Is the Tory manifesto hiding post-election pessimism?
No one could accuse the Conservatives of failing to outline an original vision for Britain. Just flick back to “Are you thinking what we’re thinking?” and the difference is pretty clear.
It is brimming with sunny pre-election optimism, the issue is: is this Blue Book hiding something a little more pessimistic post-election? The Labour charge is that a succession of giveaways before 6 May will be, in fairly sharp order be replaced by takeaways.
Labour’s rebuttal against the manifesto was not aided by the numerically confused table headlined “top four giveaways”, which then went on to list only three.
But it did point to the grey area quasi-commitments on the fair fuel stabiliser, pension dividend tax cuts, and the elimination of the couple premium in tax credits as un-costed spending that could be worth £13bn per year. Now the Tories are adamant that these aspirations are not commitments, so perhaps they should not be in the manifesto at all.
Other than that there are no new numbers in this manifesto and what we see is a Conservative party in an election fiscal holding pattern. And to be clear, the Labour manifesto too omitted the most important facts about how your life is to be affected by political decisions made by the people you will elect in three weeks time.
The IFS is pretty clear: even a real freeze in NHS spending for two years has not happened for 60 years, and a half decade of real departmental spending cuts, as implied by existing government plans, has no precedent since spending records began in 1948.
So let’s try to cut through the manifesto fog.
If the Conservatives are elected, George Osborne will arrive at Number 11 and “fire up the Quattro” of an economist called Sir Alan Budd. He is already taking soundings from Britain’s foremost economists on his mission of discovering the size of the black hole in the public finances. If he finds one, it will be reported to George Osborne, who before June, will hold an emergency budget.
And there will be cuts. Just think that the IFS assessment that I describe above is their best guess of what is implied, though not explicitly stated under current government plans.
David Cameron today said that he would go faster and deeper, despite having spent £25- £30bn averting the bulk of Labour’s NI rise. So he needs more cuts than Labour to pay for national insurance (NI), and even more for faster deficit reduction.
The only figures we have are the brief statements of Sir Peter Gershon and Martin Read, the efficiency gurus. £6bn will be cut from “waste” in non-priority departments. Immediately, in a matter of weeks, within the current financial year.
It goes towards a smaller deficit this year, and pays for the NI move in subsequent years. If spread equally that means a £1.7bn cut to the education budget. It’s definitely possible.
Have the Conservatives adequately explained whether it is possible without harming frontline services? It’s far from clear. Their efficiency guru Martin Read thinks he has given them the detailed numbers, the Tories have, as yet, chosen not to show them to voters. Both Phillip Hammond and Michael Gove have indicated that this is the case. I do wonder what is in these numbers?
But then there is the general issue of whether or not this abrupt change to public spending really is credible.
One number in the manifesto is that the Conservatives want to see the job of deficit reduction mainly done by spending cuts than tax rises, by a ratio of 4:1. Current government plans are more like 2:1.
What was the ration the last time that we had a serious programme of fiscal retrenchment? 1:1 – i.e. half tax rises, half spending cuts, according to a new analysis of the early 1990s by the IFS.
History suggests that far more of the heavy lifting of Britain’s fiscal consolidation will be done by tax rises. It is intriguing that there is no mention of income tax or of VAT in the Conservative manifesto. The realists at the IFS argue that this is a good thing as it makes no sense to deny use of potent taxation weapons if required.