middle class, including child benefit (although leaving poorer families with child tax credits).

Plans for a £1.6bn cut in "over-extended government" include halving its advertising budget (£270m), abolishing ID cards (£55m) and abolishing the National Health programme for IT (£1.2bn). Other cuts include a 10% drop in non-frontline staff in health and schools (£921m) and a 10% slice from the civil service (£1.2bn).

Matthew Elliott, the chief executive of the Taxpayers' Alliance, said: "Taxpayers cannot afford to sustain the current rises of spending."


Patrick Wintour, political editor

The GuardianTramp

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