There are a few things to note about the analysis in the Financial Times - looking at fiscal policy options after the election - that Tim has written about this morning:
- They have left off two Conservative pledges on welfare spending: the faster increase in the state pension age and stopping tax credit payments to relatively well off families. The former will have been left off because it won't happen during the next Parliament and the saving will be offset by moves to restore the link between the state pension and earnings. The latter presumably because the specific Conservative proposals - to stop payments to families making more than £50,000 - do not save a lot of money.
- It is difficult to imagine how a new government could cut prisoner numbers by 25 per cent. It is hard to see why such an extreme measure has been included, but that those working on the analysis at the FT like the idea of the justice system using custodial sentences a lot less. Of course, any list of cuts will reflect the wider views of its authors to a certain extent, but it is important to remember that the FT's list is not simply a bald statement of fiscal facts.
- To look at the same issue from another direction, they haven't included anything on the rapidly growing international development budget. Of course, there is a wide range of views in this area and reasonable people have argued for the rapid rises in spending planned and others for abolishing the budget entirely. The moderate option we have proposed is to freeze the budget for a year in 2010-11, which would save £862 million, should that really be off limits?
- As the authors note, the list of potential cuts does not include lots of smaller - but still very significant - savings. All of the items in their list are over £1 billion. The list of cuts we developed with the Institute of Directors and updated for the book How to Cut Public Spending (and Still Win an Election) came to a bigger total - £50 billion instead of £37.4 billion - but many of the measures included saved less than £1 billion.
- Their list of cuts still suffers from the same omission that exists in all of the parties' plans. They aren't doing enough to outline programmes and organisations that could be abolished. That is important as getting rid of entire lines in the budget means bigger cuts in running costs. In one of the research notes released to accompany the book we set out a range of organisations that could be scrapped outright. The biggest target should be the Regional Development Agencies. The Conservatives only need to shift their rhetoric on the RDAs slightly for their policy to count as a cut and save nearly £1.8 billion.
In 2009 Britain had the biggest deficit of any country in Europe not making serious cuts already - Ireland - or being bailed out and quite possible heading for default - Greece. In the longer term, projections from researchers at the Bank for International Settlements suggestion we are in the worst fiscal position of any major developed economy.
Between the £50 billion in potential cuts that we've outlined, the £37.4 billion that the FT have set out and the billions in spending that haven't been covered - often because it is impossible to cost potential cuts with the scant data available - it should be possible to find sufficient cuts in spending. We just have to hope that, after the election, the new Government isn't paralysed by the threat of new elections and fresh militancy from the unions to such an extent they don't get the job done.
