Alternatives to cuts
There are alternatives to cutting public services:
1. CLOSE THE TAX GAP
Figures from the Tax Justice Network show that £25 billion is lost annually in tax avoidance and a further £70 billion in tax evasion by large companies and wealthy individuals. An additional £26 billion is going uncollected. This sets the total annual tax gap at over £120 billion (more than three-quarters of the annual deficit!). Leaked Treasury documents in 2006 estimated the tax gap at between £97 and £150 billion (and to put things in perspective, benefit fraud accounts for less than 1% lost through the tax gap).
If the Robin Hood Tax (0.05% of global financial transactions) was collected, it would reduce the deficit by 12.5-20%.
2. CUT THE REAL WASTE
The Trident system costs the UK £1.5bn every year.
The war in Afghanistan costs £2.6bn every year.
3. END COSTLY AND RISKY PRIVATE FINANCE INITIATIVES
Private Finance Initiatives or PFIs are difficult to finance during the recession. This means that as bank financing dried up, the government then lent PFIs public money (specifially from the Treasury’s Infrastructure Finance Unit), to the tune of £200bn.
4. WHAT ABOUT THE BANKS?
We should never forget that it was the banking sector that caused the recession, and is ultimately responsible for the huge debts that the UK has amassed. Despite causing the crisis, the banking sector has escaped any significant regulation, and bankers are again awarding themselves huge bonuses. As a result of the UK government’s £1.3tn bailout to the financial sector, the government still owns over £850 billion in bank assets,
roughly equal to the total UK debt. Why not put these assets to good use, instead of pretending that it’s still ‘business as usual’?
5. KEEP THINGS IN PERSPECTIVE
The UK debt percentage of GDP is currently lower than that of Japan, the US, France and Germany. It was around twice as high between 1918 and 1961.
6. CUTTING PUBLIC SPENDING CAN MAKE THINGS WORSE
The experience of Ireland shows how cutting public spending can damage the economy. The crisis in Ireland was caused by the collapse of its banking sector. The massive cuts in spending and public sector pay that followed have increased unemployment and sapped demand, causing the economy to shrink further. Because of this, Ireland is now considered more at risk of sovereign default than before it started making cuts.
This is based on ‘There is an Alternative… The case against cuts in public spending‘, published by the Public and Commercial Services Union (who represent, amongst other sectors, staff at HMRC ).