A public service slasher or a deficit weakling?

“It’s April Fool’s Day,” is what I muttered to myself, when looking at the line of attack from Darling, Mandelson and Byrne in their extensive 180-page dossier on the “Conservative credibility gap”.

Yes it outlines a £22bn gap from the Conservatives on tax and spending pledges, but that suggests that the Labour frontbench think that Osborne is significantly more credible now than their previous version of their fiscal attack dossier had assumed in January (£34bn then, £22bn now). 

The Labour party, it seems, has not yet decided whether to attack Osborne for being a closet slasher of public services, or a deficit weakling.

They can’t have it Betty both ways, just as George Osborne’s year-long fiscal fetishism sits uneasily with an opaquely-funded pre-election tax reduction. Labour insiders say that the dossier is the first stage in a process of exposing what they call the shadow chancellor’s faulty fiscal arithmetic.
 
So to the dossier itself. It refers to a Treasury costing of the Tory NICS proposal, starting at £6bn and rising to £6.7bn by 2013-14, so a £25.3bn total tax cut over the course of the next parliament.

The Conservatives have used an IFS costing which starts and £5.6bn, and eventually falls to £4.3bn at some point, so roughly £20bn.

The IFS say that their costing includes the fact that smaller employer NICS will see “behavioural change” i.e. wage rises, and therefore higher income taxes.
 
This is “paid for” by £6bn per year of “efficiency savings” from non-Conservative-priority areas like schools, transport and housing.

Mr Osborne’s aides assert that these savings are waste, and “absolutely” will be made, but will be done so with zero impact on public services, despite a 2.8 per cent cut to spending in these departmental areas (everything bar health, aid and defence).
 
Now Labour’s position would be far more consistent if they could be brave enough to sketch out what departmental spending would look like in the next few years, even in outline. Yet, without firm answers, Mr Osborne is also risking his own deficit hawkery.

Obviously it’s nice to have two dozen business leaders back his tax cut, but I would also heartily back a tax cut on economics editors, yet I doubt it would be seen as emblematic of the actions of an Iron Chancellor.

No wonder that Nick Clegg can carp from the sidelines accusing both sides of “voodoo economics”.