Three ways to save big money for the government
By johnredwood on September 11, 2025
The first is well known to readers here. Cut the bond losses. More about that tomorrow.That will help get the longer term interest rate down. Government debt interest has soared to over £100 bn a year, making it a major burden on the budget and taxpayers. The current government is borrowing all of the money needed to pay the interest on past debts.
The debt interest will reduce if the government and Bank get inflation back down. The UK has issued too much index linked debt, which led to large extra costs in recent years with high inflation.It will help if the government and Bank get longer term rates down. At the moment every pound of debt that needs refinancing when the old debt is repaid means paying a much higher rate of interest on it.
The surge in benefit payments under this government needs tackling. Welfare is the second big task. Unemployment has gone up, and many more grants of benefits for long term sickness have been made. Where this is to young people or people with milder mental health issues, the government needs to help these people into work.
It will require more incentives through lower taxes to boost jobs and investment. It requires the end of the bans on oil, gas and petrol cars and rebuilding UK manufacturing. It also needs welfare reform as set out by the Centre for Social justice. Iain Duncan Smith ‘s Universal Credit introduction greatly boosted employment and cut welfare bills the right way . CSJ has set out how get more into work, particularly young people. Work is a good therapy for people, suffering from mild depression and similar mental health conditions.
The third is to boost public sector productivity. We pay £40 bn more than in 2019 to deliver the same services, before adding in the extra costs of inflation. Government does know how to run these services better, as it did so six years ago.I am setting out a tool kit for Ministers and senior officials to manage for higher quality and productivity. It includes a public sector external recruitment freeze ( exempting teachers, medics and uniformed personnel), quality management systems, use of pay and bonuses to reward productivity success, and removing needless and wasteful functions.