Detail of the “deepest spending cuts since the 1970’s”

Following on from Geoff’s blog below about recent IFS reports, their latest research released yesterday looks at the scant detail that the three main political parties have given of their plans for spending cuts and tax rises, if elected. This could be introduced with this video of writer Will Self, who reckons the parties are in denial about the real challenges which face them after the election, and the IFS report adds the numbers to this suggestion.

What is clear is that in all cases, they have chosen to tell us about only a fraction of the fiscal tightening that will be needed in order to deliver their objectives. Stephanie Flanders’ blog about the report highlights some key points indicating the gap between public announcements and private plans. So far the Conservatives have said they would cut spending by £11.3bn a year, Liberal Democrats about £12bn and Labour £6.7bn. However the IFS estimates that the Conservatives would plan to cut spending by £57bn a year, in today’s money, by 2015-16. The Liberal Democrats would cut by £51bn by 2016-17, and Labour would need to find cuts amounting to £47bn by 2016-17.

The disparity between tax rises that have been indicated and the IFS calculations of actual cuts needed is similarly depressing, and as Stephanie Flanders says, it is shocking that the focus on personality politics and where the balance of power might lie in the event of a hung parliament next week is completely crowding out any analysis of how the economy might respond to the deepest cuts since the 1970’s. She quotes directly from the report as follows:

Robert Chote, the IFS’s director, hammered away at them, once again, this morning:
“Repairing the public finances will be the defining policy task of the next government. For the voters to be able to make an informed choice in this election, parties need to explain clearly how they would go about achieving it. Unfortunately, they have not. The opposition parties have not even set out their fiscal targets clearly. And all three are particularly vague on their plans for public spending. The blame for that lies primarily with the government for refusing to hold a spending review before the election.”
The chancellor has said that it cannot do this until the autumn, because the outlook for the public finances is uncertain. But, says the report, “Uncertainty is a fact of fiscal life: any responsible government would face up to it, and seek to reduce it, not use it as something to hide behind.”

Plenty of food for thought here to bear in mind as we watch the final Leadership Debate, featuring questions about the economy, this Thursday.