The last few weeks have started to ramp up the existential crisis that we are moving steadily towards: the moment when the British state is no longer able to borrow on the international debt markets at an interest rate that is affordable or, even worse, there is a complete strike by lenders.

The numbers are as stark as they are obvious. The national debt has trebled since 2010 to hit £3 trillion and the money has not been well spent. Indeed, the majority of it has been squandered bequeathing to the next generation an appalling legacy that as a society we seem to be in complete denial in confronting.

Between 1940 and 1945 a generation of (mostly) young men gave up their lives in their hundreds of thousands to protect our way of life to benefit succeeding generations. My generation has done the opposite. Not only are we handing over a public debt which our economy can no longer service, but we have removed the aspiration of home ownership from millions and enmeshed hundreds of thousands more in student debts that require a young person to earn over £60,000 a year before even starting to reduce their individual debt balances.

Thanks a lot.

So what is to be done? The solutions are pretty obvious, but seemingly unpalatable. The state needs to spend less and the entitlement addiction needs to be confronted.

This addiction now reaches across the whole of our society. From the teenager in his or her bedroom claiming mild anxiety as a reason to not work to power generators such as Drax receiving unimaginable state support for a pretty dubious form of eco energy — in their case, importing trees from North America and being paid £2.97 billion over the last four years by the taxpayer to burn them.

We got away with this reckless behaviour during an era of nearly zero interest rates. But now the state is paying more for its borrowing — 30-year gilts are at 5.8%, the highest in nearly 30 years. The game is up.

Likewise, taxation has been cranked up to a level not seen since the Second World War. Yet never in the history of capitalism has a large scale economy delivered economic growth by relentlessly taxing its citizens and wealth creators. Today, vital people are highly mobile and are fleeing our country in their thousands, taking their entrepreneurial energy and tax paying firepower with them.

To confront this the state has to spend gigantically less. By my own reckoning we have to reduce annual spending by around £200 billion. The question is: can it be done without inflicting real hardship on those who are least able to bear it?

The answer is yes, but with two important caveats. First, are the current generation of front rank politicians honest enough to admit this and explain the basic arithmetic to tax payers? Second, can the British state be replumbed to deliver effectively for at a dramatically reduced cost to the taxpayer?

Drawn from my personal experience of ten years in Government, here are the four pillars that could form the basis of a complete rethink.

First, public fraud. This should be the easy one, as it completely bipartisan. The figure is now put at over £50 billion a year by the National Audit Office.

The problem marches ever upwards with no real commitment to tackle it. When I was the Minister responsible for countering fraud four years ago it was £32 billion. It cannot be eliminated, but it could be halved over three years with a focused approach. At the moment, there are over 22 counter fraud agencies sprayed across the government landscape. They mostly operate under different pieces of legislation with different powers and remits. But theft by fraud is what it says on the tin, so why not a joined up approach ? In the one pilot I was allowed to operate as a minister in the Cabinet Office, we showed a 15x return on the amount invested in countering fraud in a year. Any business person would bite your hand off for that. This could save at least £30 billion a year.

Second, the administration of the British State. By the time Michael Gove was sacked as Education Minister in 2014, we had reduced the headcount at the Department for Education (DfE) to approximately 3,600 civil servants, including relevant public bodies supporting education. This coincided with some of the biggest reforms to English education since the 1944 Education Act.

Yet the latest figures put the headcount at DfE over 7,500: an increase of some 100%. This is a vignette of what exists across Whitehall and Quangoland. There are over 500,000 civil servants with declining levels of productivity despite huge technological advances.

The brutal reality is that the system would work far better with at least a halving of this half million. The average cost of a civil servant including an extremely generous defined benefit pension entitlement is around £70,000 per year. Of course, these people must be treated with decency, and so a year’s pay in lieu of notice would be the right thing to do. But once that was accounted for, it would save the taxpayer over £17 billion per year.

These are only the foothills of the British state. To this can be added an amalgam of so-called ‘Public Bodies’ and regulators. The Office for National Statistics tells us that there are over 6 million people employed by the public sector, but this includes the NHS, academy schools, local government and the armed services. It is somewhat coy on a more granular breakdown. The overall numbers are going only one way — up. But is service delivery to citizens improving too? I do not think so. As with all bureaucratic structures, the more people involved, the less accountability there is.

The estimated potential reduction in non-frontline staff is a million people on top of the aforementioned Whitehall reductions. Average total renumeration there is lower at around £52,000 a year. Again, allowing for 12 months severance pay, that would deliver over £50 billion in savings a year.

Third, public sector procurement. This now runs at £400 billion a year.

One of the advantages of leaving the EU is that we have been able to craft a procurement system that suits our economy and is not beholden to EU rules. A new Procurement Bill was duly produced, in which I played a small part. But it was emasculated on its way through the legislative process. It still provides opportunities to do things differently, but the incentives are too weak to drive imaginative thinking.

The biggest win here would be to encourage procuring bodies to source from smaller UK firms rather than lazily relying on the quasi-cartels of big suppliers. Innovation tends to come from smaller firms and the state is not harnessing this. Indeed, the recent experience of drone development in Ukraine has shown that smaller firms are cheaper, faster and far more adaptable.

We ought to target savings here at 10%, working out to approximately £40 billion a year

Fourth, welfare. We now spend over £330 billion a year on welfare, more than we receive in Income Tax. In a grotesque parody, those receiving welfare benefits get automatic indexation of their entitlements, but those paying for it have had their tax thresholds frozen.

Some of this is reasonable, but much is not. Entitlement is one of the most addictive forms of behaviour. Taking back from those who are receiving handouts, however thinly deserved, is difficult. But the tragedy for so many is that it imprisons them.

The marginal tax rate on Universal Credit can be around 70%. Over-medicalisation of what are just the knocks and bruises of life quickly convince people that they are incapable of leading normal lives. The worst culprits there are Personal Independence Payments (PIPs), at £29 billion a year. But add in another £100 billion a year for working-age benefits and £10 billion a year for the third leg of the pensions triple lock, and it gives you a sense of the scope for savings available.

My message would be very simple: for every pound of reduced welfare spend, an equivalent tax cut would be made available for those paying for it. It will shake up the debate. In the meantime, we ought to target a total saving in welfare expenditure of £33 billion a year.

Adding these four pillars together, we get to £170 billion a year. The balance would be achieved across the most egregious areas of waste such as asylum accommodation, foreign aid to countries delivering no visible impact and ramming through a dishonestly unrealistic Net Zero date. The list goes on and on. Even in the House of Lords the newly appointed Lord Speaker recently told me that he has already saved £100 million in running costs, just because he cares.

Waste is oozing from every orifice of the British state. A culture of common sense and accountability would transform this ghastly behaviour.

If we could reach this goal I would split the savings three ways: one third in tax reductions, one third in structural deficit reduction and one third in improving frontline services.

This message will upset people, but not half as much as the consequences of us having to go knocking at the door of the IMF.

Original photo of a lazy worker by No Revisions.