Recently on Coffee House, and elsewhere, some people have been arguing that the deficit reduction
isn’t happening fast enough. The latest, a paper from Tullet Prebon, argues that it’s wrong to say there are cuts. Its author, Dr Tim Morgan, reiterated its points on the Today
Programme this morning. But it isn’t true — and the analysis itself proves it.
When this Government entered office, there was no credible plan to convince the bond markets that Britain was serious about dealing with its debts. So the new Coalition accelerated the pace at
which the structural deficit was to be eliminated.
Some on the right and left disagree with the pace of this plan. As we all know, Ed Balls’ answer to the debt crisis is even more spending, more borrowing and more debt. He has learnt nothing
from the mistakes he made as Gordon Brown’s right-hand man and is consequently isolated in the international debate on deficit reduction.
The IMF, the OECD and every business organisation in Britain believe the Government has the right plan. Mervyn King said recently that it was ‘a textbook response’.
Other commentators argue the Government is not going fast enough.
The Tullet Prebon contribution goes further, and says the cuts are just ‘spin’. Tim Morgan uses the years 2009-10 to 2011-12 as the basis of his argument. But the Government only came
into office in May 2010. The deficit reduction plan effectively runs between 2011-12 and 2016-17. In the first quarter of Dr Morgan’s chosen period, Gordon Brown was still in power and still
in denial about the scale of the mess. Then the Coalition cut £6 billion from the deficit in 2010-11, exactly as promised at the election. From 2011-12 onwards, Dr Morgan doesn’t quote
the figures, but does agree there are cuts.
So let’s get real. While times are tough, the deficit is coming down. Only once the deficit is under control the stock of debt can be tackled. It’s happening. It may not be as fast as
some would like. But to say the cuts are just ‘spin’ misses what’s actually happening.
Matthew Hancock is the Conservative MP for West Suffolk.
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