Laws calls for deeper spending cuts

David Laws is tipped for a return to the coalition top table
24 June 2012

Liberal Democrat former Cabinet minister David Laws has urged radically deeper cuts to public spending and taxes.

The Yeovil MP said the share of the economy accounted for by the state was too high and leading to "waste and inefficiency".

The ex-Chief Secretary to the Treasury, who resigned two years ago over an expenses scandal, has been tipped for a return to the coalition top table.

While his commitment to further cuts is likely to enhance his reputation with Tories, it could fuel Lib Dem doubts over whether he is "one of them".

However, in an interview with the Sunday Telegraph, Mr Laws said the founding fathers of the Liberal Party would approve.

"Even after the existing fiscal consolidations, state spending will account for some 40% of GDP, a figure that would have shocked not only Adam Smith, William Gladstone, and John Stuart Mill, but also John Maynard Keynes and David Lloyd George," he said. "The implication of the state spending 40% of national income is that there is likely to be too much resource misallocation and too much waste and inefficiency."

Mr Laws suggested the share of the economy accounted for by the public sector should be cut to 35%, from the 49% it hit in 2010-11 as tax receipts fell and welfare payments rose.

In an article published by the Institute of Economic Affairs, the think tank, Mr Laws will also call for "lower marginal rates of tax at all income levels", a simplification of the tax system and a "substantial" rise in the personal income tax threshold.

The coalition has already committed to raising the point at which people start paying tax to £10,000 by 2015.

Mr Laws' views are more radical than some senior Tories. Earlier this year Treasury Select Committee chairman Andrew Tyrie called on the Chancellor to cut the state's share of the economy to 40%.

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