Conservative Diary

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Taxpayers, the NHS AND defence benefit from Tory assault on waste

Last night I blogged about the Tory NI cut (or, more accurately the avoidance of Labour's increase) through the raising of thresholds; Seven out of ten working families will be better off with the Conservatives. We learn today that the NHS and defence budgets will also benefit from a Tory assault on waste.

Screen shot 2010-03-29 at 10.54.43 This morning at a press conference, George Osborne, Philip Hammond and Ken Clarke explained how it would all be funded.

The Conservatives plan to start (and expand) an anti-waste programme that the Government does not intend to implement until next year. They have been advised that this is possible by the Government's own former efficiency advisors - Sir Peter Gershon and Dr Martin Reid - both of whom have been advising the Conservatives. They advise that £12bn of savings are possible in 2010* if five areas of spending are tackled:

  1. A halt to new spending on IT projects and cancellation of existing ones that are not going to work;
  2. Renegotiation of all state-private contracts in the same way that the private sector has been renegotiating to cut costs - Philip Hammond said many suppliers that had been talking to the Conservatives said existing contracts were sub-optimal;
  3. Controlling recruitment. Productivity was up 20% in the private service sector but it's fallen in the public sector. As non-frontline vacancies arise they should not automatically be filled;
  4. The brake needs to be put on discretionary spending including travel and office consumables;
  5. Reductions in public sector property costs.

£6bn of these savings will be used to avoid most of the NI rise.

The other £6bn will be re-invested in the NHS, the overseas aid budget AND defence. Defence has been added to the Tories' list of ringfenced budgets for this year only - or at least until the strategic security and defence review is completed. That's a victory for Liam Fox.

In the longer-term other Tory spending measures - such as action on public sector pay - will make today's measures sustainable.

The Spectator's James Forsyth asked an important question at the end - what, he said, will the Tories do with the extra NHS cash? George Osborne said he didn't want to pre-empt any announcements from Andrew Lansley, Shadow Health Secretary. At the moment the Tory pledge to protect the NHS budget is too abstract. This extra investment gives the party an opportunity to spell out the benefits of this extra spending in terms that can be explained to voters on the doorstep.

> WATCH: George Osborne announces Conservative plans to block rises to National Insurance 

> Read George's Osborne's speech in its entirety

Tim Montgomerie

* Policy Exchange's Chief Economist Andrew Lilico suggested similar savings were possible last month.

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