Public spending could be cut by 215 billion pounds more than planned, the free market Institute of Economic Affairs claims

Public spending could be cut by 215 billion pounds more than planned, the free market Institute of Economic Affairs claims

Public spending could be cut by £215 billion more than planned to take £7,500 off the average household's tax bill, a think-tank has claimed.

The free market Institute of Economic Affairs (IEA) said that its plans, which would reduce spending from 50% to about 30% of gross domestic product, could also help spur economic growth.

It laid claim to public support for the plans, after conducting a poll suggesting 70% back the idea of much deeper spending reductions than the coalition is planning - in return for cuts worth about £7,500 per household.

The think-tank set out its programme for dramatic cuts in a 280-page report calling for a "complete review of government functions" and warning that current levels of taxation are damaging growth.

It said £44 billion could be saved through health reforms, £46.5 billion from pensions and the welfare state, £17 billion from defence and £12 billion from foreign aid.

Altogether, the spending reductions would enable a single flat rate of income tax of 15% and VAT of about 10%, the IEA said.

A ComRes poll found that 70% of the public supported the plans, compared with 30% backing the coalition's more modest programme of cuts, which will see public spending reduced to about 40% of GDP.

IEA director general Mark Littlewood said: "The coalition Government should listen more to the British people in general and less to organised special interest groups that push for more government spending.

"Lobbying from interest groups can push tax and government spending well beyond optimal levels. This poll makes clear that the public favour a dramatic reduction in the size of government and the right to keep more of their own money rather than surrender it in tax."

:: ComRes interviewed 2,050 British adults online between July 8 and 10.