How to Balance the Budget

This idea seeks to identify key points of leverage to transform government’s approach to spending by introducing a financial penalty to senior civil servants if they do not balance their department's budget.

An issue at the moment is that civil servants can overspend, waste money and increase the national debt, the costs of which are all borne by the taxpayer while civil servants’ salaries and pensions are protected.

Instead, therefore, we could introduce a new rule where in any department that did not balance its budget the senior civil servants in that department would receive an immediate 20% pay cut for the year and receive a zero, or at least much lower, pension contribution as well.

Additionally, whenever the UK budget as a whole was not balanced, senior civil servants taking pensions would have those pensions reduced, dropping down from their current high 5 and even 6-figure sums to a maximum of the UK median salary for the year.

All civil servants could, and arguably should, face a drop in salary and pension if their budgets are not balanced; it’s not right that those in the private sector have to pay taxes to make up for failures of civil servants.

However, it would seem unfair to punish junior staff in departments for the failures of the department as a whole when they do not have the power to change things significantly. Therefore, a halving of their pension contribution for the year, while maintaining their salary, is probably a good balance; it creates bottom up pressure for changes in practises to balance the budget without punishing junior staff in the short-term.

Civil servants would suddenly become accountable for their actions; rather than overspending and seeing the bill paid off by others, they would now suffer themselves. The losses for senior civil servants would focus the minds of those capable of changing their departments – the Sir Humpherys of the famous Yes Minister series – and provide a powerful incentive to innovate to reduce costs to maintain their salaries and pensions.

And they would have senior retired civil servants breathing down their necks to balance their budgets as well, another powerful lobbying group to place pressure on government to reduce spend.

In any business environment staff suffer when the business suffers; it is an important mechanism to drive innovation but one absent from the civil service.

This one rule-change could rapidly transform government departments' approach to their work and their budgets, rapidly cutting government spend and borrowing, and bringing accountability to the public sector.