Not the biggest divide in the world

At his press conference this morning David Cameron confirmed that the Tories would not cut public spending but would restrain its growth.

Given that Brown-Darling intend to limit spending to 1.1% from 2011 the difference between the parties is no more than about £6bn pa.  Fraser Nelson describes this as a difference "between nothing and almost nothing".  To put it in context the annual public borrowing requirement will be £118bn.

As Fraser points out the divide would be larger if, as would be likely, Labour fails to keep to the 1.1% target.  The divide would be just £3bn pa if the Tories limit real spending growth to just 0.5% to 0.6%.

The difference doesn't seem enough to avoid the "drastic" tax rises that Ken Clarke has warned about.

I'm told by the Tory Treasury team that the party has made just two commitments on portfolio spending; (1) To increase spending on health by more than inflation (no government has ever failed to deliver this) and (2) to reach the 0.7% of GDP spent on international development target by 2013.

Tim Montgomerie

Comments

[GB£.com]

Well, to be honest, neither party has a coherent plan to rebuild the economy in less than a century of micro-debt reductions and tax hikes, so in fact the single most important issue actually becomes irrelevant when it comes to voting.

You simply have to decide whether to put up with it or up sticks and bugger off somewhere else.

I expect many corporations to take the second option.

[Jack Stone]

Totally support the commitment on the NHS. All he needs now is a new Shadow Health Secretary to come up with some original policys that will get support. I am afraid Andrew Lansley is in my opinion less than useless

[Malcolm Stevas]

the difference between the parties is no more than about £6bn pa
Pretty much sums up why so many of us are ex-Tories and now describe ourselves variously as libertarians, ex-cons (!), or The Great Disenfranchised...
When the major parties are just grappling fiercely to see who can balance on the middle of the fence longest, like silly buggers on Jeux Sans Frontieres wielding foam-rubber staves, what point in voting, for those of us who actually believe in fundamental principals such as political liberty and small government?

[Steven]

Since it looks like it is pointless to either voice conservative or labour, the only way of voting remaining is to vote with one's feat and get on an aeroplane..

I really don't know what this country wants - it looks like anything that is good for ME is excellent, regardless of its cost to the rest of the country or the next generation.

[David]

There's a difference between cutting public spending and stopping the drip, drip, drip of waste. We know of things the government wastes money on that the Conservatives have already pledged to cut. I'm sure that many more such things will appear over the coming months/years. But Cameron knows he can't start talking about cuts in detail at the moment because it lets Labour hang 'Tory cuts' around his neck, however inaccurate that may well be.

[David_at_Home]

Why cannot someone in authority, just for once, tell it as it is?

At least £50Bn of wasteful expenditure could go, probably as much as £100Bn, with no loss at all to the public good and we could still fund desperately required increase in defence expenditure.

Anyway, it does no really matter what the politicians, of whatever party, say since UK GNP is set to fall be around 10% in the next couple of years so and public spending will just HAVE to fall.

This recession will be horrible, will probably include a fair degree of civil strife, and will hurt lots of innocent worthy people. That said, if the politicians can behave sensibly and try not to make things worse, the recession might have the advantage of flushing out the decaying parts of our economy and our state.

However, I have zero confidence in the ability of Messrs Brown, Darling, Cameron or Osborne to steer the ship of state safely through the hurricane that will soon be upon us.

[David_at_Home]

£6Bn is just about the same as the net cost of our fees to the EU.

The actual total cost in waste, red tape, CFP, CAP etc. is approaching ten times this!

[Malcolm Dunn]

How did Fraser Nelson exxtrapolate £6 billion?

[Malcolm Stevas]

David:
"We know of things the government wastes money on that the Conservatives have already pledged to cut. I'm sure that many more such things will appear over the coming months/years."
This is known as the triumph of hope over experience.

[Alan S]

Surely the right way of thinking about this is to undertake a strategic review of what the state should do and then decide how much it will cost. This approach smacks of incrementalism and manageralism.

[Tim Montgomerie]

The £6bn is my figure Malcolm.
It's rough but with public spending at c£600bn then 1% equals c£6bn. 1% being the difference between just increasing public spending and the 1.1% promised by Labour.

