The vulnerability of the Osborne plan is that the pain might well get worse as we get closer to the election

By Tim Montgomerie

Every year government departments have to cut by the same percentage. Year one. Year two. Year three. Year four. The big problem is that by year four the lowest hanging fruit will have been picked. Public sector managers who have succeeded in finding their first year cuts will find it harder in year two. Harder still in year three. And as year four dawns they'll have to find exactly the same scale of cuts they found in year one. By then it may be much harder to identify the useless project or superfluous employee.

The hope, of course, is that some saving processes begun now will still be paying dividends in later years. It will certainly be true that many redundancy costs will be falling away. It might also be the case that growth might take off and George Osborne will be able to reduce the cuts because of buoyant tax revenues. The danger, however, is that a nation exhausted by three years of austerity will be faced with even more unpalatable cuts in the year counting down to the 2015 general election. Free market campaigning groups and centre right think tanks need to help the government to show that more efficiencies are possible. With the aid of the transparency revolution we need to convince taxpayers that their money could still be much better used and cuts can lead to a better state.

The eve-of-the-election will be the moment when George Osborne will hope to be able to, finally, announce how he'll share the proceeds of growth. He'll want to be able to explain how he'll cut middle class taxes and invest in Cameron's Big Society, if given a second term. The danger is that he'll be hated by then. George Osborne's goal of eradicating the deficit is the right one but no Conservative should underestimate the pain of the next few years.