Centre for Policy Studies E-Bulletin 19 January 2011
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CPS Headlines

A lesson in government spending cuts from Tim Knox and Brian Lee Crowley

The Iron Lady comes to the CPS 

34 years today since the release of 'Stepping Stones

How to Cut Government Spending: Lessons from Canada
The Great Euro Swindle
The Coalition needs to be far bolder in cutting public spending, where they could expect higher growth, lower national debt – and a political windfall, write Brian Lee Crowley and Tim Knox in How to Cut Government Spending: Lessons from Canada.
The radical Canadian approach to cut departmental spending before taxation saw a fall of 9.7% in nominal terms over 1994/95 and 1996/97. From 1997-2007 the Canadian economy grew by an average of 3.3% a year and the country saw growth in employment and investment. And as a result the national debt was reduced by over a half from 68% in 1995-96 to 29% of GDP 2008-09.

At present the UK will see public-sector debt increase from 61% in 2010-11 to 78% of GDP in 2015-16. Nominal spending will continue to increase at an average rate of 1.6% per year through to 2016/17. In contrast, the Canadian government cut spending by 10% in two years.

Tim Knox, author of the paper and the Director of CPS said “With the UK needing to raise another £188 billion from the bond markets this year, it is essential that the Coalition shows determination in getting the national finances under control. That is why we must be inspired by, and take conviction from, the lesson of Canada in the 1990s.”
Media Impact:

"So far, the Coalition has talked tough on public spending. Earlier this week, the Labour Party has accepted that it will not commit to reversing the Coalition's spending cuts. This cross-party consensus is encouraging, but it is now time to match the rhetoric with some real reductions in government spending and in the role of government itself. We should heed the words of Paul Martin, Canada's finance minister from 1993 to 2002, at the beginning of the great Canadian experiment: "We are acting on a new vision of the role of government in the economy. In many cases that means smaller government. In all cases it means smarter government." - TIM KNOX IN WALL STREET JOURNAL Canada's austerity lessons for the UK

‘Mention of Canada is timely because the Centre for Policy Studies, the free market think-tank set up by Margaret Thatcher and Sir Keith Joseph, has just published a pamphlet showing how Canada dug itself out of a huge financial hole in the 1990s when it was widely seen as a financial basket case.CPS Director Tim Knox says in his pamphlet that the centre-Left Canadian government went far further than our Coalition in cutting spending.’ - DAILY MAIL Labour’s two Eds are still in denial about the past and the future

‘That’s why I believe that, while the UK Government is acting more responsibly than many others, something far more drastic is needed. With the state now accounting for around half of total GDP, the answer – at least the long-term answer – can’t be more taxation. The state must do less, much less, and do it better. There really is no alternative.
Some point to Canada’s fiscal consolidation as an example Britain may follow. A new pamphlet from the Centre for Policy Studies makes a compelling case.’ – LIAM HALLIGAN COMMENT IN DAILY TELEGRAPH The French downgrade should be a warning about hidden UK liabilities

‘Paul Martin, the centre-left finance minister who scaled back public spending in his country to the level it was at in 1951, said in an exclusive interview with Huff Post UK that ring fencing was not the right way to reduce deficits: “If everybody is going to have to give than everybody better give. You can’t have exceptions.”Commenting on a report by Margaret Thatcher’s favourite think-tank the Centre for Policy Studies, which recommended the coalition’s cuts should go further and take inspiration from the Canadian model, Martin said instigating unprecedented spending cuts protected his country from financial crisis.’ – HUFFINGTON POST Government Wrong to Ringfence Departments

The Iron Lady comes to the CPS   
On Monday the CPS hosted a private screening of the film “The Iron Lady” - based on Lady Thatcher’s life - at The Soho Hotel, London. Those who attended were greeted with drinks and an introduction to the film by Lord Saatchi. To view images from the evening visit our Flickr account.
To view Lord Saatchi's introduction visit our YouTube channel

Today also marks 34 years since the publication of the influential CPS report 'Stepping Stones' that laid the groundwork for the Conservative victory in 1979 and the reforms of the Thatcher government. In celebration of this anniversary, you can read an early draft of this important document, complete with Lady Thatcher's hand-written comments and underlines, on our website
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Media Round-up
Kathy Gyngell continued her RightMinds blog series for the Daily Mail with Will the Coalition get to grips with the state sponsored addiction it inherited from Labour?  
This followed on from supportive evidence from a pharmacist of the damaging effects of methadone found in the Guardian newspaper- Why methadone drugs don't work.
CPS Research Fellow Tony Lodge’s study into nuclear energy continues to make waves – this week he wrote for eGov monitor  and was referred to on USwitch Editorial.
Tony Lodge also appeared on BBC News 24, CNN, and Countryfile to discuss the state of UK energy policy.

Head of Economic Research Ryan Bourne wrote for Conservative Home on the worrying language behind government reforms to executive pay settlements.
CPS Research Fellow Kathy Gyngell explained why David Cameron should not cut child benefit for higher rate taxpayers.
From the Blog
Who Should a British Conservative Support in the race for a Republican Presidential nomination Ryan Bourne
Heritage: UK Economic Freedom Falls, but ranking improves. Ryan Bourne
Congratulations to Nick Clegg on more employee ownership. Charles Upham

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