[David]

Malcolm, so my guesswork is somehow invalid whereas yours is correct?

[GB£.com]

"Surely the right way of thinking about this is to undertake a strategic review of what the state should do and then decide how much it will cost."

I'd say that is step 2, with step 1 being the setting of a legal maximum tax freedom day.

This would firmly establish the relationship between the state and the people setting legal limits, and ending the process of the taxpayer being there to be plundered to whatever level the govt decides.

Once you know your budget, then you are in the right place to discuss what you can spend it on.

[Michael McGowan]

Jack, isn't Andrew Lansley your kind of health secretary: blank cheque for the NHS; non-stop pandering to producer interests; NHS "the envy of the world"? Or are you pining for Frank Dobson?

[David]

I should also say that what Labour plans to do - this 1.1% spend - and what they actually do, will most likely be very different. If the Conservatives do limit spending, as well as cut the things they have already highlighted, there would certainly be a difference between them and Labour because Labour always spend more than they say they are going to. Double digit billions in that case.

[South Londoner]

So at the last election, when the government was spending circa £450 billion, Derek James found £25 billion in waste (I am admittedly recalling these figures). Does that mean we think that as government spending has risen in the last few years, it has become more efficient so as to make £6 billion the most we could possibly save? Or do we now not care about the odd £19 billion in waste?

When will Cameron realise that restoring economic health and hope to the country is more important that kicking the right of the Conservative Party.

[Malcolm Stevas]

Tim Montgomerie:
"1% being the difference between just increasing public spending and the 1.1% promised by Labour"
Yes, I know, but this is what I've been banging on about in my tiresome fashion (Oh God these boring old farts who actually CARE about things called "liberty" and "choice", my dear, whatever they are...) for years to anyone willing to listen: all that divides (!) the major parties is a very few percentage points on this service, off that tax. Nobody actually gives a stuff about general principles anymore: nobody offers a worthwhile choice. Right, I'm off down the High Street in my old brown mac, placard in hand, so everyone can say Look at the funny man, or what was democracy, Daddy...

[Malcolm Stevas]

David:
"so my guesswork is somehow invalid whereas yours is correct?"
The key word is "experience": so on the basis of what experience - as opposed to optimistic expectation, i.e. hope - do you anticipate "many more such [cuts]" - ?

[Steve Tierney]

This is all pie in the sky. Or election campaign spin.

I expect Conservatives will be forced to renege on this promise in fairly short order and dramatically cut public spending by a very large amount indeed if we win the next election.

If we were to say that now, we'd risk a lot of votes. But given the state of finances, I believe tough choices are finally going to have to be made, regardless of the best will in the world. And soon.

[Richard Calhoun]

I understand the difficulty that Cameron has in timing announcements about public spending cuts, but to compound the error of promising to follow Labour's spending policies only to have to reverse them seems to be completely frank - crass

[Nicholas J. Rogers]

It's a bit pathetic really.

Why are we so afraid of calling for spending cuts? I just don't understand it.

[Richard Calhoun]

Timing is everything!

[John Moss]

I thought the Government committment was to 1.1% above inflation?

If that is the case and they use 2% as the base inflation figure, that is a 3.1%pa increase on a £620bn budget. That would be around £18-£20bn in cash terms, so we could suggest a 1% cash increase, in effect a real terms reduction in spending and a healthy chunk off people's tax bills and/or borrowing.

[Sarf Lunnon]

My friend who trades government bonds says it's all academic: UK creditworthiness is so poor (look at the spreads and the exchange rate) that HMG will never be able to borrow the amount of money that both parties say they will. He says the market is not predicting an Iceland for sure, but it is above the horizon.

[Richard Calhoun]

If the economy is deteriorating at the speed that it appears then we will need massive tax cuts.
This will be a relatively easy task for any Government with a little imagination and a lot of determination.
Privatise many more state assets, they are already starting on Royal Mail, take the knife to the thousands of Quango's and reduce the benefit system in return for tax cuts.
This isn't rocket science and the first party that puts a credible well tested plan forward will win huge kudos from the electorate.
It is how many of us run our affairs, reduction in revenue = reduction in overheads and spending - simple really!

