Tuesday, May 25, 2010

Tories miss their cuts target by 10%

The Tories said they’d cut £6 billion of spending this year, and £6bn is what they’re cutting – pledge fulfilled. Right? Wrong. Check the small print.

What was announced yesterday was £6.2bn of cuts, of which £500m is to be used for other spending, leaving a net cut of £5.7bn.

The Tory manifesto proposed “immediate action to cut a net £6bn of wasteful departmental spending in the financial year 2010/11”. So – and never mind the utterly subjective definition of “wasteful” – already they’re £300m under target. What’s more, their manifesto clearly said, twice, that the net £6bn cuts would be “in addition to” several other proposed cuts, including cutting “government contributions to Child Trust Funds for all but the poorest third of families and families with disabled children”.

In fact, they’re scrapping Child Trust Funds completely, which will save £320m. So not only have they had to be harsher on this programme than they said, but it means their first-year net savings excluding this come to just under £5.4bn – or 10% less than they had planned. And the scope for cuts elsewhere is now £320m lower.

Remember how the Lib Dems were going to moderate the Tory urge to cut? Well, maybe this extra harshness was down to them. Their manifesto proposed “scrapping the Child Trust Fund” entirely in this financial year. Alas, they thought they could save £395m from it – so they’ve come in 19% under target on this one. Both parties have already had their numbers fall short.

Cutting spending is harder than you think. It’s harder for them, and it’ll be harder on us.

(NB I’ve always been a bit ambivalent about the redistributive value of CTFs: the scheme gives money – eventually – to young adults, not to children, and with bonuses based on hardship 18 years ago, not at the time of receipt. On the other hand, they are an incentive particularly for lower-income families to save for their children’s future. There’s a feisty discussion chez Hopi.)

Update 27/5: Cameron has just been on the Today programme saying: “We promised 6 billion of spending reductions. We have delivered 6 billion of spending reductions.” Liar.

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