Are the Tories really getting to grips with the deficit?

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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23 Responses to “Are the Tories really getting to grips with the deficit?”

  1. Mr. Sensible

    Will, the Tories said they needed to cut the deficit yet seem to be able to fund their pet projects. And the Lib Dems have swallowed it whole.

    Indeed, they have had a share of it; announcing this change to the Income Tax threshold, which as I think Tim Horton has demonstrated on LFF won’t really help people on lower incomes.

    Having lived under one of ‘Cameron’s Councils’ where I live for nearly a year, I can tell you Will that this is not new.

  2. Guido Fawkes

    Do you want them to cut the deficit or not? Yes / No

  3. Anon E Mouse

    Are they responsible for the deficit or not? Yes / No

  4. Mr. Sensible

    Look, if we need to cut the deficit, we cannot afford Tory pet projects.

    That is absolute fact.

  5. Will Straw

    Fair questions, Guido and Anon:

    1) I want the Government to cut the deficit when the economy is ready to take the cuts. Cutting the successful Future Job Fund is unforgivable in current economic circumstances. It is a dogmatic decision which effectively cuts real jobs this year in order to support the theory that job losses may be created next year by NI rises.

    2) Labour has to take some blame for the structural deficit (about 4% of the 12% deficit this year – the rest is automatic stabilisers and bank bailouts). But since government receipts are currently 36% of GDP there is room for some tax increases to close the deficit as well some spending cuts to bring public spending levels back to balance around 40-42%.

  6. Anon E Mouse

    Will – I agree on the economy being ready to take the cuts – we are where we are and I also think Clegg stating the situation in Greece means emergency action is needed is nonsense – he’s a Tory at the end of the day but irrespective of the reasons waste is waste.

    Darling stated he had identified £blah of waste and he should have immediately started cutting it not some stupid 4 year “deficit reduction plan”.

    Personally I think a combination of an improving economy resulting in more tax receipts nad inflation increasing will solve it in the long term anyway.

  7. Will Straw

    The irony in all this, Anon, is that Labour was cutting waste this year: £15bn to be precise: http://webarchive.nationalarchives.gov.uk/+/http://www.hm-treasury.gov.uk/press_40_09.htm

    That’s part of the reason why Osborne and Laws couldn’t find the £6bn of efficiency savings that had been promised in late March and had, instead, to cut spending programmes.

  8. trevmax

    labour are incapable of cutting waste because waste=labour voters jobs.

    however much they ‘claimed’ they were going to cut is irrelevant. the last government were liars and frauds if they were anything. if labour had got elected we would have been at the IMF within 6 months

  9. Anon E Mouse

    Will – Is the coalition including this in their cutting or is it on top do you know?

    trevmax – Yes the waste are public servant Labour voters but in five years they won’t be…

  10. trevmax

    anon. i don’t think the greece thing is a red herring. there are a list of countries that were about to go under. the PIIGS. we were next. after the trillion dollar Eurozone bail out, we are actually the next country on the list that people fear will not be able to control the deficit. all this waiting for a year before cutting waste was nonsense. the market wanted to see real cuts. things that are politically unpalatable to show the government has the will to eventually reduce the deficit significantly.

  11. trevmax

    but all this talk of numbers and timing doesn’t really get to the heart of it. for 10 years, the government has been bribing people to vote for them with money that has to be paid back by their children and grandchildren. it is absolutely immoral. i think the best thing to do would be to default on the debt and make government borrowing illegal. counter cyclical measure can be taken by printing and destroying money

  12. Fat Bloke on Tour

    Will

    First up good article to get the facts on Dave the Raves + Cleggy’s “we are all dog boilers now” charade out into the open.

    The starting position of £12bill out / £6bill in has gone.
    As you note AD has snaffled all the low hanging fruit.
    The GE talk of £6bill out has proven to be the shambles it always promised to be:

    £2bill in discretionary spend — Not quite.
    £2bill in contract squeezing — Not quite and what they have talked about looks tough.
    £2bill in recruitment savings — Total retreat, £120mill’ish?

    Consequently total shambles.
    Savings include £700mill+ that the devolved regions can delay till 2011/12.
    Just how poor is their programme?

    The IFS is wrong regarding savings.
    They will not manage £5bill net this year.
    A figure of £3bill would be the best they could hope for.
    The changes they have made will affect tax revenues.

    Consequently the CTF raid looks desperate.
    Terrible economics and even worse politics.
    And all this from a cabinet where there are 23 millionaires.
    I just wish that all those who made a racket over the 10p tax issue would produce half the noise to get this re-instated.

    Frank Field, I await your thoughts on this with interest.

    GB and the poor — 8 good / 2 bad — Huge progress made.
    The coalition aka upper middle class privately educated establishment Dog Boilers:
    First change and the poor get it big time.
    Please note that this is only the first of many cuts.

    Now to the big picture.
    Can you please stick to the facts on this.
    A lot of what the left is saying is far to defensive.

