I’ll overlook the fact that she misquotes me in the piece – and for branding me “disgraceful” in a Tweet yesterday – in the hope that she can be persuaded that not only are there more useful responses to the economic crisis than setting up camp in the City, but also that there is much on which all of us frustrated  about the situation should be able to agree.

In the initial statement agreed by Occupy London – which Toynbee commends – there are key points on which the TaxPayers’ Alliance can find common cause, namely in our opposition to bailing out the banks and in wanting “regulators to be genuinely independent of the industries they regulate”.

At the time of the last Government’s £50 billion bank bailout, we expressed our opposition to the move, not least because of the increased risk to which taxpayers’ money was being exposed. Why didn’t the politicians instead look at making deposit protection more credible, changing broken rules that were making the crisis worse, or push for faster interest rate cuts?

Moreover, there are big questions to be asked about the regulatory framework in the City and the mistakes made by politicians which led us to the position in which we find ourselves today. Again, the TPA has done work on this, as published in our comprehensive report, How inept regulation and poor policy decisions drove the financial crisis.

Why did ministers encourage off balance sheet debt, whilst driving up borrowing – and claiming to have put an end to the economic cycle of boom and bust? Was it not wrong that the Bank of England didn’t have the information it needed to work effectively as a lender of last resort? Why were concerns about the FSA’s incompetence and ineffectiveness ignored? Were there not regulations in place that made the crisis worse – including those emanating from the European Union?

Considering all these questions and more would be far more productive than merely condemning bankers and the capitalist system which has doubled people’s wealth every generation around the world, lifting countless millions out of poverty. Moreover, I fear that this new wave of protests has already lost its focus, with all manner of other causes tacking along to campaign against the military, in favour of the NHS and so on, which distorts the message they were trying to get heard.

Furthermore, the protesters are signalling their support for the nationwide strike on November 30^th, whilst refusing to accept the Government’s cuts as “either necessary or inevitable”. On these matters, I’m afraid they are they are starkly out of step with public opinion – as evidenced by ICM polls for The Guardian, no less.

There is not majority support for strikes: people recognise that as we are trying to harness economic growth, the last thing the economy needs is for the country to be brought to a halt for the day. And on the issue of the cuts, only 8% of Britons believe that the Government should not be cutting public spending at all, whilst there is massive net support (66% to 12%) for the statement that the government has been spending too much [of our] money.

So the 500 protesters in the City purporting to represent 99% of the country ought to not only spend their time a bit more productively by establishing the lessons to be learned  from the economic crisis, but also considering the evidence, as published in The Guardian, which shows that the British people by no means share all of their views.  We can differ on what needs to be cut and when, but most people understand that spending cuts are right and necessary.  The Government can’t keep living beyond taxpayers’ means.

“The government still has a very long way to go in order to meet its target of reducing borrowing by £20bn this year. With nine months to go it needs to reduce borrowing by more than £2bn a month compared with last year’s figures.”

The figures show a large gap between the terms of public debate on spending and the facts. With the official Consumer Price Index of inflation at 4.2 per cent in June, spending is still rising even after adjusting for inflation. The so-called cuts simply aren’t happening and that is dangerous for two reasons: high public spending is holding back the economy and the enormous borrowing means we risk runaway debt service costs and, ultimately, a sovereign debt crisis.

Athenian austerirty riots

Britain has a debt problem. It’s not as bad as Greece’s; our official debt is approximately 80 per cent of the economy compared to 140 per cent for Greece. The average ‘maturity’ of our debt, the length of time left before we are obliged to repay it, is also much longer meaning that in each year a smaller proportion of our debt needs to be refinanced with new debt. But the scale of our borrowing problem is very similar to Greece’s and, unless we tackle our massive borrowing problem, our debt problem might soon look a lot more like Greece’s than we’d like it too.

The Government must act now to reverse the rise in spending and bring borrowing back down not just to the Government’s own tame budgeted proposals, but lower still to create room for tax cuts and growth in the private sector. The credibility of the Government’s spending plans is at stake and if capital markets stop believing the Government’s promises to keep spending under control they will become more nervous about the possibility that their loans might not be repaid. That means they will demand a higher rate of interest to make up for the increased risk. This in turn means higher government spending which can easily turn into a downward spiral (of higher spending on interest and worries about higher spending leading lenders to raise interest rates) into the kind of sovereign debt crisis now engulfing Greece.

Bold cuts to public spending are needed to avoid following that example. Britain’s taxes are already too high and too complicated. The only answer to the borrowing problem is in spending control. But reducing spending will boost the wider economy too, not just the public finances. More public sector spending means more resources being allocated by the public sector according to politicians’ priorities and bureaucrats’ convenience rather than consumers’ actual wants and needs. And that leads to slower growth in the economy and a less prosperous society. While they are always difficult at first for those whose jobs are lost or whose incomes are reduced, over time spending cuts lead to growth in the private sector and the economy as a whole.

The £500,000-plus package consisted of a £361,000 severance payment,£100,000 salary and more than £51,000 in housing benefit and car allowances. Such a massive pay-out undermines Unite’s credibility in the current fiscal debate; as part of their battle against cuts, union leaders claim to be speaking for ordinary workers and the poor, and attack high earners. For members to see their union’s boss receiving such a generous package, paid partly through subs, will be a bitter pill to swallow.  Our Trade Union Rich List published last month placed Derek Simpson as the highest earner in 2009-10, in receipt of a package totalling £186,626.

Of more concern to taxpayers is the extent to which we are contributing to such a lucrative payoff. Our report last year on taxpayer funding of trade unions revealed they received £85.8 million from public sector organisations in 2009-10 made up of £18.3 million in direct payments and an estimated £67.5 million in paid staff time.