[Simon Robinson]

I don't think I have a problem with this if the money is spent on things which have economic value. I still want huge slashes in the number of civil servants, a total gutting on NHS managers, etc. But I don't really mind if the Government commissions more ships to be made, saving the British ship-building industry, or invests money in self-funding enterprises in prisons, or building a high-speed rail link from North to South etc.

[Malcolm Dunn]

I think you're probably right Steve Tierney,whatever politicians say public spending will have to come down. And no Richard Calhoun it won't be easy, it will be bloody difficult and painful for all concerned.
George Osborne should in my opinion be looking at scrapping various projects which either have not worked or have been too expensive to be worth it. Two I can think of are the Investment in Child Trust Funds for all newborns and the New Deal which just hasn't succeeded in meeting expectations.

[Robert Eve]

NHS spending is a bottomless pit - why keep on throwing money at it?

International development - Jesus.

Looks like the Tory Treasury team are not even scratching at the surface.

[David Belchamber]

The first thing to do is to reform public services on rather more efficient lines.

Gerry Robinson in a three part TV programme a couple of years ago showed how better management could make one northern hospital much more efficient and therefore either perform more services for the same cost or cut costs, while mainataining the same output.

I cannot see why we need a civil service as large as it is if government has to rely on quangos, consultancies and general outsourcing to carry out its behest. The only answer must be the amount of red tape brought in by this government; ergo, cut it right down and try to remotivate the civil service to deliver the services.

The trouble is, how many people have the conservatives got who have the relevant experience - and strength of character - to streamline departments and get proper value for taxpayers' money?

[christina Speight]

Did nobody here read the Sunday Times 7/12/08? ="An adequate way to drive to hell"

"[senior bankers] don’t refer to the looming problems as being like 1992 or even 1929. They talk about a total financial meltdown. They talk about the End of Days. - - - The job losses will mount. And mount. And mount. And as they climb, the bad debt will put even more pressure on the banks until every single one of them stutters and fails. - - - in simple terms money will cease to function as a meaningful commodity. The binary dots and dashes that fuel the entire system will flicker and die. And without money there will be no business. No means of selling goods. No means of transporting them. No means of making them in the first place even. - - - for a while there will be absolute chaos: riots, lynchings, starvation. It’ll be a world without power or fuel, and with no fuel there’s no way the modern agricultural system can be maintained. Which means there will be no food either"

And this blog splits hairs over how many ostriches can hide their heads in one sand bucket!

[Malcolm Dunn]

Well I suppose that's something to look forward to Christina! Now why don't we talk about something important?

[Mark Fulford]

Christina, the picture you paint is basically one of runaway inflation, such as Zimbabwe’s, where money no longer works. If you think it’s a likelihood for the UK, would you like to swap your worthless money for my bags of rice? After all, they’ll soon have more value to you.

[David_at_Home]

Christina (or is it Cassandra?) is probably a being a wee bit pessimistic but only probably.

In truth, the situation is potentially very much more serious than any of our politicians have yet grasped. My prediction is that the stock market will probably rise in the New Year (invest at your own risk!) but many service and retail outlets will go bust, unemployment will rise dramatically, there will be power cuts and also significant civil unrest in some areas, requiring the deployment of the military on the streets.

[Jack Stone]

Robert Eve. Bet you or none of your loved ones rely on the NHS for there lives.The NHS is the most loved institution in this country. The fact that many on this site don`t recognise that shows just how far out of touch you are with the views of the majority.

[Richard Calhoun]

Posted by: Malcolm Dunn | December 16, 2008 at 16:55

Easy solution but I grant you very difficult to implement -- but there is no choice unless we are happy to go down the same plughole as the South American banana republics of old

[Richard Calhoun]

Posted by: Jack Stone | December 16, 2008 at 19:42

Jack : the NHS is an institution that a majority of the population would support, but only because they have no alternative being offered.
The NHS is staffed by many thousands of good people but they have been castrated by Whitehall - just visit the middle managers within the NHS, not the Consultants but the people who keep the whole thing going, and you will find a very frustrated group of people

[christina Speight]

If my - probably - slightly exaggerated account of the future can persuade some Tories that the situation is really rather serious and that to quibble about whether or not we stop expenditure going up or actually cut it is farcical then it was worth posting that from the S.Times.

