Fraser Nelson Fraser Nelson

Budgets, cuts and sacred cows

Today’s newspapers disclose that Cabinet members have received letters telling them to expect 10 per cent cuts to their budget in the next spending round. This will have been a letter designed to be leaked, and to establish a negotiating position. The Times says that the real figure is closer to 8 per cent, as I disclosed in my Daily Telegraph column three weeks ago. It was the 8 per cent figure which set off the chain of events which led to Theresa May’s leadership-style speech. To recap, here’s what happened first time around.

The problem came when Osborne asked ministers to make further cuts of 8 per cent in their budgets. This blindsided three Tory Cabinet members: Theresa May, the Home Secretary, Chris Grayling, the Justice Secretary, and Philip Hammond, the Defence Secretary. All have spent three years cutting their departments to the bone – while the Department of Health, fed like a foie gras goose in the Labour years, was not required to slim down at all. Most ministers had put this down to the hangover from election pledges, made in desperate times. “We’ve been prisoner to George’s rhetoric,” says one. A new, dispassionate Spending Review, they hoped, would take account of which departments had been stuffed with cash during the Brown years – and which ones had been neglected. Defence, justice and policing did not especially profit from Labour’s years of unbuttoned plenitude. A 2 per cent cut in the welfare budget, for example, would be enough to protect all three departments. Normally, this trio would have made their case in private to the Chancellor. But they decided, this time, to go rogue.

They are just as angry now, and with good reason. George Osborne ignored the main lesson of Canada’s very successful fiscal consolidation: that there should be no sacred cows, all departments should be cut.

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