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?”
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
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.
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.
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.
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?