Time for George Osborne to come clean about where the cuts will fall

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December 6, 2014 by Paul Goldsmith

 

Me thinks he doth protests too much. George Osborne has single-handedly managed to turn the tenor of the press coverage of his Autumn Statement around in 24 hours from one lauding many of his ideas to one focusing on the one area he said too little. Two independent groups – think tank the Institute of Financial Studies (IFS) and the fiscal watchdog the Office of Budgetary Responsibility (OBR) brought to light the sheer size of the spending cuts Osborne would have to implement to some departments if he was to meet his stated deficit targets. Osborne’s reaction was not to explain what those cuts would be, but instead attack the reporting by the BBC of what those two independent groups were saying. He and other Tory MPs reserved their spite particularly for the BBC’s Today programme – calling its reporting “disgusting and offensive”. Which has served only to shine a light further on what the Today programme were reporting. When the right-wing Spectator magazine is joining in the criticism, it doesn’t look good.

The Conservatives (I would love to say the Coalition, but I think we can all assume this is Tory led) have decided to suspend deficit reduction until the election – meaning they are promising for instance £7bn of unfunded tax cuts should they get re-elected, in addition to promising to look at cutting inheritance tax. They have allowed ISAs now to get transferred between spouses on death without being taxed (funny that, another policy gain for the people who vote most). They have ended air passenger duty for children up to age 12 next year and 16 the year afterwards (let’s not even get into the effect on the environment of that). On the spending side.  They have promised to ringfence spending on the NHS, ringfence spending on Education, ringfence Overseas aid too. Which means they have to find the spending cuts from elsewhere.

This is a serious issue because the Office of Budgetary Responsibility’s Chairman, Robert Chote, argued that spending in non-protected department would have to fall from £147bn in 2014/15 to £86bn in 2019/20 in order to meet Osborne’s stated target of moving from a budget deficit of 5% of GDP now to a surplus of around 1% of GDP then. This means that total public spending would have to be around 35.2% of GDP by 2019-20, which would put it to its lowest level in 80 years. Let me put that another way…it would shrink the size of the state to a size that has never existed since the welfare state and the NHS were created. The OBR cannot see how this can possibly be achieved without a fall in economic growth.

The IFS jumped in by saying that to achieve the target there would need to be a fall in welfare spending of £21bn a year by 2020, rather than the £12bn a year recently claimed by George Osborne. Otherwise, Osborne would have to make cuts to police, councils and roads. Whichever way he goes, the state safety net could find itself with considerable holes in it.

George Osborne got angry at Today presenter John Humphrys for simply reporting this analysis by two independent groups – one of which was created in a puff of self-righteousness by Osborne himself. But Humphrys was right to ask about it. The electorate needs to know where these cuts are going to fall, and they need to know BEFORE the next election, not after. Come on George, level with us.

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