PM warns of painful spending cuts
Published 08/08/2010 | 00:22
Drastic public spending cuts will mean the axe for "some things that we genuinely value", David Cameron has warned as he braced voters for painful decisions.
The Prime Minister said the Government would be "socially responsible" in finding massive savings across Whitehall but said it had a "duty" to cut back.
He compared Britain to a failing company and his Tory-Lib Dem coalition administration to new owners trying to make it profitable again.
Ministers are set for mounting tussles with the Treasury as they finalise cuts of up to 40% ahead of October's announcement of the results of the spending review.
And Mr Cameron signalled his personal backing for welfare reforms being drawn up by Work and Pensions Secretary Iain Duncan Smith - despite apparent Treasury concerns over the up-front costs. The £5.2 billion annual cost of fraud and error was "the one area of ingrained waste that out-ranks all others", he wrote - singling out the former party leader for praise.
"Many see it as a fact of British life that we have no hope of defeating. I passionately disagree. Simply shrugging our shoulders at benefit fraud is a luxury we can no longer afford - which is why Iain Duncan Smith is working on the radical steps we can take to deal with it."
Mr Cameron warned: "Even with reform, the truth is there will be some things that we genuinely value that will have to go because of the legacy we have been left. I don't like that any more than anyone else, but this is the reality of the situation we're in and it's the duty of this Government to face up to it."
"I can best describe our approach as like the methodical turn-around of a failing business. When a company is failing - when spending is rising, sales are falling and debt is mounting - you need someone to come in with energy, ideas and vision and take a series of logical steps," he added.
It was vital to root out "obvious" waste, he said - citing the example of an airline saving $40,000 by removing one olive from its in-flight salads. And there was also "ingrained" waste that had come to be accepted - comparing the cost of welfare and tax credit fraud and error to corporate sickness rates.
But on top of such "easy" decisions it was necessary to stop spending that was "acceptable in the good times, unaffordable in the bad times", he suggested, adding that tax credits for better-off families were like company cars: "They're appreciated by all, but if you're suffering losses for the third quarter in a row you've got to drop them."