Peter Hoskin

In the foothills of Brown’s debt mountain

In the foothills of Brown's debt mountain
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After the sunshine of the Downing St rose garden, the gloom of the public finances. This morning's newspapers are full of stories about the tax hikes and spending cuts that our coalition government is looking to introduce. The Sun and the Times dwell on yesterday's forecast for a rise in VAT. The Guardian outlines possible cuts to middle-class benefits. And there's plenty more besides.

Two articles, though, are particularly indicative of the tensions that the government will face.  Interviewed in the Sun, David Cameron has to go on the defensive about tax rises; insisting that "The Conservative party is still a low-tax party, a tax-cutting party – and that's in the agreement."  And the Scotsman claims that Alex Salmond is set to demand £700 million more cash for Scotland when he meets the Prime Minister later today. So, dismay about about tax rises, and demands from certain quarters for increased spending – welcome to Number 10, Mr Cameron.

We're also given a sense of how the government will respond.  In his interview, Cameron goes out of his way to say that the tax hikes "were on the whole already put down by Labour" (which is exactly the point that opponents of the 50p tax rate would make).  And the Scotsman reports that the Scottish Lib Dems have turned on Salmond, with the party's chief whip at Holyrood saying that, "The First Minister is relying on fantasy economics."

The strategy for detoxifying these early measures will, I imagine, have two more components.  First, the new Office for Budget Responsibility will be used initially as a delaying tactic ("let's wait until the OBR reports on the state of the public finances"), and then as a justification ("Have you seen the OBR's report on the state of the public finances?!").  And the government will introduce a few measures to sweeten the medicine, like the £140 tax cut for basic rate taxpayers mooted on the front of today's Telegraph.

One last point: all this fiscal surgery is by far the hardest thing that the coalition will have do in its first term – which is yet another reason why t'were well it were done quickly.  Best to get it out of the way while everyone is still on friendly terms.