    Thatch2 Recession / problem started under her watch
    2.5% reduction in GDP, peak to trough = 8.7% deficit.
    Not in the Top 5 of post war economic events.

    Credit Crunch incl the complete rebuilding of the UK banking sector.
    6.2% reduction in GDP, peak to trough = 11.1% deficit.
    Biggest banking crisis in 130 years.
    Biggest economic crisis since 1929/31.

    The structural deficit issue is secondary in all of this.
    GB knew that the public sector investment had to be scaled back.
    It had started but was overtaken by the Credit Crunch.
    Consequently Labour has nothing to be ashamed about.

    As an aside on all this I think that there is and was a side issue.
    Treasury deficit forecasts have been out by 1% / £10bill pa since around 2001’ish.
    50% was extra emergency spending – F+M / Iraq / A’stan …
    50% was being 12 months too slow in working out where the line was between tax avoidance and tax evasion actually was / what the courts would support.

    The structural deficit is nowhere near as bad as the establishment shroud wavers would have you believe. Better to spend now with borrowed money than re-live the 1980’s. Thatcher put beggars back on to the streets of Britain and I will never forgive her for that. I just wish more on the liberal, middle class left would remember that and stop apologising for the progress made by TB + GB.

    Yes it cost money but it was worth it.

    Regarding the figures, the deficit falls by £22bill in 6 months.
    I just wish AD had not been so taken in by Treasury figures.
    Mandy could have spent another £5bill and made a huge difference to industry.
    Lack of imagination and confidence were New Labour’s biggest faults.

    Finally to all the deficit nutters out there.
    Borrowing to invest in the public realm is not a sin.
    Our children and grandchildren will thank us for all the investment GB + AD put in over the past 13 years.

    Funny how all the failed arguments and policies of the 1930’s make a re-appearance when times get tough.

  13. trevmax

    i promise you our grandchildren will not be thanking us for this last 13 years. Blair will go down as a warmonger who did nothing domestically. Brown will go down as an economic disaster.

  14. Lozza

    And when the little snipes get all sniffy over the Labour spend, we shall remnind them that Labour spent the majority rebuilding the hospitals they were born in, the NHS they were treated for free in, the schools that educated them, and the FE places that helped them secure a worthwhile skill, to enable them to make a worthwhile contribution to society. Whilst at the same time reminding them of the capitalist greed that eventully collapsed the banks resulting in yet another example fo the privatisation of profits and the nationalisation of losses.

  15. Fat Bloke on Tour

    trevmax @ 1.12

    Whoever you are, you are no friend of the left or the Labour party.

    Thatch killed more British soldiers than TB.
    Kosovo apart, I supported all his military interventions.
    Iraq’s children and grandchildren will be grateful for his efforts.

    GB will not go down as an economic disaster.
    he will go down as the person who rebuilt the public realm after 18 years of private affluence for some and public squalor for all.
    His record on the Credit Crunch will not be bettered by the Coalition dog boilers who are firing up the chainsaw for a bit of slash and burn.

    Finally any chance you could affer some background to your political beliefs, just what do you support and what policies or politicians do you agree with?

  16. trevmax

    255 British deaths in Falklands #defensive war# http://en.wikipedia.org/wiki/Falklands_War

    288 British Deaths Afghanistan #unprovoked offensive war#
    http://www.mod.uk/DefenceInternet/FactSheets/OperationsFactsheets/OperationsInAfghanistanBritishFatalities.htm

    Brown borrowed and spent. There’s no integrity to that. His record in the credit crunch was to throw money at it. He saved the banks alright without even reforming them.

  17. trevmax

    @Lizzy

    “we shall remnind them that Labour spent the majority rebuilding the hospitals they were born in, the NHS they were treated for free in, the schools that educated them, and the FE places”

    Thats all PFI. I will be dead before that’s paid off

  18. Fat Bloke on Tour

    trevmax

    Unfortunately the Falklands wasn’t the only place where soldiers died under Thatch’s watch.

    Consequently wrong again.

    A’stan = The conflict may be many things but it is not an “unprovoked offensive war”.

    On the subject of the Falklands you have shot yourself in both feet with just the one bullet.

    Labour / GC stopped the Argies attacking the islands twice in 76 and 78. Timely naval voyages and a little scuttlebut reaching the Spanish gov meant that the plans were never carried out.

    Thatch managed to lose the islands 12 months after she decided to go down in history as a cutter and not a warrior. 81 budget and MOD / Navy cuts showed her in her true colours.

    Selling off a carrier, running down the LPD capability and pensioning off the Falklands patrol ship were not the best signals to send to the junta.

    Consequently Thatch lost the Falklands.
    The Navy and the Army won them back, offensively.
    She had nothing to lose but other peoples children’s lives.

    Away and through shite at yerself, ya numpty.

  19. lozza

    @trevmax

    Yeah! But that is capital investment, – not liabilities.

