Freeze state pensions and slash ‘non-frontline’ NHS and schools staff, said No 10’s economic adviser

Read More

Liz Truss’s top economic adviser suggested freezing the state pension, halving the government’s publicity budget and slashing “non-frontline” staff in health and schools by 10%, as part of a manifesto designed to win an election while also cutting spending.

Matthew Sinclair, the former chief executive of the TaxPayers’ Alliance, edited a book by the small-state pressure group that called for a series of radical cuts, including the scrapping of the Prevent programme designed to tackle extremism.

The book published in 2010, How to Cut Public Spending (and Still Win an Election), is now out of print. However, with Truss needing to find billions in cuts just 18 months before the likely next election date, some of the radical spending cut ideas may be needed.

The prime minister and her chancellor, Kwasi Kwarteng, will need to find spending cuts worth in the region of ?40bn by 2026-27 if they are to meet their own fiscal rules, an austerity drive comparable to that pursued by George Osborne from 2010. While they have ditched their plan to axe the 45p top rate of tax, that measure only represented about ?2bn of the ?45bn in tax cuts unveiled at the botched mini-budget.

Sinclair’s book backed a one-year freeze in basic state pension and the minimum income guarantee, which ensures a minimum income level for those drawing their pension. It states that pensioners could cope with the reduction because they had benefited from an earlier period of deflation. It also raises the prospect of the “introduction of a later retirement age”, adding: “There is a wider question about reforms to the retirement system in the context of a rapidly ageing population.”

Elsewhere, he also backs the halving of the government’s “advertising and publicity” budget. Truss is currently said to be battling the business department over her refusal to fund a ?15m energy-saving publicity campaign.

The book also says ministers should “reduce non-frontline staff in health and schools by 10%” – an estimated saving at the time of ?975m a year. It said that the figure was “almost certainly a low estimate because it does not include office and other employment costs, nor any future gains accrued from reduced pension liabilities.”

“NHS non-frontline figures includes functions, hotel, property and estates; managers and senior managers; other non-medical staff; other non-clinical GP practice staff,” it states. “Schools’ non-frontline figure directly refers to staff classified as ‘administrative’.”

It backs scrapping the Prevent programme, claiming a ?15m saving. “Faith groups may feel resentful that Muslim groups are publicly subsidised,” it states. “It is highly implausible that a reformed Prevent scheme can avoid undermining community cohesion without a massive increase in costs. The government and the councils need to accept that the [Preventing Violent Extremism] grant scheme is fundamentally flawed and abolish it, saving taxpayers up to ?15m a year.”

Downing Street opted not to comment on the book and its contents. There has been renewed interest in the libertarian, small-state groups linked to the Tory party in the wake of Truss’s mini-budget and her vow to secure economic growth by cutting taxes.

A raft of ideas from the Free Market Forum (FMF), an offshoot of the Institute of Economic Affairs thinktank said to have influenced Truss’s economic approach, has also been scrutinised. It was partly launched as a successor to the free Enterprise Group of MPs set up by Truss in 2011.

Among its ideas are scrapping free childcare hours, releasing green belt land for housing, abolishing corporation tax and dropping teacher- training qualifications for graduates. Amending the Equalities Act so white working-class boys are better protected is raised, as is restoring the link between tax and household income so a married woman’s income could be seen as part of her husband’s.