Not so fast

Speculation is growing that the Coalition will slow the timetable for deficit reduction. The slow down would bring the Government more into line with Labour's planned approach.

Speculation is growing that the Coalition government is about to slow the timetable for deficit reduction. Whitehall sources have briefed the Financial Times amid warnings from the World Bank and concerns from Cameron and Osborne’s Cabinet colleagues.

The Financial Times reports today:

“The Treasury is working on plans to “reprofile” spending cuts next April, spreading the pain of deficit reduction more evenly over the next few years, senior Whitehall officials have told the Financial Times.

“Confronted with the difficulties of quickly cutting spending – including financial penalties for breaking contracts and redundancy costs – ministers have been forced to consider delaying some of the big savings until later in this parliament.”

Although reprofiling would not presumably alter the Government’s determination to eliminate the “structural current deficit” by 2014-15, it would bring the speed closer to the deficit consolidation planned by Alistair Darling in the early years of the current Parliament.

On Sky News last night, World Bank president, Robert Zoellick warned fiscal stimulus should not be withdrawn too rapidly. In addition to praising the “wise” plan to reduce the deficit, Mr Zoellick said:

“What you have to see is that if it happened overnight – and all of this were pulled back overnight – that could create a problem.”

In an expertly written piece in the Independent on David Cameron’s conference speech, Steve Richards observes:

“As the spending review hovers, the Tories have become sudden converts to the importance of public spending, the illuminating revelation of the conference. Faced with the reality of precise cuts, they do not like them. Boris Johnson, Iain Duncan Smith, Liam Fox and an array of other prominent figures put the case for the virtues of public investment as the axe looms.”

A further example of trouble ahead is provided today as the head of the prison officers’ union, Harry Fletcher, has warned that 25 per cent cuts to the probation service budget will lead to a lack of resources and courts being forced to hand down short prison sentences despite the Government’s plans for a rehabilitation revolution.

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