Prime Minister sets out savings plan
Paris, 16 April 2014
Ladies and gentlemen,
On 14 January, the President of the Republic set a clear path: to strengthen our economy, encourage our companies, support growth and thus create more jobs.
Job creation is our top priority. We must take more decisive action against the mass unemployment which is causing such suffering to too many French people: both our older people and our young people, who are struggling to start out in life. We will not back down. And we will not give up.
To the French people, I want to state simply and clearly: there is a path to our recovery, and to the recovery of France. It must be embarked on with clear-sightedness. We must continue our efforts fairly. There will be no double standards – we will have one goal: the common good.
These efforts will be fair because everyone will play a part.
They will be fair because they will be equally distributed.
Finally, they will be fair because they will benefit everyone.
Four months ago, the President set out a road map for savings of €50 billion in public expenditure between 2015 and 2017.
These savings have three goals:
The first is to implement the Responsibility and Solidarity Pact. In simple terms, this is how we can get our economy moving, by lowering the cost of labour, revitalizing our companies, our SMEs, SMIs and very small companies, our businesspeople, craftspeople and retailers. At the same time, we must also simplify their administrative procedures. This is the aim of the proposals made by the Mandon-Poitrinal Commission. All in all, we must provide our economic fabric with the ability to better stand up to competition in order to further develop its activities and start recruiting again, without the need to call into question our social rules and in particular the minimum wage.
The second goal is to give some purchasing power back to employees, which is also a means of stimulating our economy and being fairer. From June, we will introduce a measure to help the least well-off taxpayers. On 1 January, employee contributions will be lowered for salaries close to the minimum wage, as I announced last week.
The third goal is to reduce our public deficit. Because on this issue too, I must be truthful with the French people. Our public expenditure accounts for 57% of our national wealth. We cannot live beyond our means. And we must break this debt spiral which is slowly but surely weighing us down. To remind you, in 2002 debt was 50% of our GDP, in 2007 it made up 65% and by the end of Nicolas Sarkozy’s presidency it had risen to 90%. We must regain our sovereignty.
As I have said, France will honour its commitments. Not out of stubbornness, but because honouring our commitments is the foundation for credibility and confidence. And the French people are in need of confidence.
By reducing our deficits, we expand our scope for investment. For preparing the future. For ensuring the sustainability of our social model and the modernization of our public services.
To make savings, we must make choices and honour the President’s commitments. The priority given to young people means that the new jobs planned in the national education system will be maintained.
To ensure the security of the French people, we will create the planned jobs in the police, justice and prison services.
The necessary investment for research, innovation and preparing for the future will be maintained.
Finally, the minima sociaux (1) will be preserved.
Savings will be equally distributed throughout all other areas of public expenditure.
And the state will do its fair share, with €18 billion in savings.
The state is our common asset. It has a duty to be efficient and never to waste public money.
We will continue to control operating expenditure at our ministries by making savings on property expenditure and merging wherever possible, such as in purchases or information systems. The key is to further reduce the state’s everyday expenditure.
I know how essential our civil servants are to life in France. Day after day, they work with dedication and a sense of public service. But the situation means that they too must contribute to our common effort. The index point will remain frozen.
But the rules for promotion within the civil service will remain unchanged.
Staff numbers at all ministries, with the exception of national education, security and justice, will continue to fall. These reductions will, however, be in addition to restructuring in order to preserve our public services.
Finally, we will streamline state agencies, many of which have been created in recent years. With the exception of the Pôle emploi [national employment agency] and universities, their staff numbers will be reduced. They must strive to cut their operating expenditure while maintaining their high standards of efficiency and clear public policies.
As I have said, the state will do its fair share. So will local and regional authorities.
Many actions must be taken to clarify these authorities’ competences and increase their efficiency. Our citizens also need to have a better idea of who is doing what.
€11 billion in savings are expected in the three years ahead.
