Coalition lies on Labour’s legacy

Chris Huhne and Baroness Warsi today attempted to lay the blame for cuts to come at Labour's door. But the level of cuts was their ideological choice.

At their press conference today, Baroness Warsi and Chris Huhne dishonestedly tried to lay the blame for the approaching spending review at Labour’s doors. Later today, Warsi claimed in an email to Conservative party supporters that, “the cuts to come are Labour’s cuts.” The claim is a lie. The cuts to come are the Coalition’s cuts.

The June Budget set out how the Coalition’s deficit reduction plan differed from Labour’s plan which was set out in the March Budget. The Chart below using data from Table 1.1 of the Budget sets out the different approaches.

Chart: Deficit reduction (£bn by 2014-15)

The Bank of England’s Inflation Report set out today that:

“The measures announced in the June Budget are projected to lead to a somewhat faster and larger reduction in the deficit in coming years than projected in the March Budget …

“The direct impact of the fiscal consolidation is likely to have some dampening effects on demand. Some households’ disposable income is likely to be reduced or grow more slowly as a result of the consolidation, and some companies are likely to face lower public sector demand for their goods and services.  But those effects may be offset, to some degree, if the consolidation improves investor confidence and reduces the risk of a significant rise in long-term interest rates.”

The Bank’s language clearly indicates that the Budget was a choice. The Coalition put concerns about long-term interest rates ahead of concerns about growth. The fallacy of their argument is that lower growth will lead to more job losses, lower tax receipts, a widening deficit, and the prospect of rises in interest rates anyway.

In their press conference Chris Huhne claimed, “Labour’s last budget planned cuts of £50 billion, so why are they unable or unwilling to admit where they would fall?” Yet the Coalition has – to date – only set out one third of the total cuts that it plans. The Coalition set out £6.2 billion of cuts in May followed by £11 billion of cuts to welfare spending in the June Budget – a mere fraction of the eye watering £52 £83 billion in cuts that are planned by the Coalition this Parliament.

Make no mistake about the Coalition’s tactics. David Cameron’s capitulation this week on school milk, showed how the Government have finally woken up to the pain that will be caused by their ideological approach. The Lib Dems and Tories may be “in this together” but the cuts are theirs and no-one else’s.

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