Cutting the budget deficit

The Policy Exchange has published this major report: ‘Beyond Our Means’, spelling out the need to cut the UK budget deficit (£130bn in 2024) and outlining a fiscal reform package targeting over £130 billion in savings.

Policy AreaSummary of Proposed ReformEstimated Savings
State Pension ReformFreeze pension for 3 years; raise age to 69 by 2035 and 70 by 2040£22.5bn (long-term >£20bn/yr)
Means-Test Pensioner BenefitsRestrict free benefits to pension credit recipients; align age eligibility with pension age£3.4bn
WelfareFreeze working-age benefits for 3 years; tighten eligibility to pre-pandemic levels£30bn
Healthcare and NHSCharge for GP visits and premium hospital stays; shift to social insurance model£11bn
Civil Service CostsCut admin costs by 25%; reduce staff and merge arm’s length bodies£2bn
Public Sector PensionsMove to defined contribution schemes from 2031; standard 10% employer rateN/A (long-term £22bn/yr)
Green SubsidiesEnd GB Energy, EV and boiler subsidies; slow Net Zero rollout£6bn
International DevelopmentCut aid to 0.1% of GDP; focus on disaster relief and global disease control£7bn
Universal Infant Free School MealsEnd universal entitlement; restrict to low-income families£0.7bn
Post-18 EducationCut university places by 30%; reinvest half into further education/apprenticeships£1.4bn
ChildcareReplace free scheme with vouchers; deregulate settings; launch £1bn Sure Start£4.8bn
Special Educational Needs and Disability (SEND)Restrict EHCPs to special schools; shift to budget-led model£6.2bn
Small Boats and AsylumHalve asylum hotel costs via stricter measures£3bn
Housing BenefitTighten eligibility; lower LHA rates; boost housebuilding£11bn
Barnett ConsequentialsApply devolved savings to areas like childcare, SEND, NHS, etc.£5.8bn
Total£130bn