IoD has 34 ways to save the UK £50bn

Chris Wheal

Mar 8th 2010

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Filed under: Economy, Financial Crisis, Budget 2010

The Institute of Directors' (IoD) boss Miles Templeman (pictured) has used its Business Manifesto 2010 to demand that the next Government cut the deficit as soon as it takes office. I'm not sure government do Miracles on Fridays.

The reality is, like the CBI, the IoD wants to protect high income earners and businesses from tax rises and impose swingeing cuts on the public sector, believing they will not have the negative effect on the economy that some fear.

The IoD states "Provided fiscal tightening is based on lower public spending and not higher taxation, tightening will be good for growth and will actually help kick start the recovery.

No so straightforward

"The often repeated argument that lower public spending in the short term will threaten the recovery seems persuasive because it's so straightforward.

"The reality is more complex because a fiscal tightening based on lower spending now is likely to trigger a whole series of positive developments that will assist growth.

"There is a big risk that the longer the debate over 'sooner rather than later' continues, spending restraint of any kind will become harder and be seen as damaging the economy. The implications for higher taxation are deeply worrying.

Survey backs public cuts

The IoD survey on 1,500 members suggests business leaders support public spending cuts in 2010.

86% said that current levels of public sector spending need to be reduced
72% said that the cuts should start in 2010
71% said that addressing the deficit was a top priority of the new Government in its first 100 days

And the IoD said there are six reasons why cutting spending now is likely to boost growth:

Lower spending to reduce the public sector deficit should lead to lower gilt and bond yields - good for business investment
A fiscal austerity package with credibility will help reduce the economic uncertainty for companies and households
Tighter fiscal policy will permit a looser monetary policy - than otherwise would be the case
Given the risk of weaker GDP growth, financial markets will be boosted by measures to prevent a further increase in the deficit
The size of the budget deficit risks households saving more now because they fear higher taxation in the future
The longer the debate about when to cut public spending continues the more likely the fiscal adjustment will fall on taxation - and the bigger the increase will be

"The one area of public spending which should be ring-fenced is infrastructure spending. Unfortunately the Government proposes to halve this spending over the next few years - precisely the wrong thing to do," the IoD said.

34 ways to save £50bn
The IoD has made 34 suggestions to save £50bn a year, including a one year public sector pay freeze, the abolition of child benefit for better off families, and a 10% reduction in the size of the Civil Service.

Miles Templeman IoD director-general said: "We are convinced that we need swift action to tackle the budget deficit. This means making significant spending cuts in 2010.

"The argument that early cuts would jeopardise the recovery is mistaken. We believe that lower spending is likely to trigger a whole series of positive developments that will assist growth."

The IoD Business Manifesto 2010 calls for:

Emergency budget and a deficit reduction plan - enacting a new fiscal target to reduce spending to 35% of GDP by 2020-21
School Reform Bill - introducing greater competition into education provision
Regulatory budgets in all Government Departments - capping and then reducing the total cost of regulation to businesses year on year
Corporation tax reductions progressively to 15% (by 2020)
Higher public sector productivity
Simplification of the publicly-funded skills system
New Civil Service incentives to reduce the flow of regulation
A strong defence of the UK's financial centre in Europe
A radical overhaul of the current pension saving architecture
Secure energy supplies that do not threaten carbon targets
Retention of a planning system that fast-tracks projects of strategic national importance
A third runway at Heathrow
More investment in the UK's road network
More professionalism on company boards through better training
£500 minimum deposits in employment tribunals to deter weak cases

It's a wish list to beat all wish lists. I'd add flying pigs on the end.

Reader Comments (Page 1 of 1)

3-09-2010 @ 4:04AM

keith m said...

The IOD must be in another world this is all about self intreast not about the nation ,make thounds of people jobless so they dont pay tax or NHS stamps .
i ask the IOD this should the goverment have let the banks crash ? we will all have to pay more tax this a world problem
and we are just part of it ,im sure they would like to go back to the days when you had 1000 people after one job but they are allright jack.

3-10-2010 @ 9:32AM

Last Hussar said...

Funny how they completely ignore the estimated £100bn in unpaid tax (running at about £25-40bn pa), all the clever ruses the rich can afford (a few years back merchant bankers in the city were being paid in coffee. They didn't get tons of beans, just a certificate, which they could then sell the rights too, thus avoiding National Insurance), the tax havens, 'Directors dividends' (lower tax rate, and again no National Insurance.

3-10-2010 @ 11:35AM

Ken said...

I say out of the EU save 56 billions now to take of the deficit.
I am fed up reading what the Eu are telling us to do. Lets all stand up and tell them we do not need them and save our CASH.
Why are we supporting everyone but ourselves cut out all the Inquires into things that happened years ago why keep raking them up again. Nothing happens, only money wasted on waffle. Like what Mr Brown done in his interview no straight forward answers. but read between the lines no request was turned down. However did he say any request was looked into or even got a glance I think not.

3-10-2010 @ 12:25PM

terry bell said...

Having read the article it seems that the IOD are really looking after themselves and members the last item on the list of £500 to lodge a tribunal is disgraceful, whilst undoubtedly some claims are doubtful , it would mean less justice for the ordinary worker whilst allowing employers to have an advantage. Their view is undoubtedly one that seeks to minimise any effect on them whilst everyone else takes the brunt. The better training for board members,is that not something they should be doing anyway and is therefore an indication that they have weaknesses.

3-10-2010 @ 12:18PM

oliver ashmore said...

A £500 minimum deposits in employment tribunals to deter weak cases?
Tribunals are already vastly in the employers favor as well the IOD knows.

3-10-2010 @ 1:15PM

Terri said...

If the IoD want to slash public spending, will they turn their skills to deal with the backlash of it, such as; loss of NHS staff posts, teaching posts, posts in mental health services which have to deal with the aftermath/increased suicide attempts of those who have lost their jobs already in banking, retail and other businesses?
Business world is not detached from public services......we all use them and depend on them when the going is tough.
Terri, Mental Health Social Worker

3-10-2010 @ 4:58PM

Advocate said...

Why dont the IOD recommend to its members a compulsary retirement age of 50, as I'm sure most can survive well into their twilight years on earnings, bonuses and gratuities. Then perhaps the rest of us will have a better chance of getting our snouts in the trough! Oh and lets have a tax on pensions above £50,000 a year.

3-10-2010 @ 6:16PM

Dave said...

Geez is it me? I thought these people in the CBI and IOD were `proffesional` business people. I mean what planet are they on calling for massive cuts in public spending, which could potentially result in massive job losses and then saying that it wouldnt harm the recovery of the economy! The stats are that for every pound a public sector employee earns, 50p of that is spent/put back in their respective local area, thus contributing to the prosperity of local businesses.
Their suggestions wouldnt be half as bad if they were genuine and for the good of the country but they are not, they are for the good of themselves and their big business buddys they represent. As the article says= `the CBI, the IoD wants to protect high income earners and businesses from tax rises and impose swinging cuts on the public sector` I dont recall them jumping up and down and issuing warnings regarding the impending banking collapse as vigorously, although i guess its difficult issuing damning statements against their friends.These are the people who bleated that the introduction of the minimum wage would result in massive job losses and businesses going bust, they fought the introduction of the minimum wage tooth and nail, and what happend?... nothing! As for calls for a puplic sector pay freeze , this is reality now, the Tory LGA (local govt association)in their `wisdom` have already imposed a pay freeze for this year, never mind for next year. All in all im sure these recomendations wont fool the general public who every day use in some shape or form our public services, I just hope our decison makers the politicians wont be fooled either.