GOVERNMENT DEFICIT:THE UNITED Kingdom is set for the biggest spending cuts since the second World War and Labour, the Conservatives and the Liberal Democrats are failing to tell voters how it will be done, a leading economics body has warned.
The majority of the blame was laid at the door of prime minister Gordon Brown by the respected Institute of Fiscal Studies for failing to hold a review of all state spending before the election.
The focus on the state of the UK exchequer’s health came a day after Labour had complained that policies are being ignored in the campaign, though it led to sharp exchanges between Peter Mandelson and journalists yesterday.
According to the review, Labour has identified just one-eighth of the cuts that will have to be made to make its own plans work; the Conservatives just a fifth, while the Liberal Democrats do best, but still poorly, identifying one-quarter of the reductions.
“All three have been particularly vague about their plans for public spending. It’s understandable that they’re not spelling out the full gory details but it would be better for the voters if they did,” said IFS director Robert Chote.
All three parties have made “misleading” claims during the election campaign about how much they can save through efficiencies and will have to increase taxes more than they have said, the independent think-tank said.
Labour is bidding to cut spending by twice the amount it raises in new taxes. The Liberal Democrats are hoping to achieve two-and-a-half times the amount in cuts. The Conservatives want to save £4 of spending for every £1 of new tax.
The IFS warned that the Conservatives under John Major in 1993 managed to bring the UK’s finances under control only by raising the same amount in new taxes that it cut off spending.
“This may suggest that all the parties are being over-ambitious in the extent to which they expect public spending to take the strain, and that the next government will rely more on tax rises and welfare cuts than any of the parties are willing to admit,” said Mr Chote.
The Conservatives plan to cut £57 billion a year by 2016/17, but have detailed just £11.3 billion of it; Labour proposes £47 billion a year by then, having identified just £6.7 billion. The Liberal Democrats, who insist they are being more honest than the others, would cut by £51 billion by 2016-17, but have detailed just over £12 billion of that sum.
Shadow chief secretary Philip Hammond conceded that none of the parties had been clear enough. “I don’t think any party has identified in detail how they will reduce public spending over the course of the coming parliament.”
Over four years beginning next April, the IFS said Labour and the Liberal Democrats would have to impose the biggest cuts since 1976-1980 – after the UK had to call on help from the International Monetary Fund – to make their figures work, while the Conservatives’ plans bear comparison with nothing since the second World War.
Despite the differences in spending plans, however ill-defined, the Conservatives would, if they succeeded, have managed to cut spending by just 0.7 per cent of gross domestic product more than Labour by 2017/18.
Under Labour, the government spends 12 per cent more of national income today than it did 13 years ago, and state spending would still be four percentages higher in 2017 than it was in 2000 if all targets were met.
Labour last night aired an election broadcast warning voters of “a nightmare on your street” if the Conservatives win power on May 6th, with images of dour bureaucrats delivering dire warnings to families.