The new coalition Government has announced a £6.2 billion headline cut to public spending in the current year. Since £500 million is being recycled into additional spending or tax cuts, and the £704 million earmarked for devolved administrations does not have to be found until next year, the likely reduction in borrowing in 2010-11 is around £5 billion. This is less than a tenth of the fiscal repair job that Alistair Darling's March 2010 Budget forecast suggested will be needed over the next few years.
This Briefing Note examines what the parties have said (explicitly and implicitly) about the scale, timing and composition of the fiscal repair job ahead, teasing out the differences and similarities.
Efficiency savings alone won't be enough to sort out the UK's massive deficit and there will have to be cuts in the quality and/or quantity of public services coupled with cuts to welfare benefits and increases in tax, write Rowena Crawford and Carl Emmerson of the Institute for Fiscal Studies.
The Liberal Democrat manifesto contains more extensive and more detailed tax and spending proposals than those of the other main UK parties. But taking as given the Liberal Democrats' estimates of the amounts that their proposals will cost and raise, the document is less clear than it could be in setting out how these proposals fit into the party's overall plan to repair the public finances.
The Conservative manifesto did not tell us anything about their tax and spending plans we did not already know. In particular, it was no more explicit about how much more ambitious the Conservatives would be than the Government in reducing the budget deficit over the medium term. The Conservatives promised only
The key question for the next Government is what size and combination of public spending cuts and tax increases to implement to repair our public finances. Anyone looking for a more detailed answer from Labour in its manifesto will have been disappointed.
As we watch the parties squabble over how much can be achieved in efficiency savings this year, it is worth remembering that we will not be able to judge with confidence which was right even after the event.
