Uk politics

Wednesday

20 Oct 2010

Doing things right, but in the wrong way

In today’s spending review, George Osborne was absolutely right to hold the line on eliminating the structural deficit within one parliamentary term. In the Emergency Budget released earlier this year the coalition won fiscal credibility (and breathing space from international financial markets) by setting that goal. Failing to follow through on this goal at the first sign of difficulty would have damaged the government’s credibility and reputation in the eyes of international markets. The Chancellor was also absolutely right to highlight the need for public service reform and to look to the welfare budget to provide some large and early savings. The government spends more on welfare than on

James Forsyth

Not as deep as expected

The cuts are not as bad as expected because the government has managed to make AME, annually managed expenditure, take much of the strain. The coalition is finding another £7bn from welfare to go with the £10bn of savings announced in the Budget. There is also another £3.5bn coming out of other bits of AME, more than half of which comes from the planned changes to public sector pensions. The child benefit change is also raising significantly more revenue than originally announced. This is because at the time of the announcement at Tory conference the coalition was planning to end child benefit at 16. This is now not happening. I

Fraser Nelson

Ten points about the Spending Review

In the end, George Osborne didn’t flinch. The Chancellor is a clever political operator – too clever, sometimes – but the result is a cuts package that has surprisingly broad popular support. And this has been achieved, in part, by including measures that strike the likes of me as economically unwise. So much of this budget was known in advance that we didn’t find out much new today. The below points are my thoughts not on the overall package – which I strongly support – but the pieces of it that we learned today: 1) Total state spending is falling by 3.3 percent in real terms over the next four

Peter Hoskin

The chart that could cause trouble for the coalition

Just as they did in the Budget, the coalition have produced a chart showing the impact of the Spending Review’s tax, spend and benefit measures on different income groups (see above). In many respects, this is a noble effort: it’s a good deal more transparency than Gordon Brown could ever manage in his Budgets. But it also sets a trap for the coalition. As we’ve pointed out before, these kinds of analyses don’t account for measures that can’t be quantified in terms of the money handed out to, or taken away from, the public. So policies that might improve the life chances of the least well-off, such as better schools

Peter Hoskin

The departmental cuts

The Spending Review document is available here, but we’ve collected the cuts facing some of the main departments in the table below. This is not the complete picture of Osborne’s announcements today: much of the action takes place in the separate social security budget, but we’ll have more on that shortly.

Lloyd Evans

Cameron’s warm-up act for Boy George

Cameron was a mere warm-up man at PMQs today. With Osborne’s statement due at 12.30 the session felt like a friendly knock-up rather than the main fixture. Ed Miliband rose to thunderous cheers from his backbenches and he tried to capitalise on their support by opening up an ancient Tory wound – heartless attitudes to unemployment. Spotting Cameron chinwagging with Osborne instead of listening, Miliband chided the PM for not paying attention. ‘Well, it’s a novel concept,’ said Dave smoothly ‘but in this government the prime minister and the chancellor speak to each other.’ Ed’s problem was that the OBR has predicted rising employment for the next three years.

Peter Hoskin

PMQs live blog | 20 October 2010

QUICK VERDICT: More heat than light today, but Cameron easily got the better of Ed Miliband. Now to the Spending Review live blog. 1230: Cameron says that as cuts are made, the government will have to reform the way it does criminal justice. This is a prelude for the deep cuts that the Home Office and Justice department are expected to face in the spending review. 1228: The Lib Dem MP asks whether Cameron believes that better-off graduates should bear more for their university costs. Cameron says that he agrees on principle, and claims that “everyone in the House” wants the “same thing”: a fair and well-funded university system. 1226:

James Forsyth

Osborne vows to play straight

George Osborne’s statement is, I hear, about 40 minutes long. I also hear that there is no obfuscation in it about what is being cut. The coalition is determined that no one can accuse them of trying to disguise what they are up to. Given what we have learned from pre-briefing, the cuts must be just massive in the departments we haven’t heard anything about yet. There is word this morning that the legal aid budget is going to be being reduced by far more than was expected even at the weekend. It appears that legal aid is one of the things that took the hit as the Treasury tried

Peter Hoskin

How we got here – and where we’re going

With the Spending Review less than two hours away, I thought CoffeeHousers might like to be armed with a few graphs that set the scene. What follows is by no means the complete picture of the fiscal landscape, but these are certainly some of most prominent landmarks. First up, real terms spending (aka Total Managed Expenditure) from 1966 to 2015: So, yes, all the fuss is about that small dip at the end of the blue line – a dip, as it happens, of about four percent. But don’t think that the fuss is entirely unwarranted. What the government is trying to do here is curb a trend of ever-increasing

Fraser Nelson

Exclusive: 1.5 million jobs to be created during the ‘cuts’

Almost every newspaper today leads on the chilling figure of 500,000 jobs to go. This was taken from a briefing paper held by Danny Alexander – a “gaffe” says The Guardian. Indeed: it was top secret – to anyone without internet access. “The OBR’s Budget forecast was for a reduction in public sector workforce numbers to 490,000 by 2014/15”. Read the offending sentence. This was not private advice, but posted online (here) and this is what it said… But hang on. The same forecasts predict that the number of jobs in the economy will rise – by 1.08 million over the same timeframe. So by the same forecasts, the

