Like James, I applauded Cameron’s tax-cutting plan – the right cut, in the right direction, for the right people. But there is one slight hitch. It is promised only if there’s an election this year. The 2009-10 budget starts in April, by which time Cameron probably wont be in power. If there’s an election next year, as is more likely, then the plan will not materialise because there won’t be the money. All these headlines that he hopes to generate will be for nothing.
The Tories don’t say so in terms. But I asked Cameron afterwards if his tax cut offer is valid in 2010-11 when he’s more likely to be in power – and he answered that he can’t tell what the public finances will look like by then. That sounded like a ‘no’ to me.
The reason is that Brown would increase spending by 2 percent in 2009-10, which the Tories would halve and, therefore, do the tax cut. They can’t do this from April 2010-14 when the average spending penciled in is just 1.2 percent. And as Cameron himself said in the press conferece, a “1 percent increase in spending sounds reasonable to me”. Given that he wants to increase health, international development and school spending it will be incredibly tight.
All this isn’t a criticism of Cameron: it’s testimony to the mess Brown has left him in. Any British Prime Minister will from 2010 have only two choices: cut real-terms spending, or run up a trillion-pound national debt. There just isn’t a third way.
UPDATE: In Cameron’s defence, I’d add that all oppositions can do is give illustrative examples of what they would do differently if in power now. So while Cameron’s policy is a hypothetical, a what-if, he can’t do much more. Cameron is right to say that the 2010-11 balance sheet will be anyone’s guess, so he can’t make projections given that it will be redrawn by this year’s Budget if not before.
But CoffeeHousers are right to jump on the fact that Cameron intends to increase state spending from what he inherits. This is very significant, and means there simply won’t be the scope to promise anything much in the way of tax cuts in 2010-11 onwards, when state spending is growing at a near-zero rate. Plus, from what Cameron said today, it seems that defence is joining health, schools and international development as areas where there would be real-terms spending increases. By my maths, this means he’d be borrowing a trillion pounds too by 2013/14. That’s if we can find folk to lend to us the £430bn, given that we don’t have a repayment plan. If not, then it’s back to the drawing board – for everyone.
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