Two pre-budget leaks: childcare and £2.5bn cuts

The chancellor’s pre-leaked two bits of his own budget: the childcare proposals and a £2.5bn switch from spending departments’ running costs into capital projects. The former (not coming in till October 2015) shows a government trying to connect with voters when money’s tight. The latter shows a government trying to get growth with little money in the kitty.

There’s been a painful Whitehall process trying to give birth to the tax-free childcare policy. Scrabbling for money held back the announcement for months. It was meant to be part of the government’s January mid-term review and relaunch. There’s also been intense work to try to make  sure the plans are watertight and  to avoid any sort of repeat of last year’s budget U-turns. Government sources claim that’s why the new scheme won’t come in until October 2015… but the real reason is that the money’s not there  to do it earlier.

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There’s been a rough old tussle between the Treasury and the DWP over cash to fund this policy. We’ll find out tomorrow just how much money George Osborne extracted from IDS. Whatever it was, it wasn’t enough for an early launch. The government’s pet project, its real “connector” with ordinary voters, its “only piece of good news on the horizon”, as one government source said, is now stalled until five months after the general election. ” A big pity,” one No.10 source said.

Apart from the massive social care measures, this will be one of the very few expansions of the welfare state we see for some time. Everywhere else you look the welfare state is being frozen, reordered or shrunk. The government says the purpose is to give people who want to work the choice but it’s telling that in their own Treasury Q and A factsheet the government anticipates the question: “Are you trying to make parents go out to work?” That’s certainly how some Tory MPs see it.

The cross-Whitehall cuts announced by George Osborne at cabinet today have been called cuts in “day-to-day” costs, a euphemism for running costs – but Paul Johnson at the Institute for Fiscal Studies says they’d have to go beyond salaries and natural wastage. The government briefing emphasised that police, schools, aid and hospital budgets remained ring-fenced, councils too.

But that doesn’t mean that other bits of the DCLG budget won’t be eaten into, likewise non-policing elements of the Home Office budget. There are other less reported bits of ring-fencing in the Whitehall budget too – like the nuclear decommissioning element of the DECC budget.

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