September 10, 2009 / 11:11 PM / 10 years ago

Business lobby urges pension freeze, child benefit cut

Youths play in the street in Edlington, northern England September 4, 2009. REUTERS/Nigel Roddis

LONDON (Reuters) - Britain should freeze state pensions for a year, scrap child benefits for middle-class families and axe one in ten civil service jobs to cut its growing budget deficit, a top business group said on Friday.

In a joint report with low-tax lobby the Taxpayers’ Alliance, the Institute of Directors detailed quick steps the government could take to save 50 billion pounds from its annual budget, which is forecast to be 175 billion pounds in the red during the current tax year.

The report adds fuel to a key debate in the run-up to a national election due by June 2010 on how Britain’s politicians will balance the country’s books. Neither Prime Minister Gordon Brown’s Labour Party nor the Conservatives, who are well ahead in the opinion polls, have given many details so far.

The report’s authors said they had aimed to highlight specific cuts rather than to call for vague efficiency savings, a frequent get-out clause when governments try to set budgets.

“The question is not cuts versus reform but cuts and reform, because we need to deal with a fiscal crisis in the short term, and in the long term deliver more effective public services,” said Matthew Sinclair, research director at the Taxpayers’ Alliance.

The biggest single saving in the IoD/TPA report comes from abolishing universal weekly child benefits of up to 20 pounds per child and targeting funds on the poorest families, saving an estimated 8.447 billion pounds.

Some 6.203 billion pounds would be saved by freezing the pay of all public-sector workers apart from military personnel serving in combat zones for a year, and more than 2 billion pounds apiece would be saved by making public-sector workers pay more towards their pensions and building fewer new schools.

The report also proposed scrapping one in ten jobs in the civil service and a similar proportion of jobs in state-funded health and education services which did not involve direct contact with patients or students.

* For a copy of the report, see here

Reporting by David Milliken; Editing by Toby Chopra

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