Darling carves up the spending pie
Fraser Nelson 11:26pm
It’s the eve of the Pre-Budget Report, and the lunacy has already begun. Tomorrow's FT says that Darling will copy the Tories’ plans to protect the NHS budget – and throw police and schools in to the protected status as well. This is introduced as "the biggest squeeze in pubic spending for a generation," with the headline figure of 14 percent cuts. How to make sense of that? My guide:
1. Any sentence that starts “A Labour government would...” can be ignored. Darling can promise to fund free beer for everyone after 2011 – he won't be in office. These are decoys for the media: the wilder his claims, the worse he expects to lose.
2. We already know it will be “the biggest squeeze for a generation” - Budget 2009 involved 7 percent cuts over three years (in the small print). The FT story says Darling’s stuff is “fiscally neutral” so its all within that budget. Any department that is protected means the squeeze is bigger in the unprotected departments: hence the Tory thing where, by protecting the DoH, they have to cut 10 percent elsewhere. A fact which caused Labour to dub Cameron "Mr 10 percent"...
3. The 14 percent figure can be calculated if the overall spending envelope stays the same, and certain parts of the budget are cut. But "schools" is not the same as "education" - "hospitals" is not the same as the "Department of Health budget". There won't be a spending review: either tomorrow or (I suspect) before the election. So this cannot really be broken down. But the FT will have made some assumptions.
4. Darling "has concluded that it is too early to begin a more ambitious assault on the deficit because of fears that deeper spending cuts could choke off the recovery," says the FT. Concluded it’s the wrong side of the election, I suspect. This is all about the election.
5. "Hospitals, schools and the police will receive modest real terms spending rises between 2011 and 2014. But these will be expected to be funded by efficiency gains, tax rises and the scrapping of what Gordon Brown, the Prime Minister, calls 'unnecessary programmes'." Basically, the "efficiency saving" is a figure drawn from thin air. It’s a target, drawn so you can claim you are "protecting" various services.
6. "The deficit is expected to peak this year at about £180bn". I suspect the FT is taking a flyer on this, but most independent forecasts agree. The debt situation will be worse, but not much worse, than Budget 2009.
All told: this story is politically interesting but not fiscally significant. It’s all about how Darling would carve up a pie that he will be nowhere near by 2011.
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Austin Barry
December 9th, 2009 12:00am Report this comment"the biggest squeeze in pubic spending for a generation."
Well, at least since the 1960 Wolfenden Report crimped the opportunities for such louche expenditure.
J H Holloway
December 9th, 2009 12:46am Report this commentThe Guardian says tonight
'Gordon Brown is planning to escalate Labour's growing war with the City by threatening two more levies on banks in addition to the tax on bonuses due to be announced tomorrow by the chancellor.
Alistair Darling will use tomorrow's pre-budget report to impose a one-off tax on this year's bonus round, but No 10 will further step up the squeeze on the Square Mile on Thursday with a 60-page report making the case for a so-called transactions tax on all City trading, and an insurance scheme to stop taxpayers being forced to foot the bill for any future banking crises.'
Looks like McDoom is going to position himself against the City as much as the opposition. Very clever, as you might expect, however can he keep up this shadow boxing until next Spring?
Will the City remain silent and refuse to give Broon a target to aim at?
EC
December 9th, 2009 8:01am Report this commentWhat pie?
Also he appears to, rather imprudently, have forgotten to pack a spare pair of underpants.
Michael Booth
December 9th, 2009 8:14am Report this comment"So this cannot really be broke down".
'broken down', Fraser, surely?
peter
December 9th, 2009 8:32am Report this commentToday's events are an irrelevance as the likelihood of a labour Chancellor enacting any prooposed legislatuion is remote. What we do want to hear starting soon is exactly what the Tories intend to do. Playing coy on the basis that labour will steal their clothes no longer washes.
We need to see what we are being asked to vote for, in detail. The problems are so severe and so potentially damaging that the Tories can pussyfoot around no longer. Big, big cuts are the only medecine - anything else will impress no one, least of all the big lenders we are going to need for the next 10 years.
Chris lancashire
December 9th, 2009 9:25am Report this commentReference point 6: Labour will fiddle everything to ensure that the headline figure stays below £200bn. I suspect they already know that the real figure is in excess of that and PFI's/deferred funding and every other dodge is being employed to reduce apparent borrowings. History shows that Labour in general and Brown in particular will forecast optimistically and then bend every figure to support it.
Get after them Fraser - they're lying.
Pete Hoskin
December 9th, 2009 9:48am Report this commentMichael Booth: thanks for the spot - fixed now.
Dorothy Wilson
December 9th, 2009 10:36am Report this commentJ H Holloway
December 9th, 2009 12:46am Report this comment
The Guardian says tonight
Quote from the Guardian: 'Gordon Brown is planning to escalate Labour's growing war with the City by threatening two more levies on banks in addition to the tax on bonuses due to be announced tomorrow by the chancellor."
If indeed Brown is going to declare war on the City, perhaps someone should be asking him how he will replace the tax they have been paying to the Exchequer.
Man in a Shed
December 9th, 2009 11:08am Report this commentI wonder what Darling will do for a living after June 2009 ? Since he may lose his seat as well as his job.
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