On the Today programme this morning, David Cameron defended the coalition's £6bn cuts - but the rationale for the move has shifted since the election.
On the Today programme this morning, David Cameron defended the coalition’s announcement on Monday of £6 billion in spending cuts in 2010-11. But the rationale for the move has shifted since the election.
On Today, David Cameron said:
“The key thing is we promised £6 billion of spending reductions, we have delivered £6 billion of spending reductions, that is good for our economy, it shows us getting to grips with the deficit.”
But in March, a Conservative Party press release was clear that cuts this year would be limited to “cutting waste”:
“The Conservatives have announced that a Conservative Government will stop Labour’s tax rise on jobs by cutting waste…
“A Conservative Government will take immediate action to start cutting Government waste, in order to spend £6 billion less in 2010-11 than Labour’s plans…
“Former Government advisers Sir Peter Gershon and Dr Martin Read, now members of the Conservatives’ Public Sector Productivity Advisory Board, advise that savings of £12 billion across all departmental spending are possible in-year without affecting the quality of front line services.”
On Monday, George Osborne and David Laws announced £6.25 billion of cuts rather than £12 billion. But these include reductions in spending programmes such as scrapping the Child Trust Fund, Future Jobs Fund, and cutting student numbers.
Although the IFS outlines that “the likely reduction in borrowing in 2010-11 is around £5 billion”, the Government’s planned tax cuts are likely to erode this in 2011-12. The coalition agreement said:
“We will increase the personal allowance for income tax to help lower and middle income earners. We will announce in the first Budget a substantial increase in the personal allowance from April 2011, with the benefits focused on those with lower and middle incomes.
“This will be funded with the money that would have been used to pay for the increase in employee National Insurance thresholds proposed by the Conservative Party, as well as revenues from increases in Capital Gains Tax rates for non-business assets as described below.
“The increase in employer National Insurance thresholds proposed by the Conservatives will go ahead in order to stop the planned jobs tax.”
The total cost of this package is likely to be similar to the £5.6 billion cost of the Conservative party’s pre-election National Insurance cuts. This can hardly be called getting to grips with the deficit.
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