Of course we'll HAVE TO cut expenditure and that applies to the NHS too, Jack Stone . My youngest descendant has just qualified as a doctor in Yorkshire and coming from a family of doctors I know. It's mess kept going against the interference of the socialist bureaucrats by a (mostly) dedicated medical staff.

[John Prendergast]

Why has MOD 97,000 civil servants? With recruiting shortfalls etc we cannot field that number of soldiers! Sack the majority of these and we can do defence better for no more. Apply same level of cuts to NHS and we can have better health for less, ditto almost all other public services.

Oh! The Railways still don't work well and tthe M6 tollrad is oo expensive to do its job.

[Rod Sellers]

Why on earth should we be content to accept what the NHS can provide for us when in almost every other aspect of life we can choose the quantity and QUALITY of service that we want (by making sacrifices elsewhere) and can afford. Why should the most essential human aspiration - good health - be rationed by the State.

Excellence for All (regardless of ability to pay) is a hopeless and cruel, Utopian fantasy.

[Mark Fulford]

Christina, we must be careful that the treatment doesn't kill the patient.

When you factor in the cost of subsequent unemployment and reduced GDP, what percentage of public expenditure cuts are realised as a benefit to the economy? Can we be certain that it's not a negative?

[Steve Tierney]

My earlier comments tried to avoid what
Sarf Lunnon said at 16:35, but Sarf is (in my opinion) exactly right.

Government Bonds will continue to lose their value and interest to investors until the answer is finally "no way" and then the writing is on the wall.

No bonds = No Money, No Borrowing, Big Big Trouble.

At that point there will be two possible options that I can think of. MASSIVE cuts. Or Print Money. I know which is the sensible thing to do, I suspect I also know which is the better vote winner (in the short term.) Which do you think clever Gordon will pick?

We really are on a narrow ledge here. One wrong step and over we go. And its a very long fall. Ask Zimbabwe, they'll tell you.

[christina Speight]

Mark Fulford @2215 - Like half the population, you're missing the point and minimising the crisis! Cutting expenditure isn't a policy decision, an option. It's going to happen whether we like it or not. If we do it in a controlled way AND SOON we may survive it . If we are forced into it it will bring "absolute chaos: riots, lynchings, starvation. It’ll be a world without power or fuel, and with no fuel there’s no way the modern agricultural system can be maintained. Which means there will be no food either"

Steve Tierney at 2255 has got the scale of the problem but should think through the 'print money' solution. The pound would vanish out of sight and a $60 barrel oil would cost us instead of £41 at present, something like £400 . Inflation would go through the roof (farmers and buses can't work without it) Coal would have to be dug to get some electricity for we couldn't afford to build nuclear, (And two-fingers to Climate Change maniacs)

Think what that would do to inflation.

Printing money would be national suicide.

We MUST cut expenditure. There's no other way to stay alive as a nation. BUT - as I said - we have a chance if we drastically cut expenditure in the next month or two. In practice we won't do it as no party has the guts to tell the truth. So buy a wind-up radio and you can hear the BBC telling us daily of how many went down the plughole that day.

[Steve Tierney]

Christina @ 23.56
You wont get any arguments from me. If you re-read my post you'll hopefully see you misunderstood my meaning (or perhaps I wasn't clear enough.)

I said:-
>>At that point there will be two possible options that I can think of. MASSIVE cuts. Or Print Money. I know which is the sensible thing to do, I suspect I also know which is the better vote winner (in the short term.) Which do you think clever Gordon will pick?<<

The "sensible thing" I was talking about were the massive cuts I promise you, not the terrifying 'print money' option that I suspect our idiot Prime Minister will choose. Hence my final comment about looking to Zimbabwe for the results of that sort of plan.

[pp]

I don't get it... What is the additional spendng on the NHS for? or is 'spending' a virtue?

Is the NHS falling short somewhere?

Is there a service it isn't offering that it should?

Is there too little money to maintain infrastructure?

I don't get it... What is the additional spendng on the NHS for? or is 'spending' a virtue?