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?”
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.
Guido Fawkes
Do you want them to cut the deficit or not? Yes / No
Anon E Mouse
Are they responsible for the deficit or not? Yes / No
Mr. Sensible
Look, if we need to cut the deficit, we cannot afford Tory pet projects.
That is absolute fact.
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%.