In their report on “Together Controlling Public Expenditure”, to be submitted this afternoon to the President of the French Republic, Martin Malvy and Alain Lambert have set out many proposals. I am all too aware of them, as they have come from elected representatives themselves. It is our representatives who each day help to make our territories more vibrant and it is their role to prepare them for the future. Our representatives are aware that structural reforms must be undertaken.
Several new measures will be put in place to help these authorities reduce their expenditure. These will be in addition to the measures planned in the first part of the decentralization act which encourages villages, towns and councils to pool their resources.
The future bill on clarifying the competences of local and regional authorities will include far-reaching reforms to generate savings. I’m thinking in particular of the removal of the general competence clause, better selection of financed projects and streamlining of inter-communal cooperation associations.
The transformation of our local and regional authorities has now begun. And I want to commend the initiatives which are emerging throughout France to bring regions closer together.
Our new national health strategy is also a way to save money: €10 billion between now and 2017 on health insurance expenditure.
I want to emphasize that these savings will be made without reducing the provision or the quality of healthcare services. They will be achieved by broadening the structural reforms which are already under way, especially to better organize the treatment process: outpatient surgery clearly shows that we can make savings while improving the quality of healthcare.
We will also have to optimize our expenditure on medication through more mindful consumption, greater use of generic products, as well as prices which are more in line with therapeutic innovation.
Finally, €11 billion will be saved when it comes to the management of the social system.
Decisions have already been taken which will save over €2.9 billion. This is the case for pension reform, the agreement on supplementary pensions and the reform agreed last year on our family policy.
We must go further.
There is obviously no question of cutting social security benefits. But in the exceptional circumstances we’re in, they won’t be increased until October 2015.
This stability will affect basic pension schemes (€1.3 billion). It might also affect additional pensions run by the social partners (€2 billion). These temporary measures will not affect retired people on more modest pensions, since the minimum vieillesse (2) will go on being increased.
The level of the other social security benefits will also be stable until October 2015 (€0.7 billion), with the exception of the minima sociaux (RSA (3), ASS (4), adult disability benefit), which will continue to increase at the rate of inflation.
The commitments to make exceptional increases, decided in the January 2013 poverty plan, to the RSA, the complément familial (5) and the family support allowance are confirmed. But these increases will be put back a year.
A new unemployment insurance agreement, on which the social partners agreed, is going to allow us to improve the operation of the labour market, particularly as regards job security and vocational training. The unemployment insurance scheme will have to contribute more effectively to the smooth operation of the labour market and allow us to restore the financial balance of UNEDIC (6) by 2017 (€2 billion in total).
The continued updating of family policy will allow savings of €0.8 billion.
Social security funds will make savings of €1.2 billion, thanks to computerization and better coordination between the different bodies. This will make things genuinely simpler for those insured.
Ladies and gentlemen,
The government believes in these choices we’re presenting to you. And we believe in them because they lead to France’s recovery. We believe in them because we’re convinced that with these choices, France will be stronger and therefore fairer.
The Council of Ministers’ meeting of 23 April will look at the stability programme, which will be subject to a National Assembly vote on 30 April.
The savings measures will be reflected in financial legislation which will be presented before the summer (additional finance bill and additional social security funding bill) then in the autumn (public finance programming bill, finance bill, social security funding bill).
I know what people expect, I know the doubts. But the team around me is dedicated to serving the French people. That’s the truth we owe it to you to tell. And truth leads to success. France’s success./.
(1) benefits for those on the lowest incomes.
(2) welfare payment for elderly people.
(3) revenu de solidarité active – inclusion income support comparable to the US EITC (earned income tax credit) and the British WTC (working tax credit).
(4) allocation de solidarité spécifique – allowance paid to long-term unemployed people who are no longer entitled to unemployment benefit.
(5) means-tested family allowance (for parents with three children above the age of three).
(6) French national organization which manages unemployment benefit schemes.