Chancellor urged to up public sector productivity
The Centre for Policy Studies (CPS) has said that if public sector productivity increases, then Government tax and spending could fall.
The centre, which was founded by Margaret Thatcher, argues for the “value of free markets, the importance of individual choice and responsibility, and the concepts of duty, family, respect for the law, national independence, individualism and liberty.”
Ruth Lea, the centre’s director said: “If public sector productivity had risen at the same rate as that in the private sector since 1998, then government spending would only need to be 35 per cent of GDP.” Public spending is currently scheduled to be around 42 per cent of GDP, it said.
Ms Lea brands Gordon Brown’s policies as “high public spending and high taxation.”
“The overwhelming weight of economic research now shows that high public spending results in long-term damage to economic growth.
“As the public sector expands, diminishing marginal returns set in; increases in spending and taxes crowd out. Private spending and destroy initiative. The IMF suggests that the optimum level of spending should be around 30 per cent of GDP.”
She welcomed the establishment of the Gershon review into Government waste and efficiency, but said it will not go far enough in cutting Government spending, nor return money to taxpayers’ pockets.
The Conservatives have been campaigning heavily on alleged spending inefficiencies under Labour. They claim that a Conservative government could cut public spending whilst also improving public services.
Labour claims that any budget cuts would damage frontline services.