    PFI does not fund the day-to-day overheads of running the schools, the NHS, transport etc.

    From an accoutning POV long term debt is exactly how you fund the long term growth of a company and is what most ‘commercial enterprise’ is built on, that is how you guarantee the maximum return on capital – you are in it for the long run – not for short-termism.

  20. Anon E Mouse

    Fat Bloke on Tour – So you disagree with cutting military spending then? I was in the mob when the Falklands was on and I can assure you there is a difference between defending a peaceful society invaded by a fascist regime and launching unprovoked attacks by showing poodle like support for a US president and misleading the MP’s in the commons as to the threat – 45 minutes anyone?

    Anyway your question was about numbers killed and on that you are clearly wrong and “Thatch” never killed anyone – the enemy did…

    Finally what tour are you actually on – it sounds like Bob Dylans Neverending Tour without the talent…

  21. Fat Bloke on Tour

    Anon E …

    There you go again, supposed “Labour” supporter bigging up the Tories at every turn.

    Somehow I don’t believe you .

    When it comes to who was the better protector of the Falklands, old Sunny Jims wins hands down over Thatch the Snatch.

    Thatch’s policies killed more servicemen than TB ever did.
    Please review the forces casualty rates to learn the truth.
    More servicemen died in the 80’s than the noughties.

    When it comes to enemies of the human race the junta couldn’t hold a candle to SH, I would be interested to know if you would argue against that statement. Consequently he had to go.

    Having G”W”B involved made it a lot harder, would you have had the same issues if Gore had been in charge.

    Regarding defence spending I have issues with MOD procurement, officer feather-bedding (esp private education perks) and British Waste of Space profits / lack of technical ability.

  22. Anon E Mouse

    Fat Bloke on Tour – Told you I didn’t vote Labour last time so you may be right – currently I am not a Labour supporter.

    I don’t consider the liberation of peaceful peoples in the Falklands, attacked by a fascist regime a reason to attempt to score political points about who did what and when. You are simply incorrect regarding the numbers of troops killed in action under Thatcher/Major and Blair/Brown. trevmax is right – you are wrong and no matter how many red herrings you throw up that is the fact ya numpty.

    Finally, irrespective of who I vote for, if they are in the wrong, they are in the wrong and your sort of tribal football team like support (and Mr.Sensible, Shamik Das and Liz McShane included) you display is simply intellectually stupid.

    Example: Either tuition fees had “been legislated against to prevent them rising” as Blair suggested or they were not. Blair lied and up went the fees. And Lisbon Treaty etc etc etc.

    Yet even when the left are wrong in their actions people on this blog still make excuses for them instead of robustly challenging the Labour leadership and making it clear who runs the show. Because of the tacit support and lame excuses by blogs such as these (and I don’t include Will Straw, Ed Jacobs, Mehdi Hasan and the like in this – they display a modicum of intelligence that is somewhat lacking by other contributors to this blog) we get dishonest inexcusable actions that are excused here.

    So when that last useless unelected PM, Gordon Brown, calls a Labour voter a bigot you lot say “It was a private conversation” – an excuse.

    When Walter Wolfgang, a lifelong Labour supporter in his eighties, heckles Jack Straw at the Party conference he is arrested under the Terrorism Act – not challenged from the stage, not questioned as to his grievance simply arrested by thugs and removed from the hall. Same with the woman reading the names of the dead at the Cenotaph. Wrong but the blogs excused it.

    And smearing David Cameron in the week his disabled son died – by employees actually in Downing Street. Wrong but the blogs excused it. And smearing David Kelly and on and on and on.

    So if as a Labour supporter you think it’s ok to excuse the likes of Derek Draper, Charlie Whelan and Liam Byrne I’m afraid I don’t. If something is wrong challenge it – shout to the rooftops and don’t let the likes of Mandelson and Campbell or any of those other truly unpleasant characters hijack the membership.

    When the left says it needs to rethink the whole thing from the bottom up they are right but can we please have less hypocrites like John Prescott rewarded by the party – sorry Lord Prescott – and elect a leader who is actually electable. That rules out Ed Miliband – too evasive. Ed Balls – too dishonest. Andy Burnham – too stupid…

    I’m going with David Miliband…

  23. Fat Bloke on Tour

    Anon E …

    Stop moving the goalposts.
    Just answer the questions.

    Troop casualties — Thatch killed more — Fact.
    Falklands — Thatch lost them — Fact.
    David Kelly — Media Tart — Fact.
    3 BBC reporters can’t be wrong.

    As for the rest of your post, Daily Mail laundry list.
    Some of your points have merit but they are lost in the blizzard of bile.

    Consequently you may have voted Labour in the past but I see you as a New Labour Glory hunter after all the cheap credibility of supporting a sure thing. Consequently you are peripheral to the post election debate on what went right, what went wrong.

    However if we have to debate then please get your facts right.
    Much work needed on your casualty figures.
    Tip — Look at the NI casualties.

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