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The first cut is the deepest?

October 20, 2010

The first cut is the deepest? There has been furious activity in recent days amongst the ConHome community with claim and counterclaim about the extent of the cuts. So just how severe can we expect this week’s Comprehensive Spending Review to be?

For sure the unrelenting austerity message risks undermining business confidence, which urgently needs to be boosted by a growth strategy and a consistent recovery plan. Moreover, the fall-out of the likely future spending cuts, especially in terms of public sector employment, cannot readily be dismissed as minor fiscal tinkering.

Nevertheless, it is also the case that the differences between the Coalition and Opposition over the extent of the Spending Review are considerably narrower than most frontline politicians would have the British public believe.

The truth is that domestic economic policy will continue to be defined largely by Gordon Brown’s framework (the future costs of repayment of debt and PFI, for example, stand as a tribute of sorts to the lack of room for manoeuvre which Labour imposed on any incoming government). Indeed our commitment to cutting public spending is still exclusively sold on the grounds of necessity rather than promoting Conservative instincts for a smaller, more efficient state. Never mind the change of government – the ‘fairness’ and ‘social equality’ agenda of the last decade continues unabated.

Three years of breathlessly grim economic news since the collapse of Northern Rock have been superseded by five months of austerity talk. The great British public can be forgiven for believing – as many folk do – that the worst is behind us.

Yet the reckoning will not even come with Wednesday’s sombre review. Faced by a blizzard of statistics about percentage cuts and £ billions of departmental economies over a four year programme, most of the public will be utterly bemused.

I suspect the real impact will only start to become apparent nearer to and beyond the new tax year next April. Only then will the voters see which local school reception classes are earmarked for closure, which road programmes will be shelved and meals-on-wheels services discontinued, and above all whose jobs are not safe.

Eliminating this deficit rapidly is essential (on moral as well as economic grounds) and so too is a clear programme for future economic growth. It is to this task that the Coalition must now urgently turn. Mark Field 20 October 2010