On the pay-out, Emma Boon, Campaign Director of the TaxPayers’ Alliance, said:

“Trade unions leaders claim to speak for ordinary workers but this whopping golden goodbye puts Derek Simpson in a class with the privileged elite he spent so much time criticising. Simpson looks hypocritical for taking this pay off after condemning high pay elsewhere. Worse still, the union coffers that this money came from are boosted by millions of pounds of taxpayers’ money every year, which helps them to afford generous deals like this to departing leaders.”

Matthew Sinclair, Director of the TaxPayers’ Alliance, appeared on BBC News this morning to discuss the strikes:

He added:

“Unions shouldn’t be disrupting services and forcing schools to close in a vain attempt to stop long overdue changes to their pensions. With an ageing population and huge pressure on the public finances, there needs to be reform so taxpayers aren’t paying a fortune to support pensions far more generous than they enjoy themselves. The Government’s proposals are moderate steps towards making the arrangements a little fairer and more affordable. Striking in response to them is disproportionate and will ultimately prove futile as these arrangements are too expensive to last. The unions should negotiate with the Government, avoid a strike if at all possible, and be realistic about the pressures faced by the families paying for their pensions.”

Government spends £4 for every £3 raised in tax

These figures show that the need for a fiscal retraction remains overwhelming. The UK borrowed over £17 billion pounds in May alone because the £38 billion raised in tax was not enough to fund Government spending. The events unfolding in Greece show that the greater risk does not lie in the Coalition Government’s timid cuts being too hard but instead that they’re too small. The British economy desperately needs tax cuts and tax simplification but it also needs to close the huge deficit these figures reveal.

Once social benefits and interest charges are stripped out, remaining current expenditure rose only slightly, from £32.5 billion in May 2010 to £32.6 billion in May 2011. This shows that the Government is showing restraint that would be, in a more benign environment, admirable. But for a government that is spending more than £4 for every £3 it can raise in taxation, it simply isn’t good enough.

As I have previously reported, Labour won a surprise victory and took control of the council. Last Thursday, it passed its emergency budget, but as I predicted on election night, the budget is nothing more than a fantasy. It is based on saving money on redundancy costs. The argument goes, if you don’t make people redundant you don’t have to  pay them off.  Anyone can see that although you may save money on redundancy costs this year, you will still have those employees salaries to pay next year. Well it seems as if the new leader and his colleagues are going to worry about next year when next year arrives.

One of the new spending decisions is to reduce the cost of primary school meals by 50p a day. This will cost £500K to implement. Hardly protecting front-line services, but working towards an existing pledge of providing free school meals to all primary school children in the city. As far as I’m concerned, it is not my responsibility to feed all of the primary school children of Hull. There are many families who already receive free school meals due to their current financial circumstances, but what about those people who can easily afford it? They should be paying for it themselves, but this argument doesn’t resonate with the new ruling administration.

It looks like there will be a £6 million black hole in the budget next year that will need to be plugged. How do they plan to do it? My guess is they will rely on two things. Firstly, the government has promised to reward councils again for not increasing council tax. This could get the council through 2012/13, but will of course be storing up problems for the future. A source told me the administration is hoping it can limp through until the time of the next general election, hoping that a new government will give it a generous settlement. It is also likely to increase charges through the back door. Look out for increased parking charges, burial charges, planning application fees. You name it, the council will increase the charges for it.

Is this the leader of Hull City Council?

Instead of responsible local government, and making tough decisions, the administration is burying its head in the sand, hoping for jam tomorrow. It should be looking to provide the best front-line services, for the best possible price. It could look at cooperating with neighbouring East Riding Council. Both councils could merge some back-office functions. Although it has taken on my my suggestion to seek more private sponsorship for the city’s Freedom Festival next year, it can expand this policy, engaging the private sector more. There are always savings to me made. Some are big; some are small, but they are there, and they require the political will.

Spending half a million pounds to reduce the cost of meals for all primary schoolchildren is a waste of money. Pretending you are really saving money by not going through with the planned voluntary redundancies is putting your head in the sand. The new leader, Cllr Steve Brady, needs to face reality and stop being an ostrich. Pretending the problem doesn’t exist won’t make it go away.

It has been reported today that Roger Ching, the strategic director and Section 151 Officer of Portsmouth City Council, is going to take early retirement. He said:

“I am 60, and have reached the magic age where I can retire. I have been at the council 41 years, and because of the financial situation, the time’s right for me to step aside.”

The council also comments that Mr Ching will not be replaced and his duties will be spread around other senior officers reporting to one of the five remaining strategic directors. This does beg the question: if he is not being replaced, what was the point of either him or at least one other director being there?

How gracious of you

In our Town Hall Rich List this year, we revealed that Mr Ching’s total remuneration (including pension contributions) was £129,784. Other directors are on a similar package.  If Mr Ching had not decided to take early retirement, would the number of directors (that the council has freely admitted is too high) have been reduced?

There are 433 councils in the UK. If every council reduced the number of directors by one, the savings run into tens of millions of pounds. If every council also decided to merge back office functions with neighbouring authorities, hundreds of millions of pounds could also be saved.

All too often we read about councils cutting front-line services, rather than cutting the size of their bureaucracies. Lambeth and Nottingham are prime examples, who even went to the lengths of using up advertising space they could have received revenue from to place posters blaming the government!

Instead of reducing its bureaucracy, Lambeth decided to increase the cost of traders’ parking permits from £2.60 a day to £18.75. Nottingham is trying to increase the costs of private hire licences, and local private hire firms are threatening to vote with their feet and register their cars in a neighbouring authority.

They are just two examples, and there are many more. Keep on writing to us and letting us know of similar increases by the back door. We will highlight as many as we can. No-one is saying councils do not have hard choices to make. They do, and they need to look harder inside town halls before they look at reducing services in their communities.