The question of when exactly the Liberal Democrats u-turned over the speed of tackling the deficit reared its head again today when Bank of England Governor Mervyn King appeared before the Treasury Select Committee in Parliament.
The question of when exactly the Liberal Democrats u-turned over the speed of tackling the deficit reared its head again today when Bank of England Governor Mervyn King appeared before the Treasury Select Committee in Parliament – in particular Nick Clegg’s claim that he had changed his mind after a personal warning from the Governor.
As Paul Waugh reports, King was unhappy Clegg had used his conversation with him as an excuse. Responding to questioning from Labour MP Chuka Umunna, he said:
“I don’t think central bankers ever feel comfortable when they are drawn into comments by politicians.”
Adding:
“I said nothing that wasn’t already in the public domain. My position hadn’t changed.”
Watch the exchange:
During the election campaign, the Institute for Fiscal Studies examined whether the Liberal Democrats were “planning to be more ambitious than Labour in reducing the deficit”, concluding:
“If anything the manifesto implies the opposite: it says that a Liberal Democrat government would carry out a Spending Review over the summer and autumn ‘with the objective of identifying the remaining [our italics] cuts needed to, at a minimum, halve the deficit by 2013-14’.
“At face value this might suggest a less ambitious plan to reduce the deficit overall than that implied by the forecasts in the Budget. The Budget predicted that the deficit (total government borrowing) would be down to 5.2% of national income in 2013-14, whereas halving it means that it need not be reduced below 5.9% of national income (half the 11.8% forecast for 2009-10).
“But the Liberal Democrats tell us that this promise to “at a minimum, halve the deficit” should be taken as shorthand for matching the deficit reduction path set out in the Budget. So, overall, they are no more or less ambitious than the Government.“
Indeed, in January Vince Cable had said:
“My party takes the view that the government’s eight-year plan, with a four-year halving of the deficit, is a reasonable starting point…
“The time to start cutting the budget deficit and its speed must be decided by a series of objective tests which include the rate of recovery, the level of unemployment, the availability of credit to businesses and the government’s ability to borrow in international markets on good terms.”
Of course the Lib Dems now support an additional £32 billion of spending cuts above and beyond Labour’s plans in this parliament; as Waugh points out, Clegg initially put this down to a the result of a private conversation with the Governor, telling The Observer:
“He [King] couldn’t have been more emphatic. He said: ‘If you don’t do this, then because of the deterioration of market conditions it will be even more painful to do it later.'”
After the Forgemasters debacle, we know all he likes to change his mind, but what excuse will he use this time to justify his decision?
36 Responses to “More confusion over when Clegg flip-flopped over the deficit”
Sean
watch flip flop today over retirement at 65
bosses will get opt out
just wait and see
Gez
go away mouse
troll off to you own site
bye
not wanted here
Terry
Someone check his IP address
Anon E Mouse
Gez – Typical left wing control freak attitude. Never challenge or debate or try to prove a case just smear and lie about peoples character.
Nice to see the student debating society in action.
Terry – Check away. How do you know I’m not female?
Guido Fawkes
Did they actually contemplate going even faster? Back in September 2009 in a pamphlet “Tackling the fiscal crisis: A recovery plan for the UK” Vince Cable identified nine specific areas of potential spending cuts to start to a radical programme of reform.
http://www.reform.co.uk/Research/ResearchArticles/tabid/82/smid/378/ArticleID/950/reftab/56/Default.aspx
The main proposals are:
> Zero growth overall for public sector pay (saving £2.4 billion a year), a 25 per cent reduction in the total pay bill of staff earning over £100,000 and a salary freeze and end of bonuses for the civil service (saving £200 million a year).
> Tapering the family element of the tax credit – saving £1.35 billion.
> A radical review of public sector pensions with the view to moving to higher employee contributions and later retirement ages. There is currently a £28 billion subsidy to unfunded schemes.
> Scrapping several major IT systems including the ID card scheme (£5 billion over 10 years), Contactpoint (£200 million over 5 years), the NHS IT scheme (£250 million over the next 5 years) and the proposed “super database” (£6 billion).
> Curbing “industrial policy”, including scrapping Regional Development Agencies (£2.3 billion annually) and EGCD subsidies (£100 million annually) and reducing (by at least half) the Train to Gain and Skills Councils budgets (£990 million together a year).
> Reforming the National Health Service, by reducing the centralisation and over-administration – starting by scrapping Strategic Health Authorities (£200 million a year) – by strengthening commissioning and with “supply side reform” – in particular tariff reform could save around £2 billion a year.
> Curbing the centralisation in education, by cutting national strategies and scrapping quangos – saving around £600 million a year.
> Reducing the amount of waste in the defence procurement process, including scrapping the Eurofighter and Tranche 3 (£5 billion over 6 years), the A400M (total cost £22 billion), Nimrod MRA4, the Defence Training Review contract (£13 billion over 25 years) and the Trident submarine successor (£70 billion over 25 years).
> Examining possible future public sector asset sales, including some aspects of the Highways Agency (land value of £80 billion) and intangibles such as spectrum, landing rights and emissions trading.