Peter Hoskin

The slog starts today

Welcome to Stage Two of the government’s life. The first stage was the Budget, which established the size of the fiscal mountain looming over the coalition. The third stage will be the difficult, four-year slog up to the top. But today – the Spending Review – is all about determining the route for that ascent. In just a few hours we will know when, where and why the pain will come. Don’t forget to pack sandwiches. Of course, with this roadmap being drawn out in Westminster, we already know some of the details. This morning’s papers major on the fact – snapped from Danny Alexander’s hands yesterday – that almost

Tuesday

19 Oct 2010

Tom Clougherty

On the eve of the cuts

In economic terms, the role of the Comprehensive Spending Review is a fairly straightforward one: to set Departmental Expenditure Limits for every government department, and outline some of the policy measures that will be undertaken to keep spending within those limits. Fraser Nelson has already ably summarised the real impact that the spending review will have on public expenditure, so I won’t go into that here. Suffice it to say that, yes, the cuts are significant but, no, they aren’t nearly as severe as the BBC would have us believe. But just as interesting as the cold, hard numbers themselves is what they will tell us about the

James Forsyth

Generous settlements mean gigantic cuts elsewhere

I hear that the Department of Transport’s settlement is another one that is not as bad as expected. The capital statement is, apparently, positively reasonable. George Osborne’s commitment to infrastructure spending has meant that a good number of transport projects have been saved. On rail fares, I hear they will indeed go up significantly. But not by as much as the doomsday 30 to 40 percent scenario reported in the Sunday papers. Nearly all the settlements we have heard about so far have been less bad than expected. There must be, given that Osborne is sticking to the cuts schedule set out in the budget, some departments that are going

Matthew Sinclair

What we know already

At the Comprehensive Spending Review tomorrow, we will get a much clearer picture of how the Government plans to manage spending cuts. There are a few things we already know, though: 1) The overall cuts will be modest. As Fraser has pointed out, the overall cut in spending is small. Spending is going down to around the level it was at in 2006-07. It will remain several percentage points of GDP above the level at the start of the last decade. 2) Cut in some areas will be much sharper. The higher bill for Government debt interest, the ringfencing of Health and International Development and the relatively soft deal for

Fraser Nelson

The unavoidable cruelty of necessary cuts

Even though the SDSR promises that it “will be used by units returning from Germany or retained for other purposes,” the loss of RAF Kinloss will still be a body blow to Moray. For years, it has sustained hundreds of airforce families in Elgin, Forres and Nairn – mine amongst them. And I can picture the bakeries, shops and other small businesses that will be hit by losing so many clientele. About 6,000 jobs depend on the RAF up there: not just Kinloss but Lossiemouth, 15 miles away, whose future also looks bleak. Jet fuel for the Tornados in Lossie is sent via Inverness harbour, so it would mean job

James Forsyth

Cameron reveals the scale of defence cuts

David Cameron delivered his statement on the Strategic Defence and Security Review with few rhetorical flourishes. He had two main messages: i) the mission in Afghanistan would be spared from the 8 percent cuts in this Parliament’s defence budget, and ii) the problems the review is trying to deal with stem from the fact that “the last government got it badly wrong.” The appalling legacy that Labour has left the coalition on defence rather hamstrung Ed Miliband in his response. The most memorable line in it was a gag about how he had advance sight of the statement in ‘today’s papers, Monday’s papers, Sunday’s papers.’ Indeed, trickier for Cameron

Patrick Nolan

What should the Chancellor do in the Spending Review?

With this autumn’s Spending Review set to be one of the most important moments in the life of the Coalition Government, Reform has linked up The Spectator’s Coffee House blog to ask what could – and should – be in the final document. This post and all previous posts have been collected in a report that you can download here . 1). Hold the line on eliminating the deficit in one term The coalition Government must hold the line on the commitment to eliminate the structural deficit in one parliament. Delaying the task will simply make it harder. Unless programmes and entitlements are reformed now, then the growing costs

Mats Persson

Time for a new approach to the EU

All eyes are on the spending review, but yesterday another potentially huge challenge landed in the Coalition’s in-tray: the prospect of a new EU treaty. In the small town of Deauville in Lower Normandy, French President Nicolas Sarkozy and German Chancellor Angela Merkel struck another of those ‘Franco-German compromises’ that tend to set the EU agenda, and have too often left the UK on the back foot. Yesterday’s compromise will see Sarkozy backing German calls for a new EU Treaty to introduce new a mechanism that would enable countries within the euro area, such as Greece, to default. And Merkel means business. Under the current eurozone bail-out packages,

James Forsyth

Not fit for purpose

John Reid famously declared that ‘the Home Office was not fit for purpose’. But judging by the fudge over the carriers this epithet would have been better applied to one of his previous departments, the Ministry of Defence. Something has gone very wrong when it would cost more not to build something than to build it. How the MoD got into this position over the carriers needs to be the subject of an urgent and thorough investigation. Those responsible for this absurd situation need to be held to account. It is also ridiculous that there will be several years when there’ll be no carrier from which helicopters can be launched

Peter Hoskin

The coalition’s carrier trouble

We will be presented with the full defence review at around 1430 today – but already its contents are spilling out across the papers. Much of it is unsurprising: a delay for the Trident upgrade, two new aircraft carriers, etc. But some of it is slightly more surprising: for instance, the immediate decommissioning of both our 80-strong fleet of Harriers and the Navy’s 25 year-old flagship, the HMS Ark Royal. As Liam Fox admitted on the Today Programme earlier, those last two measures will mean that Britain loses the ability to fly jets from its carriers for up to ten years. Ruling the waves, and even the skies, has been