Reading George Osborne’s responses to Coffee House has made clearer my own advice to him: save money by decelerating NHS and education budget increases. Max out with rhetoric about “we will outspend Labour” and say “every penny of Brown’s spending will be locked in” etc. It will all be true. But simply increase at very low rates – 0.5% to 1% in real terms. By 2010, with unemployment and repossessions soaring, the public will be in the mood to hear that the government is also tightening its belt.
Given that the NHS has so little to show for the doubling of its budget, it will hardly notice if it is on a 1% real growth trajectory rather than a 2% real growth trajectory. But the Treasury will certainly notice – in money left over. The education budget is already big enough to have plenty cash for Gove’s Swedish schools project – £6,000 a head by 2010/11.
This, rather than a Gershon-style hunt for illusory spending cuts, will be the best way to save extra billions. Whether this is used for debt repayment or tax relief is another question. But slowing these two budgets is, in my view, the most powerful way to save.
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